Back to college: "Managing spare parts when demand is a mystery" 
Date: January 30, 2024
Time: 13h00 - 17h00
Location: Erasmus University, Rotterdam
By: Hans van Waveren, vice president SLF
On Tuesday, Jan. 30, the first session of Back to College took place at Erasmus University in Rotterdam. This initiative aims to refresh the knowledge of SLF participants in the field of service logistics and also to learn about new developments.
The secretary of the SLF, Alexandra Te Selle, explained this new concept in her opening remarks and also made a case for the connection between theory and practice. The intention is to organize a Back to College every year. Then the speakers had the floor, consecutively:
- Rommert Dekker, Professor of Operations Research, Quantitave Logistics and IT at the Erasmus School of Economics;
- Engin Topan, Associate Professor of Smart Manufacturing and Supply Chain Planning at the University of Twente
Managing spare parts when demand is a mystery | Rommert Dekker
Rommert Dekker's introduction was entitled "Managing spare parts when demand is a mystery." Rommert discussed the different goals that specific companies in the chain have with service parts. In particular the position and interests of the OEM, the User, the Maintenance Organization and the Wholesaler. Service parts can be profit generators, but also loss reducers. Of great influence on this can be suppliers of pirate and second hand parts. Rommert emphasized to take into account end of life, the risks of no with the risks of no supplier left.
To convince the finance department to stock certain service parts that hardly move at all, the concept of insurance premiums was emphasized. Companies insure themselves against anything and everything and often pay substantial premiums for this, while the intention is never to have to use these insurances. In fact, the same applies to keeping service parts in stock. Of course, the aim here is to keep the premium as low as possible.
Paying attention to what is or is not included in the purchase of capital goods can be particularly rewarding. Does the purchase price include maintenance and repair, which parts are part of the contract? What is covered in terms of availability? Are there penalties? Etc. etc.
In his talk, Rommert also dwelt extensively on the various methods of determining inventory levels, especially in the case of the long tail, the few rotating parts, mostly with varying demand patterns. Scale can help, pooling between companies is used as a solution. Priority rules have to be properly agreed upon in that case. In conclusion, the possible forecasting methods were reviewed.
Value of information during the product life cycle | Engin Topan
Engin Topan's introduction was entitled "Value of Information during the product Life Cycle". Engin mentioned the importance of information, especially as a lever to move forward in decisiveness, efficiency and to respond well to (unexpected) changes.
Central topic of Engins presentation was the control tower. Engin specifically mentioned that the concept of control tower is directly related to the real-time use of data. The cycle: Monitoring the supply chain, Signalizing to the plan, Suggesting to human and Decision Making without human interventions is central to this. Condition Based Monitoring, provided proper interpretation of the incoming signals is becoming increasingly important. This requires a policy on which conditional signals are more important than others. Failure rates of parts and the use of bathtub curves that phase in start-up, stable period and wear-out when making a parts policy can contribute a lot to the decision making concerning the keeping of stock and the taking of decisions concerning centralized or decentralized keeping of stock. Properly assessing which sku's give many failures and which failures tend to lead to follow-up failures can also provide important information.
From the 30-strong audience, all kinds of questions were fired at both presenters during the presentations, leading to a lively Back to College.
See you at the next SLF event?
Alexandra closed by thanking the presenters, combined with a box of chocolates for each. She also previewed the next three SLF meetings:
- March 19: The AI world of ProRail | register for this event
- April 17: Over coffee at The Royal Navy | register for this event
- June 05: Service logistics and refurbishment at Katoennatie | register for this event
During the closing drinks, there was further animated networking and further discussion about what concerns us all: The optimization of the service logistics chain.
