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Optimize logistics & warehouse management

Spare parts warehouse organization

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.

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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

  • the selection of reliable suppliers
  • negotiating suitable delivery conditions
  • ensuring timely deliveries

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.

Efficient spare parts management

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.

Fundamental factors for effective management of your spare parts warehouse

Various factors must be taken into account for the optimal spare parts warehouse organization:

Basic factors for effective management of your spare parts warehouse

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

  • ABC analysis: this strategy classifies spare parts based on their relevance and urgency. The so-called A-parts comprise only a small part of the stock, but bear the largest share of responsibility for overall costs and consumption. Continuous monitoring and stock control are crucial here in order to guarantee the availability of parts at all times. B-parts are an intermediate category that are not as critical as A-parts, but their availability is important to avoid bottlenecks. Therefore, their monitoring should be regular but less intensive. C-parts make up the largest part of the inventory, but have little impact on overall costs and consumption. Due to the relatively low inventory costs, less stringent monitoring is sufficient here.
  • Just-in-time (JIT): This strategy avoids the storage of large quantities by aiming to procure spare parts at the time they are needed. This results in reduced storage costs and a lower capital commitment, but also requires precise coordination with suppliers and an optimized and reliable supply chain.
  • First-In-First-Out (FIFO): This approach is particularly suitable for spare parts with a limited shelf life or for further technical developments, as the use of the oldest stocks is prioritized here so that the obsolescence or wastage of spare parts can be prevented.

Storage technology

Modern warehouse technology can have a significant impact on the efficiency of warehousing. This includes, for example, the use of:

  • MDE devices (mobile data collection devices): These devices can record and manage inventory data in real time, helping with speedy and error-free picking and inventory control.
  • Warehouse lifts: Warehouse lifts make efficient use of vertical space by stacking shelves upwards. This reduces space requirements and maximizes storage capacity. The systems have an integrated elevator that quickly brings the spare parts that are needed to the removal opening. By transporting the stored items directly to the operator, quick access to the required spare parts is guaranteed and access times are efficiently reduced.
  • Dispensing machines: These systems are particularly suitable for dispensing spare parts that are frequently required, as they allow for fully automated and controlled dispensing. This ensures that spare parts are always available when needed and significantly reduces the administrative burden by automating inventory management. Furthermore, they can track the material flow precisely as every access to the required parts is documented.

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:

  • Vendor Managed Inventory (VMI): In this process, the supplier manages the customer’s inventory by directly accessing all inventory data and accordingly replenishing spare parts. This process significantly reduces the customer’s administrative burden and improves the efficiency of the supply chain.
  • Automated replenishment: This strategy relies on modern software solutions that can create demand forecasts based on predefined rules and algorithms and use them to order spare parts. This avoids human error, resulting in smooth supply and effective inventory management.

Key components of spare parts management

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

Key components of spare parts management

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.

Challenges of the spare parts warehouse organization

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

Identify & implement optimization potential

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

Picking techniques

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.

Modern technologies

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:

  1. 1

    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.

  2. 2

    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.

  3. 3

    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.

  4. 4

    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.

  5. 5

    Individual portfolio strategies

    In a further step, a specific inventory strategy should be developed for the various types of spare parts. This includes

    1. the definition and adjustment of inventory parameters
    2. the implementation of automated disposition systems
    3. the dynamization of inventory parameters
    4. the use of consignment warehouses and Vendor Managed Inventory (VMI)
  6. 6

    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:

    1. Improvement of demand planning and supply processes
    2. Effective handling of returns & refurbishment processes
    3. Improvement of relevant warehouse processes such as incoming and outgoing goods, stock transfers and inventories, etc.
  7. 7

    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.

Individual approaches

How to find the right method for you

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.

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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.

Your contact persons

Gereon Küpper, valantic

Gereon Küpper

Partner

valantic

+49 211 56 38 75 - 42

  • Supply chain optimization
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Dennis Goetjes

Dennis Goetjes

Partner

valantic

+49 211 563875-50

  • Supply Chain Management
  • Sales & Operations Planning
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