"Service parts are often characterised by long lead times, unpredictable demand spikes, and low usage rates making them difficult to procure in
a just-in-time manner. In addition, unlike production parts, spares must be stocked throughout the whole lifecycle of a product. This comparatively
long stocking period means planners must manage significantly more SKUs for service parts. It follows then that the top challenge to effective service
parts management, noted by 60% of polled companies, was service parts demand planning and forecasting."
"The Service Parts Management Update" - Aberdeen
Benchmark Report, Oct 2006
GRA's extensive experience in Service & Repair has given us an in-depth understanding of the unique characteristics of Maintenance,
Repair and Overhaul (MRO) organisations. The following are some typical characteristics of MRO organisations:
Culture
Culturally, many MRO organisations have similar characteristics. The background of management is frequently engineering-focused rather
than supply-focused. Business pressures can be different, particularly in government or quasi-government organisations where there are no 'real'
(direct) competitors. Furthermore, the skill level and knowledge of the user base can be an issue given that purchasing, rather than inventory
asset management, is often the predominant discipline.
Technology
IT systems and business processes are often not integrated. In order for the supply system to perform successfully, configuration
management, engineering and maintenance systems need to be integrated. Optimisation of the 'Supply' segment in isolation (whilst accepting constraints
of the adjoining business functions) will significantly reduce cost reduction opportunities, but importantly, will respect the real world risks and requirements of
a rolling stock operator. Improved performance reporting will assist in enabling an integrated management process
by sitting across the top of disparate systems. GRA has practitioners with extensive direct experience in configuration management, engineering
and maintenance systems. We have managed assets worth more than $4 billion within a single organisation using these systems.
Repairable or rotable items
Another fundamental skill set in MRO supply chain management is repairable (or rotable) item management. GRA can provide logistics support
analysis and advice on initial spares acquisition. We adopt logistics techniques such as Life Cycle Costing (LCC) which analyse the costs of a
component of a system during each of its phases: acquisition, in-service and disposal. LCC techniques have real power when comparing options
across functional boundaries, using a disciplined series of trade off analyses.
MRO inventories
In our experience, characteristics of MRO inventories include:
- lumpy/sporadic demand (slow moving inventories)
- broad/shallow inventories with long 'tails'
- breakdown spares and rotable (repairable) item inventories
- large number of SKUs/SKULs
- large, multi-tiered distribution networks
- requirement for 'reserve' or 'insurance' stocks
- service/availability levels corresponding to item criticality issues
- mixture of imported (long lead times) and locally sourced items
- inventory balance difficulties (too much and too little)
- item mix driven by configuration management
- scheduled and unscheduled demand
- difficulty in linking inventory levels to availability of the end system
GRA specialises in demand, inventory and supply chain optimisation and can work with you to optimise your supply chain network and
inventory levels while improving customer service, process efficiency and management controls. We identify opportunities and work with you closely
to deliver guaranteed results.
Some of the topics that will need to be explored in order to address the unique characteristics of MRO supply chains include:
- proactive and strategic inventory management
- comprehensive link between service levels and inventory investment across the distribution network
- workload assessment and prioritisation
- financial planning and
- preparedness and contingency planning issues.
GRA guarantees results, including a minimum 3:1 return (typical returns range from 10:1 to 30:1) and remuneration is based on delivered
milestones. We have achieved proven results with the following clients in the Service and Repair space: The Royal Australian Army, Australia
Post, The Royal Australian Navy, Cummins Engine, Defence Materiel Organisation, Honeywell, Honda Australia, Qantas,
Royal Australian Air Force, Repco, Super Cheap Auto and Toyota.
MRO Services
Examples of our supply chain Professional Services relevant to MRO organisations include:
