Effective Spare parts management of parts inventory can bring companies enormous costs savings and, in addition, bring great benefits. Therefore, it definitely pays to look critically at all the inventory processes and see where improvements can be made. Our experience is that many companies underestimate this and do not realize they can achieve great benefits by managing their inventory better.
Costs and necessity
Maintaining inventory costs you money, as it must be purchased. The inventory also needs to be stored and insured. These are all costs you want to minimize. But having inventory is also a necessary thing to respond to market demand. Furthermore, in order to provide a high level of service, you want to keep a certain minimum stock. And sometimes your customers would like to purchase more than they normally do, especially when prices are low. So there is definitely the need to have a parts inventory.
“Strong item master data – including reliability estimates and sources of supply and repair – is essential.”
Customer satisfaction and service
The bottom line when it comes to spare parts management is to provide the right level of customer service. Not being able to deliver what is promised or long delivery times lead to dissatisfied customers and of course lower revenues. Accurate and real-time visibility of inventory levels means you can act and thus deliver quickly.
Excellent insight and efficient management
An accurate insight of the parts inventory also helps to manage the inventory efficiently. Knowing what’s in stock and where it is located exactly helps a lot. An understanding of the stock turnover rates is important to determine if and where there may be too much or too little in stock. And again, this understanding helps you with efficient inventory management.
Optimization of inventory
An important consequence of this is that the total inventory is not by definition reduced, but it is optimized. In other words, the right stock at the right time in the right place. However, in practice most companies experience a reduction of their inventory. Reductions of 50% can be achieved in some cases. Stock optimization makes it less likely you will miss parts when picking, which saves you frustration and improves your service level.
Control over the processes
Successful spare parts management means full control over your inventory, real-time insight into parts and logistics processes at any time and immediate intervention when necessary. No more parts whose origin are unknown, which are booked completely wrong or whose numbers in the system do not correspond with reality. Knowing what is located in your warehouses, where it is shipped to and what the value is, saves you time costs and frustration.
Investing saves costs
Investments in optimizing spare parts management, including investments in an ERP system or WMS, can have a very good ROI. Does your inventory management get you frustrated every day? And do you see opportunities for improvement? Do not hesitate to take action. Clearly define the different processes and see where you can do better and more efficient. On the one hand by changing the way you work, on the other hand by support of the right tools and the help of partners specialized in spare parts management.
What’s in store for the future for spare parts management?
The concept of spare parts management as a discipline has evolved as technology has provided faster, more accurate methods for tracking, reporting and synthesizing information. One area where advances are already seen, and where significant further improvements could arise, is in the Internet of Things. The ability to connect both low- and high-value assets to a network and then have those items instantaneously transmit information about operations, efficiency, wear and tear and other concerns. With data that doesn’t come from projections but the machines themselves, a lean just-in-time delivery model becomes a reality, leading to further and more significant savings.