A case study-based analysis of spare parts management in the engineering industry

Abstract

Eroding margins for primary products have redirected many firms’ attention to the highly profitable spare parts business. These firms push for increased sales and more efficient spare parts supply chains. However, previous research in spare parts supply chain management has principally been limited to planning and operational aspects such as the determination of spare parts inventory levels and re-order policies. Taking the sellers’ perspective in the supply chain, the primary objective of the case study research presented in this article is to better understand the problems that engineering companies encounter and approaches that they adopt in their spare parts supply chains. The initial proposition, that engineering companies need to, and are eager to, adopt supply chain management practices in their spare parts businesses in order to capture revenue and profit potential, is supported. Among the key areas for improvement are the formulation of spare parts strategies, a better understanding of the installed base, and top management support for the spare parts business.