Spares Logistics

OPTIMIZATION OF SPARE PARTS LOGISTICS

BACKGROUND AND INITIAL SITUATION

A network operator has one central and eighteen regional stores for spare parts, which are responsible for 20,000 deliveries per year

2 Mill. EUR capital expense, 500,000 EUR storage costs, 450,000 EUR transport expenses

Delivery capability: currently 92% – target 97%

VERIFIED ROOT CAUSES

  • Unsuitable equipping of regional stores, long delivery times, and unnecessary transport costs
  • Obsolete supply quantity algorithm under estimates target inventories by ~25% Manual countermeasures to the above based on “gut instinct” lead to excessive inventories with an associated capital cost of 250,000 EUR per year

IMPLEMENTED SOLUTIONS

  • Demand-oriented equipping of regional stores
  • Conversion to an adequate algorithm
  • Reduction and avoidance of excessive inventories

ADDED VALUE FOR COMPANY AND CUSTOMERS

  • Delivery capability increased from 93% to 98%
  • Project benefit of 500,000 EUR per year through reduction of capital costs, storage and transport expenses