Business intelligence for service parts logistics management

Abstract

Many leading companies now offer global customers better spare parts services for system maintenance through a complex service logistics network, which extends traditional on-site stocking management to boost profit margins. The major challenge that spare parts service providers face is how to achieve desired service levels at a low cost and minimise excess inventory in the global spare parts supply chain. To address this issue, we demonstrate an inventory redeployment strategy that transforms a conventional spare parts supply chain into a closed-loop, multi-echelon service network capable of redeploying inventory from overstocked to understocked facilities, and thus reducing purchases of high-value spare parts. To assess the quality of our novel approach, we used a network flow optimisation model to analyse the proposed excess inventory redeployment strategy based on an international company's service parts operations. Significant inventory cost savings were identified.