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Journal cover: International Journal of Operations & Production Management

International Journal of Operations & Production Management

ISSN: 0144-3577

Online from: 1980

Subject Area: Operations and Logistics Management

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Demand categorisation in a European spare parts logistics network


Document Information:
Title:Demand categorisation in a European spare parts logistics network
Author(s):A.A. Syntetos, (Centre for Operational Research and Applied Statistics, Salford Business School, University of Salford, Salford, UK), M. Keyes, (Centre for Operational Research and Applied Statistics, Salford Business School, University of Salford, Salford, UK), M.Z. Babai, (BEM-Bordeaux Management School, Talence Cedex, France)
Citation:A.A. Syntetos, M. Keyes, M.Z. Babai, (2009) "Demand categorisation in a European spare parts logistics network", International Journal of Operations & Production Management, Vol. 29 Iss: 3, pp.292 - 316
Keywords:Demand forecasting, Distribution management, Inventory management, Spare parts
Article type:Case study
DOI:10.1108/01443570910939005 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:The dissemination of the work described in this paper has been facilitated by the Engineering and Physical Sciences Research Council (EPSRC, UK) Grant No. EP/D062942/1. More information on this project may be obtained at: www.mams.salford.ac.uk/CORAS/Projects/Forecasting/.
Abstract:

Purpose – Spare parts have become ubiquitous in modern societies and managing their requirements is an important and challenging task with tremendous cost implications for the organisations that are holding relevant inventories. An important operational issue involved in the management of spare parts is that of categorising the relevant stock keeping units (SKUs) in order to facilitate decision-making with respect to forecasting and stock control and to enable managers to focus their attention on the most “important” SKUs. This issue has been overlooked in the academic literature although it constitutes a significant opportunity for increasing spare parts availability and/or reducing inventory costs. Moreover, and despite the huge literature developed since the 1970s on issues related to stock control for spare parts, very few studies actually consider empirical solution implementation and with few exceptions, case studies are lacking. Such a case study is described in this paper, the purpose of which is to offer insight into relevant business practices.

Design/methodology/approach – The issue of demand categorisation (including forecasting and stock control) for spare parts management is addressed and details reported of a project undertaken by an international business machine manufacturer for the purpose of improving its European spare parts logistics operations. The paper describes the actual intervention within the organisation in question, as well as the empirical benefits and the lessons learned from such a project.

Findings – This paper demonstrates the considerable scope that exists for improving relevant real word practices. It shows that simple well-informed solutions result in substantial organisational savings.

Originality/value – This paper provides insight into the empirical utilisation of demand categorisation theory for forecasting and stock control and provides some very much needed empirical evidence on pertinent issues. In that respect, it should be of interest to both academics and practitioners.



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