2004 Articles
October 14, 2004
META Group Research - Complex Service Parts Planning: Part 1 - The Multi-Echelon Opportunity
META Group Research - Analyst Insights
Until recently, service parts planning (SPP) was supported by relatively rudimentary methods for calculating parts replenishments. While there was some sophistication in the forecasting engines, first-generation SPP applications provided relatively limited location-by-location safety-stock calculation, and they used simplistic logic for netting inventory requirements up and allocating/pushing parts down a hierarchical network. We see an SPP revolution driven by industries where assets are costly and availability is critical (e.g., aerospace and defense, utilities), which is creating demand for more flexible, sophisticated, and holistic SPP approaches that address strategic parts planning (i.e., networkwide view of what and how much to stock and where). Recent SPP advancements apply more sophisticated modeling and optimization techniques to a multi-echelon networkwide stocking problem. These solve "top down" to minimize systemwide inventory costs while maximizing asset availability. SPP specialists (e.g., Clockwork Solutions, MCA, Servigistics, Xelus) will continue to lead innovation in SPP. While some SCM and ERP vendors are moving toward SPP, companies with complex requirements looking for the next level of cost reduction without jeopardizing service should shortlist the experts and innovators.