Webinar June 25th, 2013
Optimized Planning of
Repairable Parts Inventory
Ulrika Olsson
Phone: +49 173 710 90 04
ulrika.ols...
Page 2
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Table of contents
• Introduction
• Repairable Parts – Background
• Projec...
Page 3
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
About Syncron
• We deliver solutions for optimize joint
pricing and suppl...
Page 4
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
We are trusted by leading global companies
Page 5
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Syncron product footprint
Right stock in the right amount at the right pl...
Page 6
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
One Integrated Suite for Global Inventory Management
Management
Reporting...
Page 7
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Table of contents
• Introduction
• Repairable Parts – Background
• Projec...
Page 8
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Supply Chain for Durable Goods and Spare Parts
• Dependent demand is infl...
Page 9
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Where, when and how to source required inventory
• The customer demand fo...
Page 10
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Table of contents
• Introduction
• Repairable Parts – Background
• Proje...
Page 11
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Project ODIN
Global Inventory Management at DB AG
Page 12
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Page 13
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Page 14
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
T.WVM 1, 11.06.13 15
OBJECTIVES
 Realization of individual levels of availability
 Improved demand forecast
 Daily calc...
Page 16
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
T.WVM 1, 11.06.13 17
DB SPECIFIC SUPPLY CHAIN
GIM supports the core elements of our supply chain
purch.
requisition
"Mater...
T.WVM 1, 11.06.13
The new software has been integrated into the existing
IT-landscape
SYSTEMS
R/3K Host
R/3-LVS
R/3 AAR
DB...
T.WVM 1, 11.06.13
DB SPECIFIC SUPPLY CHAIN
purch.
requisition
"Materialdisposition" ("distribution & supply) w/ DB Fahrzeu...
T.WVM 1, 11.06.13 20
Items are classified into different demand types – individual
forecasts & levels for availability are...
T.WVM 1, 11.06.13 21
Manual demand planning has been established before
using specific adjusted specific demands per vehic...
T.WVM 1, 11.06.13
DB SPECIFIC SUPPLY CHAIN
purch.
requisition
"Materialdisposition" ("distribution & supply) w/ DB Fahrzeu...
T.WVM 1, 11.06.13
Spare parts are classified depending on number of picks and value
of annual usage
STRATEGIC MATRIX PER W...
T.WVM 1, 11.06.13
DB SPECIFIC SUPPLY CHAIN
purch.
requisition
"Materialdisposition" ("distribution & supply) w/ DB Fahrzeu...
Page 25
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Standard principles applies for all spares
• Redistribution is used to b...
T.WVM 1, 11.06.13
DB SPECIFIC SUPPLY CHAIN
purch.
requisition
"Materialdisposition" ("distribution & supply) w/ DB Fahrzeu...
Page 27
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Integrated view of all Recommended Orders
Indication for different order...
Page 28
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Repairable Parts Pop-up
New or repaired parts info Defective parts info
...
Page 29
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Stock Details Pop-up
Stock information
during the supplier and
workshop ...
Page 30
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Stock Details Pop-up, contd.
Prediction of total stock
Prediction of
ser...
Page 31
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
System console – Summarized view of your spares
Summarized view
of the s...
Page 32
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Table of contents
• Introduction
• Repairable Parts – Background
• Proje...
Page 33
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
Interested in more information?
• Read & Download:
– Spare parts invento...
Page 34
COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
End of presentation / Q&A
Thank you for
Your attention !
Syncron Interna...
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Optimized Planning of Repairable & Consumable Parts Inventory

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The MRO supply chain planning process that controls the flow of repairable parts is more complex and challenging than planning consumable parts. In this two-way supply chain, there are several key points that must be managed:

• Ensure that new parts are not ordered to replace parts that are out for repair
• Decide when to purchase replacement parts
• Decide when to scrap parts
• Manage the combined MRO planning and purchasing process
• Average the value of both new and repaired parts kept in stock

In this presentation, Syncron provides insight on how to plan and manage both consumable and MRO parts. This presentation is based on a case study of the German railway operator, Deutsche Bahn AG, outlining their processes and how they are optimizing spare parts inventory.

Published in: Technology, Business
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  • One of the key problems faced by any organization that utilizes complex equipment and machinery is the management of repairable inventory items.Repairable parts are basically spare parts that, through repair, can be returned to an ”as new” condition.Repairable parts are typically complex products meaning they are:Often make-to-order leading to long purchase lead timesExpensive to purchaseDue to the complex nature of repairable partsthey often stand for a significant part of the stock value and are traditionally subject to a manual planning and purchasing process
  • Repairable items are typically complex products meaning that they are:Often make-to-order leading to long purchase lead timesExpensive to purchaseRepairable parts often stand for a significant part of the inventory value and are traditionally subject to a manual planning and purchasing processHow to size/calculate the Safety Stock and the Order Level to achieve a correct repairable parts pool so that:A correct Target Service Level is achieved?The average stock is kept as low as possible?The supplier orders are not placed too early or too late because the supplier lead time differs from the repair lead time?In the repairable parts case we also need to take different lead times, return and repair efficiency as well as availability of items that can be repaired into account
  • About 185 000 rail vehicles moving around in a 34000 km network.
  • About 20% of number of SKUs are repairable with build up approx. the 1/3 of the stock value
  • They required sophisticated forecasting and inventory policy models in order to come up with accurate stocking levels for both the repairable and consumable spares. In addition, DB wanted to implement a virtual warehouse concept to enable more accurate and cost-effective planning of their slow-moving parts.
  • DB was keen to improve their inventory performance through centralising, coordinating and automating the MRO and purchasing processes. Started by centralizing…I met with DB in 2009 and at that time they explained that productivity and efficiency improvements were the main drivers for the project. In the autumnof 2010 DB decidedtoimplement Syncron GIM. Pilot during summer 2011.
  • Material planners at DB are responsible for a wide range of the supply chainAbout 20% of number of SKUs are repairable with build up approx. the 1/3 of the stock value
  • Standard interface to SAP (iDocs)MBP – Planned maintenance, created in a in-house solution (access) and imported as a flat file to GIM
  • The system automatically adopts forecasting methods and algorithms, based on each part’s demand information. This is handled automatically by the demand trend classification in the system.Nowwehave a statistic forecastbutwithin the railwayindustrythere is a lotofplannedmaintenancethatneedto be incorporatedinto the total forecast.
  • DB has different strategies in the different business units when creating the maintenance plans which are divided into repairable and consumables.This is the MBP flat file that now is imported to GIM to apply different types of forecast adjustments based on rule sets defined.
  • Before DB had one global service level
  • Servicableitemsare new and repaireditemsUn-servicableare the oncethatareavaliable for repairThe solution works slightly differently depending on the relation between the repair and supplier lead time:When SLT > RLT we have to in advance order from the supplier to account for scrapping and availability of defective items that can be repairedWhen SLT < RLT we can wait for defectitems to be repariedand use the shorter supplier lead time only in the case when we have nothing to repairIn both cases we need to take the effect of scrapping into account when generating repair orders
  • Optimized Planning of Repairable & Consumable Parts Inventory

    1. 1. Webinar June 25th, 2013 Optimized Planning of Repairable Parts Inventory Ulrika Olsson Phone: +49 173 710 90 04 ulrika.olsson@syncron.com Syncron International AB Postfach 14 03 29 40073 Düsseldorf, Germany www.syncron.com Nicole Heinze Phone:+46 709 822 228 nicole.heinze@syncron.com Syncron International AB Ångbåtsbron 1 SE-20123 Malmö, Sweden www.syncron.com
    2. 2. Page 2 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Table of contents • Introduction • Repairable Parts – Background • Project ODIN Deutsche Bahn • Closing words / Q&A
    3. 3. Page 3 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 About Syncron • We deliver solutions for optimize joint pricing and supply chain performance, easily. • Our customers are multinational companies in manufacturing and distribution. • We have active users in more than 90 countries around the world. • Our customers are supported on every time zone by offices located in: – America Chicago & Atlanta – Europe Birmingham, Düsseldorf, Malmö, Stockholm (HQ) & Warsaw – Asia Tokyo Some Partners Awarded 3 consecutive years Awarded 5 consecutive years
    4. 4. Page 4 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 We are trusted by leading global companies
    5. 5. Page 5 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Syncron product footprint Right stock in the right amount at the right place at the right time
    6. 6. Page 6 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 One Integrated Suite for Global Inventory Management Management Reporting Replenishment Planning Demand Forecasting Global Planning Life cycle Management Seasonality Analysis Statistical Forecasting Forecast Alerts Forecast Adjustments Market Knowledge Inventory Optimisation Stock Replenishment Inventory Simulation Order Scheduling Rotables Planning Inventory Alerts Supply Chain Visibility Virtual Planning Buy Back Ordering Stock Redistribution Stock Allocation Multi-Echelon Optimization Key Performance Indicators System Console Embedded Analytics
    7. 7. Page 7 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Table of contents • Introduction • Repairable Parts – Background • Project ODIN Deutsche Bahn • Closing words / Q&A
    8. 8. Page 8 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Supply Chain for Durable Goods and Spare Parts • Dependent demand is influenced by new product introduction, marketing campaigns, economy, etc • Make or buy • Forward logistics process SupplierCustomer Distributions Center Plant Durable Goods Plant Supplier Repair Facility Central Warehouse Stock Location Stock Location Stock Stock Stock Stock Installed Base of Customers, Service Providers or Service Engineers Local stocking locations Regional stocking locations Spare Parts • Erratic and independent as well as dependent demand due to unscheduled maintenance and repairs • Multiple sources of supply such as make or buy, overhaul, repair and alternative items • Forward and reverse logistics processes
    9. 9. Page 9 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Where, when and how to source required inventory • The customer demand for spare parts can be fulfilled by either: – Repairing a broken item in the repair workshop at a repair lead time – Purchase a new item from an external supplier at a purchase lead time • Repairable parts are sometimes scrapped, this takes place either when customers buy new items or when the items are being repaired • In the repairable parts case we need to take different lead times, return and repair efficiency as well as availability of items that can be repaired into account
    10. 10. Page 10 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Table of contents • Introduction • Repairable Parts – Background • Project ODIN Deutsche Bahn • Closing words / Q&A
    11. 11. Page 11 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Project ODIN Global Inventory Management at DB AG
    12. 12. Page 12 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
    13. 13. Page 13 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
    14. 14. Page 14 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
    15. 15. T.WVM 1, 11.06.13 15 OBJECTIVES  Realization of individual levels of availability  Improved demand forecast  Daily calculated parameters for distribution (based on forecast, lead time, service-level, order quantity) for approx. 1 mio. SKU*  Optimization of stock balance by rule-based redistribution  Virtual central warehouse *) stock keeping unit The tasks of an optimized spare parts planning can be achieved by modern tools
    16. 16. Page 16 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013
    17. 17. T.WVM 1, 11.06.13 17 DB SPECIFIC SUPPLY CHAIN GIM supports the core elements of our supply chain purch. requisition "Materialdisposition" ("distribution & supply) w/ DB Fahrzeuginstandhaltung Stock management purchase order procurement & delivery parameter calculation stock manage- ment incoming orders forecast supply monitoring order suggest demand history AND/OR manual demand planning/ reservations statistic based forecast to support manual demand planning Optimized buffer stock and order level. Updated monthly for ~1 mio. SKU Rule based redistribution proposal; optimized order quantity Warning in case of runout, changes in demand structure, etc. at start: manual check of all orders by planners GIM s u p p o r t
    18. 18. T.WVM 1, 11.06.13 The new software has been integrated into the existing IT-landscape SYSTEMS R/3K Host R/3-LVS R/3 AAR DB Network R/3 ISI "Klick-Shop" to come: PLS Changes to material master data Registered movements Stock level Open PO orders Contracts (Supplier agreements) Accepted orders / redistribution orders Order proposals Open reservations Open repair orders GIM/ "ODIN" KLÜ MBP
    19. 19. T.WVM 1, 11.06.13 DB SPECIFIC SUPPLY CHAIN purch. requisition "Materialdisposition" ("distribution & supply) w/ DB Fahrzeuginstandhaltung Stock management purchase order procurement & delivery parameter calculation stock manage- ment incoming orders forecast supply monitoring order suggest demand history AND/OR manual demand planning/ reservations GIM system forecast + DB specific planning  total forecast
    20. 20. T.WVM 1, 11.06.13 20 Items are classified into different demand types – individual forecasts & levels for availability are calculated Lumpy Slow ErraticFast Negative Trend New Dying Obsolete Positive Trend DEMAND TYPES
    21. 21. T.WVM 1, 11.06.13 21 Manual demand planning has been established before using specific adjusted specific demands per vehicle & event FZI Werk SAP# Menge Monat 1312 1232456 1 01.10 1312 1232456 1 02.10 … 1312 345728 5 01.10 Result (updated monthly) shown in SAP but no automatic processing drill down of BOM for rotables  secondary demands Workshop Long Distance trains Regio SCHENKER RAIL FZI Revision E x t r a p o l a t i o n f o r p r i m a r y d e m a n d s : TOTAL OF ROTABLES based on kilometers per fleet based on planned maintenance events per vehicle seasonal demands based on planned maintenance events per vehicle seasonal demands only available for DB as a whole based on planned maintenance events i.e. number of revisions PURCHASE PARTS
    22. 22. T.WVM 1, 11.06.13 DB SPECIFIC SUPPLY CHAIN purch. requisition "Materialdisposition" ("distribution & supply) w/ DB Fahrzeuginstandhaltung Stock management purchase order procurement & delivery parameter calculation stock manage- ment incoming orders forecast supply monitoring order suggest demand history AND/OR manual demand planning/ reservations service level  buffer stock  order level
    23. 23. T.WVM 1, 11.06.13 Spare parts are classified depending on number of picks and value of annual usage STRATEGIC MATRIX PER WAREHOUSE OR CLASS OF PARTS 23
    24. 24. T.WVM 1, 11.06.13 DB SPECIFIC SUPPLY CHAIN purch. requisition "Materialdisposition" ("distribution & supply) w/ DB Fahrzeuginstandhaltung Stock management purchase order procurement & delivery parameter calculation stock manage- ment incoming orders forecast supply monitoring order suggest demand history AND/OR manual demand planning/ reservations daily check: stock level vs. order level
    25. 25. Page 25 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Standard principles applies for all spares • Redistribution is used to balance excess stock in warehouse with shortfalls in other warehouses • Virtual planning can be used for efficient management of slow moving items in specific regions
    26. 26. T.WVM 1, 11.06.13 DB SPECIFIC SUPPLY CHAIN purch. requisition "Materialdisposition" ("distribution & supply) w/ DB Fahrzeuginstandhaltung Stock management purchase order procurement & delivery parameter calculation stock manage- ment incoming orders forecast supply monitoring order suggest demand history AND/OR manual demand planning/ reservations Order quantity  Daily orders
    27. 27. Page 27 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Integrated view of all Recommended Orders Indication for different order types Reparable item icon
    28. 28. Page 28 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Repairable Parts Pop-up New or repaired parts info Defective parts info Supplier info Repair workshop info Scrap rates
    29. 29. Page 29 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Stock Details Pop-up Stock information during the supplier and workshop lead times respectively
    30. 30. Page 30 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Stock Details Pop-up, contd. Prediction of total stock Prediction of serviceable stock
    31. 31. Page 31 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 System console – Summarized view of your spares Summarized view of the status of all your items
    32. 32. Page 32 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Table of contents • Introduction • Repairable Parts – Background • Project ODIN Deutsche Bahn • Closing words / Q&A
    33. 33. Page 33 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 Interested in more information? • Read & Download: – Spare parts inventory optimisation is vital for high rail fleet operational availability www.syncron.com -> Resources -> Articles – Deutsche Bahn AG case study www.syncron.com -> Resources -> Success Stories
    34. 34. Page 34 COPYRIGHT © SYNCRON INTERNATIONAL AB 2013 End of presentation / Q&A Thank you for Your attention ! Syncron International AB Postfach 14 03 29 40073 Düsseldorf, Germany ulrika.olsson@syncron.com Phone: +49 173 710 90 04 www.syncron.com Ulrika Olsson Syncron International AB Ångbåtsbron 1 SE-20 123 Malmö, Sweden nicole.heinze@syncron.com +46 709 822 228 www.syncron.com Nicole Heinze
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