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In the complex landscape of the supply chain, the spare parts warehouse is often an underestimated but indispensable player. The art of spare parts warehouse organization lies in finding a balance between availability and storage costs – a balancing act that can determine the success or failure of a company.
Spare parts management deals with all process steps that arise in the context of the procurement, storage and management of spare parts within a company:
Effective demand planning
Demand planning focuses on analyzing and forecasting the need for spare parts based on historical data, machine running times and maintenance cycles
Supplier management
Smooth and rapid procurement plays a fundamental role in the availability of spare parts. This includes in particular
Warehouse management
This level focuses on the organization and optimization of stock levels. Digital technologies, such as a warehouse management system, are relevant tools for this, monitoring stock levels in real time and thus ensuring the traceability of spare parts.
Inventory optimization
The term inventory optimization refers to the identification of an appropriate balance between the optimal availability of spare parts and reduced storage costs. Methods such as ABC analysis can be helpful here in order to analyze the inventory structure and identify optimization potential.
An effective spare parts warehouse organization significantly increases the efficiency of warehouse management by reducing both storage costs and the complexity of warehousing. Strategic inventory management also minimizes working capital, as the liquidity that is freed up can be used for other business activities. In addition, an effectively defined inventory strategy can avoid overstocking and minimize warehousing costs. This results in an overall improvement in financial flexibility and a sustained increase in the company’s economic efficiency.
Terms and classifications in detail
The following terms play a central role in the context of spare parts management:
Stock corpses
This term describes spare parts for which there is no current demand and which therefore remain unused in the warehouse for a long time. They therefore make no contribution to operational efficiency, take up valuable storage space and tie up capital. Their storage is therefore unprofitable, which is why a continuous review of the stock and targeted sorting out of essential parts is crucial.
Slow spinner
Slow-moving parts are spare parts that are rarely used. They have a low turnover rate and are required in particular for specialized machines or systems that are used less frequently. They take up space in the warehouse even though demand is very low. It is therefore important to find a balance in order to avoid overstocking and at the same time ensure availability when needed.
Fast mover
This term refers to spare parts that are sold frequently and quickly due to high demand. It is therefore crucial that a sufficient quantity is available to ensure business continuity and reduce downtime. However, demand should also be continuously forecast for fast-moving items so that the risk of overstocking can be counteracted.
Various factors must be taken into account for the optimal spare parts warehouse organization:
Various factors must be taken into account for the optimal spare parts warehouse organization:
Choice of location
The choice of an appropriate location is crucial for fast response times and for optimizing logistics and shipping costs. A strategically sensible location is close to customers, production facilities or central transport connections so that delivery times and transportation costs can be reduced. It is also important to consider the availability of qualified personnel when selecting a location. Regional market conditions and framework conditions can also have a significant influence on the company’s operating costs and flexibility. A suitable location helps companies to act with agility in the event of fluctuations in demand and enables warehouse capacities to be expanded as required, so that customer satisfaction and the company’s competitiveness can be guaranteed.
Operating hours
The operating times of the spare parts warehouse can significantly influence the availability of relevant spare parts. A warehouse that is continuously open can react more quickly to unexpected demand situations and thus counteract downtimes. When determining the operating times, it is therefore important to adapt them to the demand and urgency of the spare parts supply, whereby a suitable balance between personnel costs and operating costs must be identified.
Storage strategy
The warehouse strategy focuses on the optimal storage and management of spare parts. This includes, above all, the strategic placement of parts to enable quick access when required and the selection of the right storage density to make optimum use of the available space. Frequently used strategies include, for example
Storage technology
Modern warehouse technology can have a significant impact on the efficiency of warehousing. This includes, for example, the use of:
Portfolio strategy
An efficient inventory strategy aims to ensure the availability of spare parts and improve the efficiency of warehousing. This requires the use of modern strategies. Proven approaches are as follows:
Spare parts warehouse management relies on a variety of key processes to ensure smooth warehouse operations and increased operational efficiency. Two key approaches in this context are
Spare parts warehouse management relies on a variety of key processes to ensure smooth warehouse operations and increased operational efficiency. Two key approaches in this context are
Express orders: Express orders have the special feature that they have to be processed quickly. Spare parts must be picked, packed and delivered to the customer as quickly as possible. However, this requires a suitable storage location and appropriate shipping methods. The efficient handling of express orders is therefore a key project that proves whether a company can fulfill time-critical requirements quickly and reliably.
Pick & pack principle: This systematic process consists of removing the ordered items from the warehouse (pick) and packing them securely (pack). The implementation of modern technologies such as automatic picking systems, which automatically remove the required items from the warehouse and thus speed up the picking process, as well as precise scanning technologies, which identify and document the spare parts without errors, reduces the error rate. These technologies also shorten processing times.
Quantities, predictability and efficiency
The efficient management of the spare parts warehouse presents companies with numerous challenges that require strategic planning and organization. Relevant challenges include, for example
Spare parts are often available in large quantities, although the differences can be minimal, particularly in terms of size, design and type. This increases the complexity of management and warehousing processes and requires precise classification systems that make warehousing more efficient.
The various spare parts are based on different demand frequencies and quantities, which have variable lead times. This makes it difficult to plan requirements, as companies need to procure frequently requested parts quickly and keep rarely needed spare parts in stock. This means that unexpected bottlenecks can be prevented at any time.
Spare parts are usually required due to machine or system downtimes. Missing parts result in expensive downtimes and significant downtime costs. A high service level is therefore a relevant process step that ensures that operational processes are maintained and the effects of potential failures are minimized. This primarily includes a high level of operational readiness of the company so that it can react quickly to special requirements and process orders efficiently.
Spare parts management is usually positioned as an interface between the purchasing, warehouse and maintenance departments, which can lead to unclear responsibilities and communication problems.
In most cases, the master data is only incompletely maintained; usually only the initial maintenance of the master data is available. Updating data is a demanding process that requires regular monitoring in order to ensure transparency in the warehouse and avoid incorrect information.
The market for purchasing spare parts is diverse and is based on a wide variety of sources such as C-parts, dealers and OEMs (Original Equipment Manufacturers). Each of these sources has its own lead times for standard parts and procurement conditions, which significantly increases the complexity of spare parts procurement and planning. If there are special requirements, custom-made parts usually have to be produced.
Parts that are subject to infrequent or irregular demand take up space and tie up capital, even though they are only required sporadically. This unnecessarily increases storage costs and reduces the efficient use of resources.
Due to highly variable demand, forecasting demand can be very complex. Inadequate planning could lead to overstocking or bottlenecks, which can significantly increase costs.
Strategies for an effective spare parts warehouse organization
An efficient spare parts warehouse organization requires the integration of strategic measures and technologies aimed at both the efficiency of warehousing and the cost control and availability of spare parts. Central approaches are
Man-to-goods: In this approach, staff are guided to the goods, which reduces travel time. This process is particularly suitable for high order quantities or a high throughput of orders. Manual picking means that the shelves usually have to be kept very low, making handling easier for staff. To ensure efficient storage capacity, it makes sense to divide the warehouse into several levels. Furthermore, the implementation of flow racks, which are responsible for the continuous replenishment of goods, and dynamic picking racks, which adapt optimally to demand, would be recommended. These systems ensure optimized access to spare parts and therefore a faster picking process.
Goods-to-man: With this method, the goods are delivered directly to the picker using automated systems such as miniload systems or container conveyor systems. This significantly reduces the distance employees have to walk as well as the physical strain. This process is efficient for smaller order quantities or orders that require a high level of accuracy, as the probability of errors is relatively low.
Warehouse management systems (WMS): Warehouse management systems can track stock levels in real time and automate processes such as the receipt, storage and management of goods. On the basis of suitable analysis and reporting tools, they can identify bottlenecks at an early stage and make optimum use of warehouse capacity.
Cross-docking: This process focuses on the direct transportation of goods from goods receipt to goods issue without them being recorded in the warehouse stock. This reduces storage time, the use of storage space and therefore storage costs. It also speeds up the processing time. The direct transfer of goods also reduces potential stock errors or damage.
In addition to these proven strategies, we recommend the following steps for an optimal spare parts warehouse organization:
Trained staff
Qualified personnel who are familiar with the specific requirements of spare parts picking and the optimal warehouse management strategies can have a significant impact on the efficiency of the processes. Appropriate training and further education are crucial for this, informing employees about the latest technologies, changes and procedures.
Effective parking space reorganization
A strategic arrangement of shelves and storage areas contributes significantly to the efficient use of available space, which allows the warehouse organization to be significantly optimized. This includes, in particular, differentiating between the frequency and criticality of spare parts. Optimum storage space reorganization thus enables maximum utilization of space capacities and less time spent by employees on retrieving spare parts.
Creating transparency & streamlining the portfolio
The basis of efficient warehouse management is comprehensive transparency of all available spare parts in the warehouse. This means that all items in the warehouse must be identified. In addition, all their movements should be traceable. This enables optimal planning, as precise inventory data is available and shortages or excess stock can be identified and avoided. To ensure transparency, it makes sense to use warehouse management systems (WMS), as these provide real-time information on stock levels, storage locations and item availability. Subsequently, a comprehensive inventory adjustment helps to prevent unnecessary storage costs by selling or scrapping spare parts that have no relevant future demand or too low a criticality. A crucial step is to analyze which spare part would most likely have a negative impact on system availability if it were missing. This method ensures that only the relevant and critical spare parts are kept in stock so that storage costs can be reduced.
Conception of the spare parts warehouse
In order to benefit from maximized efficiency of your warehouse processes and optimal use of storage space, you should plan your spare parts warehouse in detail, including storage capacity and technology. To do this, you need to identify the appropriate picking method that specifically fits your operational requirements and circumstances. Factors that should be taken into account when choosing include the volume and type of spare parts stored, the order frequency and the space and personnel resources available.
Individual portfolio strategies
In a further step, a specific inventory strategy should be developed for the various types of spare parts. This includes
Process optimization and interface management
Optimizing the processes between the areas of purchasing, warehousing and maintenance is crucial for the effectiveness of the entire supply chain. The focus here should be on the following aspects:
Reporting
Automated reporting systems continuously monitor cost and service KPIs, ensuring timely control and adjustment of warehouse processes. This allows costs to be monitored at all times and ensures rapid responses to problem situations or changes.
A tailor-made strategy for your spare parts warehouse organization is fundamental to your operational efficiency and customer satisfaction. In order to find the method that is specifically suitable for your company, the first step is a detailed analysis of your current warehouse processes and structures. To do this, you should take into account the size of the warehouse, your product variety, the order volume and the requirements of your industry. On the basis of a comprehensive inventory, the quality of your warehouse data can be optimized and clear responsibilities defined. You should always ensure that all relevant areas, such as purchasing, warehouse and maintenance, are included in the planning process to ensure smooth communication and collaboration. Test different approaches, such as the man-to-goods principle, or simulate different scenarios to determine the strategy that suits you best. Continuously monitor the results of your strategies to identify potential optimizations and make adjustments.
valantic is at your side with detailed end-to-end consulting and supports you in finding and implementing the optimal solution for your company. Find out more about our services in the area of inventory management.
Gereon Küpper
Partner
valantic
Dennis Goetjes
Partner
valantic