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Inventory Planning
Challenges
Aftermarket spare parts have very strict lead time and order fulfillment requirements, as any delay in delivery or stock out can result in significant losses to customers and violate the service level agreement (SLA).
Compared to finished products, aftermarket spare parts are characterized by:
- A large number of SKUs.
- Different, and strict SLAs for different SKUs and customers.
- Difficulty in making accurate forecasts.
- Occasionally being custom-made for special purposes.
- Non-substitutable by other SKUs.
- Requiring a high level of coordination across different functional groups.
To prevent stockouts and SLA violations, companies often resort to overstocking, which can lead to significant waste of working capital.
Sophus Solution
Segment and classify spare parts based on their product characteristics, such as product value, demand volatility, and ordering frequency.
Improve inventory turnover and reduce the working capital
Recommend when to stock, where to stock, and how much to stock, along with the optimal replenishment frequency.
Benefits
Achieve a reduction in inventory of
20-30%
while preserving the order fulfillment rate.
Focus on enhancing the customer service level by
40-50%
while keeping inventory levels constant.