Inventory Planning

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.