For producers of high-tech equipment, such as ASML, Océ, Vanderlande, IBM and Airbus, the provision of support services to their buyers is becoming ever more important. Nowadays a substantial chunk of their income is generated by maintenance contracts including so-called ‘service level agreements’, whereby the producer is responsible for the maintenance and proper functioning of the equipment.

How rapidly one can get a failing device to start again depends largely on the availability of spare parts. Therefore, inventory control of these parts is becoming increasingly important, and is now a prominent logistics issue which the researchers of Operations, Planning, Accounting, and Control (OPAC) are focusing on as well.

Geert-Jan van Houtum is head of this research group within the Department of IE&IS. He and his colleagues at TU/e were at the cradle of new planning models, which take into account so-called lateral shipments - the dispatch of spare parts between different local warehouses.

“For spare parts ASML has one central warehouse per continent, and a whole series of local warehouses in the vicinity of factories of its customers”, Van Houtum explains. “When one of their machines stops due to a failure, in many cases a spare part is required. If such a part is not available in the nearest warehouse, it is common practice to check whether another warehouse in the region does stock it. In that case the part is available faster than when it needs to come from a central warehouse.”

However, the stock planning did not make allowance for such lateral shipments - between local warehouses, that is. Even though huge cost savings may be realized by strategically distributing the more expensive parts among the local warehouses. Van Houtum and his colleagues calculated that the same service could thus be maintained with lower stocks (and hence lower costs). Or, if formulated in the way companies prefer, with their more state-of-the-art planning models you can provide better service at the same costs.

ASML had hundreds of millions worth of spare parts in stock

“When we started our investigation at ASML in 2002, it had several hundred million euros worth of stocks worldwide”, as Van Houtum underlines the extent of the ‘problem’. “And when a chip machine stands idle, this may cost as much as a hundred thousand euros per hour.” His PhD candidate Bram Kranenburg took stock of the situation at ASML and designed a planning model tailored to the situation of the world’s largest chip machine manufacturer. Which was to their utmost satisfaction, for the effects were spectacular. According to the model the costs for spare parts in the local warehouses could be reduced by thirty percent. After ASML had implemented the new planning in 2006, the actual impact also turned out to be big. “The service has improved enormously and the costs have been reduced by many millions”, says Van Houtum.

The presentation of the bookSpare Parts Inventory Control under System Availability Constraints written by Kranenburg and Van Houtum has been scheduled for Monday September 21 from 16:00 to 18:00 hours in the Paviljoen. Anyone interested can register at Christel van Berlo (eSCF@tue.nl)