The Analysis Of Spare Part Inventory Controlling In Customer Service

Spare parts'position is crucial in service supply chain management. Especially, the inventory cost of spare parts which influences service cost and total cost, and at the same time the response speed and service gurantee are also restricted. The inventory cost of spare parts is important for corporate management. Corporations pursue to minimize the lowest total logistics cost based on a certain service level in order to gain the highest profit. The total logistics cost includes transportation, warehousing, order processing, information, lot size and holding inventory costs. The different costs are interrelated and restricted to each other. Moreover, inventory cost is a gigantic investment including stock, ordering, OS(out of stock) and purchasing costs. By maintaining an inventory quantity of spare parts, a corporation can ensure the guarantees of after-sale service are implemented smoothly. Whereas the inventory covers up many problems such as poor product quality, error forecasting, variational purchasing cycle and so on, problems should be concealed with high level inventory. The level of inventory depends on the service level. If the service level is higher then the inventory level is higher which influences profitability for the company. Spare parts inventory control is based on the company's developmental strategy. According to the standard service goal, a necessary inventory level must be met to achieve the lowest logistic cost. Currently, spar parts after-sales service management is facing difficulties, such as how to achieve the highest meet rate and in the meantime, maintain the lowest inventory level. Based on a certain service level are three methods can be taken to optimize inventory and to gain "zero inventory", as follows. 1.The application of the ABC classification method. Calculate quantity of annual parts usage, and multiply with the price of the single spare part. After that, classify them from the highest spare parts expenditure to the lowest according to the ABC method, emphasize the A category, carry out continuous stock-checking supplemental policy, set up different service levels according to different categories and make the general service level above the industry service level. 2.Spare parts'demand forecasting. The main factors which influence the demand of spare parts are sales promotion, seasonal factors, and the lack of quality of lot size products. General methods of demand forecasting are moving average, average standard deviation, linear regression and average standard deviation based on filtered data. Every method is applicable to different situations. 3.The calculation of safety stocks and re-order point. The safety stock is a sort of extra holding stock as a buffer, which supplements the excess demand duiring the lead time if the real demand increases or the real lead time is postponed. The factors which influence the safety stock level are; the meet rate of customer demand, the quantity of customer demand and lead time. As these factors'index increase, the quantity of the safety stock increases as well. If lead time or demand is uncertain, the formula of safety stock calculation is also different. The re-order point means that when the inventory quantity is reduced to a certain number predicted in advance, ordering from suppliers begins. The re-order point is based on the preparation time. The re-order point is equal to the forecasting demand in the checking period and the safety stock. When the available inventory is below the reorder point, supplement is ordered. For example, a home appliances supplier with more than 60,000 spare parts, overstock occupies more than 50% of the total inventory. According to class three warehouse management, some strategies and proposals are put forward to cut down the inventory of spare parts. 1.Making different stock policy based on spare parts classificationand warehouse class. According to the frequency if individual spare part's replacement, physical characters and product status etc. Spare parts are categoried and classified into wear parts, standard parts, key parts, general parts, EOL(end of life) parts, and appearance parts. A different stock policy is taken based on spare parts classification and the warehouse class. 2.Utilizing the JIT idea and changing the function of warehouse. Change the orientation of RLC(regional logistics center) and LLC(local logistics center), as they don't play the stock center's role but should supply spare parts according to market demand. Furthermore, the RLC and the LLC should perform a transfer center, a distribution center and a process center. The change can not only avoid overstock and degenerative stock but also reduce the expenses of loading, transit and keeping inventory etc. Some function of RLC can be taken by vendors'warehouse and transporting network. The standard parts are supplied according to market requirement and are not stored in RLC. 3.Flexible function of warehouse. Breaking the vertical and linear service chain, warehouses in defferent classes can transversely or lenghthways serve each other. Every LLC can support all other local logistics centers as a RLC throughout China. Playing a LLC's role, the regional logistics center may delivery the spare parts to service centers. In terms of the above proposals, the author worked out the doable measures, made the inventory policy according to spare parts classification and especially the calculation method of local service providers'stock. The JIT theory was referenced in the scheme of optimizing inventory. The shortage of spare parts is managed by automatic transfer based on the simulative central warehouse and second warehouses. The class three warehouse frame and the class two warehouse frame coexist. The traditional class three warehouse frame mode is reorganized.