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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Automated Inventory Management of Rotable Items
Erik Lindholm – Presales Director
June 2015
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Syncron is the global leader in aftermarket service
optimization
• Dealer Aftermarket Specialist
– Inventory management
– Price Management
– Analytics
• Customers are multinational
companies
– Active users in more than 100
countries
– R&D intensive, investing >20% of
revenue
Meet the Presenter:
• 15 years experience of
inventory management
• Product manager for
inventory management
application
• Program manager for
several dealer inventory
management projects
Erik LindholmPresales Director
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Agenda
• What is a rotable item?
• Managing rotable items
inventory
• Optimizing rotable items
inventory
• Daily work with rotables in a
best-of-breed inventory
management system
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What is a rotable item?
• Rotable items are spare parts that, through repair, can be returned to an ‘as
new’ condition.
• The demand for new items can be fulfilled by either:
– Repairing a broken item in a repair workshop
– Purchasing a new item from an external supplier
• Rotable items are scrapped when they are broken beyond repair
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An automated inventory management system will reduce
administration, improve service and decrease inventory
• Advanced best-fit forecasting algorithms
• Optimize inventory to meet a target service
level
• Automated replenishment
• Network stock optimization
• Alerts and reports
• KPIs
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Rotable items are complex and expensive
• They often stand for a significant part of
the inventory value
• Due to their nature, they are traditionally
subject to a manual purchasing process
• Rotable items are typically complex
products:
– Often make-to-order leading to long
purchase lead times
– Expensive to purchase, hence we
wish to repair them if possible
20% of the parts
80% of the stock
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Rotable team members face many challenges
• Ensuring that new items aren’t ordered to replace items that are out for repair
• Deciding when to purchase replacement items and scrap the repairable item
• Providing visibility of the status of items
– Requires cooperation between maintenance and planning department
• Managing the purchasing process
• Averaging the value of both new and repaired items in the inventory
• Sizing the buffer stock correctly to meet the target service level
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Optimizing rotable inventory – Definitions and assumptions
• Status of an item:
– A broken item is called an unserviceable item
– A new or repaired item is called a serviceable item
• There is no distinction between new and repaired
items
• It is assumed that when customers buy serviceable
items they also return unserviceable items
• Rotable items are sometimes scrapped
– When customers return the unserviceable item
– During the repair process
Repair WS Supplier
Scrappingat return
Scrappingat repair
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Objective to use repair workshop
• The objective is to use the repair workshop as the primary source of supply
due to:
– Lower cost of carrying unserviceable items
– Lower cost to repair unserviceable items
– Quicker to repair unserviceable items?
• Rotables planning is an integrated
module in Syncron GIM:
– Standard GIM inventory
optimization features should apply
to rotable items as well
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Rotable challenges are very difficult to manage manually
• How to calculate the safety stock to achieve a correct
rotable pool so that:
– A correct target service level is achieved
– The average stock is kept as low as possible
– The supplier orders are placed in the right time
• In the rotable case, we not only need to take demand
and supply randomness into account buy also:
– Different lead times
– Return/repair efficiency
– Availability of unserviceable items
Repair WS Supplier
LT - repair LT - supply
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
To plan efficiently for rotable items, consider 2 different
situations
• Supplier Lead Time > Repair Lead Time:
– Order in advance from the supplier to account for
scrapping and availability of unserviceable items
• Supplier Lead Time < Repair Lead Time:
– We can wait for unserviceable items
– Use the shorter supplier lead time only in the case
when we have nothing to repair
• In both cases, we need to take the effect of scrapping
into account
Repair WS Supplier
LT - repair LT - supply
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Stock due – Supplier lead time > Repair lead time
Unserviceable
Supplier
Warehouse A
Stock balanceserviceable items
Serviceable
Time
Customer
Supplier orders
Warehouse A
Stock balanceunserviceable items
Repairworkshop
Repair lead time
Repair orders
Customer returningunserviceable items
Supplier lead time
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
Stock due – Supplier lead time < Repair lead time
Unserviceable
Supplier
Warehouse A
Stock balanceserviceable items
Serviceable
Time
Customer
Supplier orders
Warehouse A
Stock balanceunserviceable items
Repairworkshop
Repair lead time
Repair orders
Customer returningunserviceable items
Supplier lead time
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Syncron GIM standard principles will further optimize rotable
inventory
• Dynamic inventory policy – Right
breadth and depth of stock
• Redistribution – Use excess stock in the
network
• Virtual planning – Efficient management
of slow moving items
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Daily work with rotables in a best-of-breed inventory
management system
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1. Review pending orders
Indication for different order types
Rotable item icon
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2. Click the rotable item pop-up for more information
Serviceable item info Unserviceable item info
External supplier info Repair workshop info
Scrap rates
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3. Stock details pop-up displays serviceable as well as
unserviceable stock information
Stock informaton duringthe supplier and workshop lead timesrespectively
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4. Graphical prediction of stock for accurate planning
decisions
Prediction of total stock
Prediction ofserviceable stock
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COPYRIGHT © SYNCRON INTERNATIONAL AB 2015
A best-of-breed inventory management system expedites
and improves management of rotable items
• Best-of-breed inventory management systems can perform advanced
optimization also for rotable items
• Advanced inventory management features can be applied to rotable items to
further improve inventory and service
• For your rotable team members:
– Managing rotables is not an easy task
– An inventory management system can reduce their workload
– An inventory management system lets them focus on the exceptions –
the cases where their experience really makes a difference
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