Spare Parts Management

Doctoral Seminar
Spare Parts Management --Strategies and Processes

14-July-2005
Juan Zhao University Mannheim, Chair of Information Systems III, Prof. Schader
Content
1. 2. 3. 4. 5. 6.
Review on the last work Objectives in Spare Parts Management System Analysis Logistics Strategies Process Management Further Research
Review Objectives Analysis Logistics Strategies Processes Further Research
Review on the last work
Spare Parts Management in Aerospace Industry Definition Business background Literature Review Business Models, Processes and IT systems
Objectives of Spare Parts Management
Customer Facing Reliability Responsiveness Flexibility Internal Facing Cost Asset Management
Supply Chain Council, SCOR 7.0, 2005
Visibility
4
Review Objectives Analysis Performance System Theory Structure Mapping Logistics Strategies Processes Further Research
System Analysis
unsatisfying performance of Spare Parts Management
Avg. Numver of stockouts and spares inventory turns per year

600
51 3,9
8
7 6,75
500 400 300 200

1 ,5 01 4,1 1 21 6,1 231 5,25 4,62
7 6 5
Avg. Number of stockouts per year
272
4 3 2 1 0
100 0
A erospace A utomotive High-tech M etals/metal products Overall
Average spares inventory turns per year
Source: Aberdeen Group September 2003
System Analysis
Goal
System Structure and Behavior

Adjustment time stock 2. Order System
Adjustment gap
Order Rate Order Received
Over stock
goal Adjustment time 1. Order System
Shipment
Stock out
Shipment Rate stock Model of a Second Order System time
Oscillation Reason: material and information delays

6
System Analysis
Spare Parts Management: complex dynamic system
Dealer Part Supplier
Producer
Product Engineering Repair Center Procurement Manufacturing Field Service Warehouse Logistics Sales
Customer
Marketing
Logistics Strategies
Transportation
Expediting Outsourcing Direct shipment by part supplier
Inventory
Forecast Method Purchase: design/manufacture for serviceability, VMI Inventory: part segmentation (Cost based , Movement based , Criticality based); virtual inventories Outsourcing
Location
Warehouse: Centralization/Decentralization; Hub- and Spoke; outsourcing Repair Centre: outsourcing, leave it to supplier or customer
Other:
alliance, e-Commerce, m-Commerce
Logistics Strategies
The system becomes more complex. Processes and IT systems must be adapted to the strategies.
Part Supplier
Dealer
Customer
producer
Service Provider
3PLs
Review Objectives Analysis Logistics Strategies Processes Theory Modeling Further Research
Process Management
Business Process
four perspectives: deterministic machines; complex dynamic systems; interacting feedback loops; social constructs. across functions within a firm - across firms in a supply chain
Business Process Re-engineering (BPR)

use the power of modern information technology to radically redesign our business processes in order to achieve dramatic improvements in their performance. (Hammer 1990)
Business Process Modeling (BPM)

the techniques for charactering and analyzing business processes
Business Process Management (BPM)

support business processes using methods, techniques, and software to design, enact, control, and analyze operational processes involving humans, organizations, applications, documents and other sources of information. ( Aalst, Hofstede, Weske 2003)
Business Process Outsourcing (BPO)

delegate one or more information technology (IT)-intensive business processes to an external provider that, in turn, owns, administers and manages the processes based on defined and measurable performance metrics. (Gartner) 10
Process Management
BPR - BPM - BPO
Re-engineering
Radical clean slate IT-Led Mechanistic Inspirational Future Lessons from Reality
Process Management
Total lifecycle new/ existing processes IT-Enabled Holistic Systematic Past, present, future
Service Level Management
Business Process Outsourcing
Support
Business Process Modeling

11
Process Management
Business Process and Strategies

Processes follow strategies. Strategies follow processes.
Business Process and IT

enabler, inhibitor, facilitator, implementer, supporter
Business Process and Organization

Functional, hierarchical structure - process-based, horizontal structure Individuals manage the boundaries of processes. Matrix-based organization
12
Process Management
Business Process Management Procedures
1. 2. 3. 4. 5. 6. 7. Preparation of modeling Strategy and business process framework As-is modeling To-be modeling Organizational structure Implementation Continuous process management
13
Process Management
Business Process Modeling Objectives
Communication, Analysis, Control
A conceptual Framework for Process Modeling

Curtis et al.(1992) Functional, what activities, which data (information) flows; Behavioral, when and how; Organizational, where and by whom, what physical communication mechanisms and storage; Informational, entities flowing through the process, their structure and relationships.
Standards
SCOR 7.0 Supply Chain Council RosettaNet TM Forum PIPs eTom
proposal
Aerospace and Defense, Automotive, Chemicals, Electronics Electronics, Semiconductor, Telecommunications, Logistics Telecommunications
Process Model
Process Modeling
graphical executable
IDEF0, EPML, UML, BPMN XLANG, WSFL, BPML, BPEL4WL;ebXML BPSS, ebXML BP TC, WSBPEL; XPDL
14
Process Management
Field Service Repair Cycle
Down time Parts Delivery Time
Remote On-site Diagnosis Diagnosis
Time
Customer calls Machine fails. Customer Service Centre (Regional) Field Service (Local) Logistics (Global)
FSE orders parts, if necessary
Parts arrive.
FSE returns unnecessary parts. Repair job completed. Machine is up.
FSE arrives with some or all of the required parts
15 Reference : Cohen 1999; Wolfrum 2004
Process Management
Logistics Processes in Spare Parts Management
Customer Order
Order transmit
Order accept
Order prepare
Order execute
Packaging Shipment
Transport
Delivery received Spare Parts Purchase Spare Parts Warehouse
Documentation 16
Ester 1997
Process Management
Processes in Spare parts management
Life-CycleManagement
Spare Parts Production
Supplier Management
Disposition /Purchase
Source
Distribution Management
Service Level Management
Order Processing Deliver
Retour Management
17 Impuls 2003
Process Management
The business processes in spare parts management cut across various classes of application.
Parts Supplier PDM Life-Cycle-Management Spare Parts Production Supplier Management Disposition/Purchase Distribution Management Service Level Management Order Processing Retour Management MES SCM PDM MES Producer 3PL Customer
ERP
SCM
CRM
TMS WMS
ERP
18
Process Management
Summary
Process Management is hot word in practices, but few academic publications. Most articles describe how to implement BPR/BPM. Existing process models of spare parts management map internal processes and are rough. Processes may be interrupted by diefferent systems. Information are delayed and /or missed.
Problem:
Unique or common processes across companies and industries? Customized or standard IT- Enabler? How can the standards help process management in spare parts management?
19
Further Research
Processes Modeling
Technique, Standards
Processes Management in Spare Parts Management

Modeling, analysis, optimization, implementation
20
Thanks!
21

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Doctoral Seminar

Spare Parts Management --Strategies and Processes

Review Objectives Analysis Logistics Strategies Processes Further Research

Review on the last work

Review Objectives Analysis Logistics Strategies Processes Further Research

Objectives of Spare Parts Management

Avg. Numver of stockouts and spares inventory turns per year

500 400 300 200

Avg. Number of stockouts per year

Average spares inventory turns per year

Source: Aberdeen Group September 2003

System Structure and Behavior

Order Rate Order Received

Shipment Rate stock Model of a Second Order System time

Oscillation Reason: material and information delays

Dealer Part Supplier

Review Objectives Analysis Logistics Strategies Processes Further Research

Review Objectives Analysis Logistics Strategies Processes Further Research

Business Process Re-engineering (BPR)

Business Process Modeling (BPM)

Business Process Management (BPM)

Business Process Outsourcing (BPO)

Service Level Management

Business Process Outsourcing

Business Process Modeling

Business Process and Strategies

Business Process and IT

Business Process and Organization

A conceptual Framework for Process Modeling

Remote On-site Diagnosis Diagnosis

FSE orders parts, if necessary

FSE returns unnecessary parts. Repair job completed. Machine is up.

FSE arrives with some or all of the required parts

15 Reference : Cohen 1999; Wolfrum 2004

Delivery received Spare Parts Purchase Spare Parts Warehouse

Spare Parts Production

Service Level Management

Order Processing Deliver

Review Objectives Analysis Logistics Strategies Processes Further Research

Processes Management in Spare Parts Management

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