Achieving Breakthrough Service Delivery Through Dynamic Asset Deployment Strategies

Many firms have shifted their focus from their products to their customers and the value derived from owning and using the products. They see after-sales service as an important source of revenue and profit, customer acquisition and retention, and competitive differentiation. However, they also find it challenging to manage their service-supply chain. Service organizations must position and manage service-supply-chain resources optimally to support the delivery of after-sales service. They must also develop capabilities to respond rapidly to the demand for service in a cost-effective manner. To succeed in implementing a service-centric strategy, firms must determine what items in their products’ service bill-of-material hierarchy should be deployed throughout their geographical hierarchy of service support locations. They must make these complex and interrelated decisions in anticipation of service demand, which is uncertain. Firms must also be flexible and should understand the mechanisms in a service-supply chain needed to fulfill customers’ demands for service and the resulting demands for support assets and capacities. Dynamic asset deployment (DAD), a collection of management policies that promote this flexibility, can be used to develop the capabilities needed to effectively and profitably deliver services. These policies require a real-options-based optimization approach to decision making

Supply Chain Modifications to Improve Additive Manufacturing

Additive manufacturing (AM) offers unique production characteristics which among those, toollessness and production of complex geometries are potentially significant to operations efficiency. Previous research has illustrated the potential sufficiency of this technology to affect the supply chains‟ arrangements and enabling decentralized production configurations. While, one of the important advantages of AM enabled distributed production is the increased flexibility, which is a necessity in today‟s competitive and ever changing global supply chains, number of obstacles have kept this method from wide implementation. In this paper, we study the possible supply chain modifications to decrease the cost of an AM-enabled decentralized production system. In other words, we perform a cost-benefit analysis on various AM supply chain strategies in a spare parts context to realize the independent operational factors affecting the implementation cost of additive manufacturing. Moreover, we analyze the ways to adapt the supply chain management to enable full potential of AM considering the present technology.Mechanical Engineerin

An Advanced Heuristic for Multiple-Option Spare Parts Procurement after End-of-Production

After-sales service is a major profit generator for more and more OEMs in industries with durable products. Successful engagement in after-sales service improves customer loyalty and allows for competitive differentiation through superior service like an extended service period after end of production during which customers are guaranteed to be provided with service parts. In order to fulfill the service guarantee in these cases, an effective and efficient spare parts management has to be implemented, which is challenging due to the high uncertainty concerning spare parts demand over such a long time horizon. The traditional way of spare parts acquisition for the service phase is to set up a huge final lot at the end of regular production of the parent product which is sufficient to fulfill demand up to the end of the service time. This strategy results in extremely high inventory levels over a long period and generates major holding costs and a high level of obsolescence risk. With increasing service time more flexible options for spare parts procurement after end of production gain more and more importance. In our paper we focus on the two most relevant ones, namely extra production and remanufacturing. Managing all three options leads to a complicated stochastic dynamic decision problem. For that problem type, however, a quite simple combined decision rule with order-up-to levels for extra production and remanufacturing turns out to be very effective. We propose a heuristic procedure for parameter determination which accounts for the main stochastic and dynamic interactions between the different order-up-to levels, but still consists of quite simple calculations so that it can be applied to problem instances of arbitrary size. In a numerical study we show that this heuristic performs extremely well under a wide range of conditions so that it can be strongly recommended as a decision support tool for the multi-option spare parts procurement problem.Spare Parts, Inventory Management, Reverse Logistics, Final Order

Installed base information utilisation in industrial service development and operations

This paper describes a systematic literature review conducted to determine how installed base information (IBI) is utilised in developing and operating industrial services. We found that the reviewed literature considers IBI useful and relevant for industrial service operations, and that it is mainly used to improve service quality and efficiency. However, it is evident that there is a shortage of empirical studies and further investigations that show concrete applications of IBI in different service activities. The existing research concentrates on particular contexts, such as preventive maintenance and asset management. The asset owner perspective is emphasised in the literature, but the use of IBI for service offerings, service contracts and service sales is rarely discussed. The literature indicates that many companies lack a holistic approach to IBI management, in general, and utilisation as a part of it. It is not uncommon for companies to build large databases, but fail to do accurate analyses based on the collected data.Peer reviewe

The application of product service systems for hydraulic excavators

The concept of Product Service Systems (PSS) was introduced as an alternative business model for Original Equipment Manufacturers (OEMs), who are motivated to shift their traditional manufacturing focus towards the after-sale service, to meet the market demand and gain additional profit and market share. A PSS is a system that integrates product and service as one package at the point of sale. It is increasingly popular because customers are demanding more supplier involvement to prolong and maintain the life of products they purchase and keep them functioning at maximum performance levels. Furthermore, it is also widely accepted within the community that the PSS concepts enhance competitiveness and promote the shift towards sustainable practices and society simultaneously. The flexibility of different PSS models allows OEMs to open new opportunities to improve relationships between customers and suppliers, or better understand the strengths and weaknesses of their own business strategy and products. [Continues.

After-sales business model to create customer value: case profit potential of hydraulic hose-assemblies

After-sales business is supposed to be a very profitable business. If conducted properly with the right strategies and clear understandings its impact on the company’s profitability tends to be significant. The main focus of this study has been pointed towards providing superior customer value and enhancing sales potential in after-market for hydraulic hose-assemblies. Therefore, in the empirical phase of this study, emphasis has been provided towards developing a deep understanding about hydraulic hose-assemblies and their complexities. Hydraulic hose-assemblies provide huge potential for after-sales revenue. These hose-assemblies also have a relatively short life span as compared to most of the other machine parts. Despite the business potential, OEMs today make hardly any hose-assembly related after-sales revenue. Potential business opportunities in after-sales make it interesting to study different facilitators that are directly influencing the after-sales business potential. Understanding profit potential is one of the vital factors in order to finalize beneficial strategies for after-sales hose-assembly business. It is not necessary that strategies those are successful and profitable in one segment (application based) would also be profitable for the other segments. The study suggests that responsiveness, price and number of hose-assemblies in machines are the direct influencers towards the profitability of the hose-assembly after-sales business. OEMs need to understand the profit potential in a certain segment before strategizing their after-sales services for hydraulic hose-assemblies

Spare parts on demand using additive manufacturing : a simulation model for cost evaluation.

Little is known about the impact of additive manufacturing in the spare part supply chain. A few studies are available, but they focus on specific parts and their applications only. A general model, which can be adapted to different applications, is nonexistent. This dissertation proposes a decision making framework that enables an interested practitioner/manager to decide whether using additive manufacturing to make spare parts on demand is economical when compared to conventional warehousing strategy. The framework consists of two major components: a general discrete event simulation model and a process of designing a wide range of simulation scenarios. The goal of the dissertation is to help verify existing as well as gain new knowledge about operations of additive manufacturing and the cost implication in the spare parts supply chains. Particularly, the proposed model enables simulation based analysis with various strategies, setups, specific parts, machines and system operating parameters. Furthermore, the process related issues of interest are the influence of building speed, building space volume, material price, machine purchase price and cool down time. Strategy related issues are multi-machine and multi-material production strategies in several setups. Also simulation investigation of different spare part stock properties are executed and analyzed by using different part size distributions. This dissertation establishes fundamental understanding of the characteristics of the additive manufacturing system for spare part supply strategies. This model could directly help the decision-making processes in whether to adopt additive manufacturing technology, and also helps the evaluation of different additive manufacturing strategies when the technology is adopted. Both decisions (adoption and strategies) are made based on cost analysis for spare parts in a broader supply chain