Ultimate Spare Parts Planning (USP)

This project is about service logistic operations using spare parts. In an earlier innovation project a control tower solution is developed called Planning Services. This service is primarily tactical in nature, meaning a focus on forecasting and inventory control parameter settings. All pilots revealed significant success in terms of service level increase and inventory reduction.

The pilots also revealed two very persistent planning issues:

 All planning requisitions are reviewed by the planners (no automatic ordering whatsoever)

 The vast majority of all planning requisitions are manually adjusted for reasons that could often not be verified.

Exploratory research revealed that in quite a number of cases manual adjustments make sense. Nevertheless in the majority of the cases the manual adjustments seemed arbitrary at first sight. We assume that planners seem psychologically ‘programmed’ by historical successful, unsuccessful planning experiences/events.

To make a real breakthrough happen, we need to address the topic of planning behavior. In this project we will do that in a “mild” way: we intend to create a feedback mechanism on spare parts orders. The assumption is that, by providing planners with feedback on the quality of their planning decisions, they will improve their decisions. Another assumption is that planners will rely more on actual system recommendations rather than “gut feeling” based on past events. To the best of our knowledge this feedback loop has not been implemented in any company and had not been addressed in scientific literature.

Ambition of the project is to develop a proof of concept for the ultimate spare parts planning characterized by the following simple metric: at least 50% of all order recommendations are fully processed without any human interventions.

Facts & Figures

20% reduction of operational costs in planning
15% reduction of capital tied up in spares
15% reduction of misperformance

Startdate: 1 Jan 2014
Enddate: 1 Jul 2015