Study On Spare Parts Supply Chain Coordination

Manufacturer’s Equipment spare parts management is an important approach to maintain equipment availability. If its spare parts are out of stock, manufacture equipment could run out with huge supply failure costs and disruption costs. But, because of spare parts’features (hard to forecast its demand, high-professionalization, high-price and wide-variety), spare part suppliers don’t want to hold large inventory. It makes manufacturer facing longer supply lead time and larger equipment failure risk. To solve the problem, this paper uses equipment spare part supply chain coordination theory, to incent suppliers to increase supply service level.This paper discuses a spare part supply chain, including one manufacturer (supply chain core enterprise) and serval spare part suppliers. Based on the equipment spare part supply chain coordination theory, this paper analyzes two situations:1. in the early product life cycle, its equipment spare part management aims for equipment availability;2. in the mature product life cycle, it aims for costs. With these two situation, this paper discusses how to coordination the supply chain with incentive and penalty contract. Then, using bargaining model and optimization algorithm to find out reasonable contract terms and optimal inventory. And it considers the inventory cost, failure rate, purchasing lead time and backorders in models. Finally, we make a case study by B Company to discuss the feasibility of models.The creative points of the paper are:(1) Based on spare parts supply chain coordination theory to find out how to incent suppliers to stock enough spare parts inventory to meet manufacturer demand.(2) Considered that different product life cycle will impact equipment spare parts supply chain coordination target.(One considers equipment availability, the other considers the total cost.)(3) Using bargaining model to find out contract terms.