With digital transformation affecting every part of the supply chain, old problems are using adopting new solutions. Spare parts management is a perennial issue in so many sectors, requiring a fine balance between service levels and working capital.
Efficient aircraft spare parts inventory management under demand uncertainty - Semantic Scholar
However, digital innovations are changing the dynamic, bringing capabilities that were previously unreachable and re-writing the rules of the past. In this article, you will witness this change through the experience of one of the largest rail companies in the world, learning lessons that can be readily applied to your spare parts management.
In , the German rail company Deutsche Bahn DB faced a problem that many in the heavy engineering sectors will recognise:. As supply chain managers will know all too well, though, even with these actions in place, there remain several issues to deal with:. Like decision makers in those sectors, DB had to find a better way of doing things. One approach which has quickly borne fruit was to use 3D printing.
Increasingly, companies are looking to this family of technologies as a way of solving issues with making parts for end use. While for much of its year history 3D printing has been extensively used as a tool to help with design and prototyping, advances in the 3D printing techniques, materials science and the design tools used over the last 10 years are transforming its capabilities and, from that, demand for it.
Recent innovations, particularly the drive towards digital transformation, as well as the shifting dynamics that supply chains face are further catalysing this trend. By doing so, companies are reaping benefits such as:. Moreover, the flexibility of 3D printing means that they can produce lighter parts, with fewer components that need to be assembled, or parts with optimized geometries that suit the specific dimensions that they need.
Initially, DB attempted a systematic approach, mapping the family of SKUs, analysing the data they had on each item from their procurement, engineering, logistics and other support systems to identify those spares which it made the most sense to 3D print. However, they found that, despite there being plenty of data, its quality and completeness made the task too complex.
A different methodology was needed. Instead, the team at DB which led the 3D printing efforts travelled to key workshops, briefed the staff there on what 3D printing is and what it can do, and asked for recommendations on what to use it for. That initiative quickly resulted in a list of items, from small plastic grommets to large metal boxes, which suffered from long lead times, expensive procurement or unrealistic MOQs.
Now they faced the question of how to go about implementing 3D printing. As with any modern manufacturing technology, 3D printers are not cheap. Different machines are needed for each material type, for each 3D printing technology. Moreover, the items that were needed had to be designed for 3D printing or reverse-engineered from existing designs. The solution that DB employed was to use external specialists.
They hired a company with dedicated design specialists to produce the data files that were needed, using a mix of scanning and digital design skills. Those were passed to one of several firms which leased their 3D printing capacity, choosing the right machine, with the right capabilities for the job, having quality assured its output.
The first option is always to repair unserviceable assets if they are available in adequate quantities. Repair programs are continuously underway at organic AMC depots, other military service depots, and commercial repair facilities. In urgent situations, the IM has the option of tasking AMC maintenance depots to fabricate a part or cannibalize it from a next-higher assembly. When the above sourcing options have been exhausted, the IM procures new repair parts from industry by initiating a purchase request. A spend analysis reviews how procurement funds were spent in the past.
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These data suggest that there were opportunities to reduce prices, ALT, and production leadtime and that current tactical sourcing processes were not exploiting these opportunities. The spend analysis data highlighted which repair parts were the best candidates for consolidation into fewer larger-dollar-value contracts in the future and which vendors were likely to compete for those contracts.
Analyzing past procurement spending data to rationalize future contract obligations can also reduce administrative costs to both the Army and its vendors because purchase request solicitation processing and the contract administration workload will be reduced. This is especially true when contracts are consolidated for multiple repair parts from multiple weapon systems and from multiple AMC acquisition centers. After analyzing procurement and rationalizing the supplier base, RAND recommends establishing long-term partnerships with the best suppliers. The goal of the partnerships is to help vendors improve quality, cost, and services by integrating them into the AMC spare parts management supply chain.
AMCOM hosts semiannual conferences with these suppliers and tracks their performance with a supplier management scorecard. The scorecard measures progress toward attainment of key metrics, such as reducing ALT, production leadtime, shipment delinquencies, proposal turnaround time, and the number of spare parts in a critical supply posture. AMCOM targets contracts with these key firms for delivery, capacity, cost, performance, and other incentives. Today, the company operates 50 U. Caterpillar Logistics Services, Inc.
Cat Logistics , supplies a network of dealers and 1, rental stores with spare parts from 22 distribution centers located around the world. The company offers over , parts, the majority of which are nonstocked because of low demand rates and the age of the equipment they are designed to repair. When ordered by dealers, these nonstocked items are procured or fabricated as required AMC provides similar services to its customers.
This includes roughly 7, lines individual item counts on emergency orders for which delivery is guaranteed within 24 hours. Things were not always rosy at Caterpillar. The company faced union unrest and financial losses throughout the s. Decisionmaking authority was pushed downward, and new customer-focused performance metrics were introduced. In , Caterpillar introduced its workforce to the Lean Six Sigma tenets of defining, measuring, analyzing, and controlling factory and administrative processes.
Conversion to Lean production process techniques began in to reduce waste and improve the flow of inventory and information. The results are impressive. The finished-goods inventory is nonexistent because each machine is sold before it is produced. Part and component inventories are minimized by scheduling factory receipt just 1 day prior to induction to the moving assembly line. Like DOD, Caterpillar has a large workforce: over 94, employees. Also like DOD, Caterpillar was a stodgy, inefficient, industrial bureaucracy.
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Yet in just 15 years, the company has morphed into an efficient, lean, and customer-focused organization. AMC is also actively implementing Lean manufacturing and Six Sigma quality processes throughout the command. This systemic change both requires and enables additional organizational and process change.
These include the projects mentioned in this article as well as performance-based logistics, contractor logistics support, depot partnering, and other initiatives. Multiple initiatives are underway, but they are not focused on a unified and clearly articulated command-wide vision or SCT objective.
Improving the Armys Management of Reparable Spare Parts
AMC is currently staffing a dedicated team of logistics and acquisition personnel to focus and coordinate its SCT activities. Following the example set by Caterpillar, the command should metaphorically assume the V-formation used by geese and ducks in flight. The dedicated SCT team will focus on the operational attainment of program goals and objectives.
Synchronizing these efforts within the command and with suppliers, customers, and other DOD components will create synergistic benefits and unity of purpose. Aspiring to operate under transformed supply chain operations will result in all of these benefits, but most importantly, it will result in improved repair parts support to the Army and its Soldiers. The purchases were made by procurement offices. One in three companies had multiple Army contracts. Forty-two percent of the dollars spent and 35 percent of the contracts awarded were restricted to 1 company.
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