Inventory management in a multi-echelon spare parts supply chain

Abstract

In many industrial sectors, firms are dealing with a demand which is more and more uncertain often due to the supply chain structure. One of the most critical effects of demand uncertainty is the simultaneous increase of inventories and decrease of customer service. This work describes an integrated system for managing inventories in a multi-echelon spare parts supply chain, in which customers of different size lay at the same level of the supply chain. The differences in size generate demand peaks and thus a very variable and lumpy demand pattern. The analysis presented in the paper stems from a case study in the field of durable goods spare parts. The paper contributes in three ways: on the one hand, it shows that consistency between managerial solutions and supply chain structure enables to enhance operative performances. On the other hand, it provides a new solution to a problem that characterises several different industrial contexts. Eventually, it highlights that the exploitation of a larger and more reliable set of information dramatically improves performance.