Criticality analysis of spare parts management: a multi-criteria classification regarding a cross-plant central warehouse strategy

Abstract

Today an efficient warehouse and inventory management of spare parts for production machinery is essential for service organizations. Optimal strategies in procurement, stocking and supply play an important role for serviceability in spare parts management. In this context, individual item criticality should be considered, which describes how crucial a spare part is. This paper presents a three-dimensional classification approach for spare parts regarding a cross-plant central warehouse strategy of a service network. The approach uses two dimensions to estimate value and predictability of spare parts with aid of an ABC and XYZ analysis. The third dimension VED analyses a multi-criteria criticality classification and six feasible criteria are identified to describe item criticality. The methodology of the analysis is based on a decision tree, which represents the defined criteria by nodes. In addition, the analytic hierarchy process is used to solve the multi-criteria decision problems at the different nodes of the decision tree. The approach is developed in a research project and evaluation of spare parts is performed based on real inventory and transaction data in cooperation with an industrial company. As a result 15,000 out of 50,000 items could be classified as suitable for central warehousing.

Testing an AHP model for aircraft spare parts

“…It is noteworthy to emphasise that in the aviation industry, both 'operational criticality' and 'technical characteristics' are suggested to be the most important criteria due to the stringent regulation imposed to ensure passenger safety (Vieira and Loures, 2016), while 'supply characteristics' is considered to be less important and moderated by the collaborative strategies among the aviation partners, which lead to an incresed certainty in the supply continuity (Kilpi et al, 2009). The developed AHP model enabled a practical and relevant multi-criteria classification of aircraft spare part thanks to its ability to i) aggregate both qualitative and quantitative criteria (Stoll et al, 2015), ii) structure and cluster all factors in hierarchical manner (Saaty, 2008;Saaty, 1990), iii) enable different weight in each criterion to be considered, iv) provide a transparent (Molenaers et al, 2012) and user friendly decisionmaking framework (Roda et al, 2014) and v) integrate the decision diagram logic to solve the specific aircraft spare part essentiality classification.…”

“…It is suggested that the primary advantages of the AHP method are the transparency and the user friendliness (Molenaers et al, 2012). A study by Stoll et al, (2015) also assigns a spare part classification to inventory management. The paper presents a three-dimensional spare-part classification using a decision tree and AHP.…”

“…show that every aircraft type has a different cost consequence depending on the number of passengers and the destination, which is similar to Dekker et al's (1998) perspective of machine criticality in the manufacturing industry. Although this sub-criterion has less weight than the previous one, many authors consider aircraft or machine criticality in their classification (Gajpal, 1994;Braglia et al, 2004;Stoll et al, 2015).…”

“…Therefore, the current mathematical decision-making model does not represent a holistic thinking of the decision-makers. However, AHP allows considering both quantitative and qualitative criteria in the classification, it enables the multicriteria classification of the spare part, in line with Gajpal et al, (1994) Lolli et al, (2014) Stoll et al, (2015 Subramanian and Ramanathan (2012) .…”

Inventory centralization decision framework for spare parts

“…The concept of inventory centralization dates back to the 1960s (Das and Tyagi, 1997).The main body of research within inventory management of spare parts agree that centralization is the best way to achieve cost savings (Tiacci and Saetta, 2010;Karsten et al, 2012;Braglia and Frosolini, 2013;Cohen et al, 2009;Stoll et al, 2015;Karsten and Basten, 2014). Inventory centralization is in this paper defined as the physical consolidation of local warehouses, procurement and distribution functions to a few (single) main warehouses.…”