"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
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:
Culturally, many Maintenance,
Repair and Overhaul (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.
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 Maintenance,
Repair and Overhaul (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.
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 is an expert supply chain and logistics consulting firm specialising in supply chain strategy, planning & execution. We offer professional services and supply chain planning and optimisation systems across a broad range of industries. We can define optimal supply chain strategies & structures, design high performance facilities and embed the best-practice operating processes and systems required for superior performance. We are results focussed and have proven approaches for quickly delivering sustainable improvements in working capital, cost and service level performance. We provide our clients with a sustainable competitive advantage by significantly improving margins, asset efficiency and supply chain responsiveness.
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.
Examples of our supply chain management Professional Services relevant to Maintenance,
Repair and Overhaul (MRO) organisations include: