Prepare your spare parts planning for unexpected shocks

Did you know that it was Benjamin Franklin who invented the lightning rod to protect buildings from lightning strikes? Now, it’s not every day that we must worry about lightning strikes, but in today’s unpredictable business climate, we do have to worry about supply chain disruptions, long lead times, rising interest rates, and volatile demand. With all these challenges, it’s never been more vital for organizations to accurately forecast parts usage, stocking levels, and to optimize replenishment policies such as reorder points, safety stocks, and order quantities.  In this blog, we’ll explore how companies can leverage innovative solutions like inventory optimization and parts forecasting software that utilize machine learning algorithms, probabilistic forecasting, and analytics to stay ahead of the curve and protect their supply chains from unexpected shocks.

Spare Parts Planning Solutions
Spare parts optimization is a key aspect of supply chain management for many industries. It involves managing the inventory of spare parts to ensure they are available when needed without having excess inventory that can tie up capital and space. Optimizing spare parts inventory is a complex process that requires a deep understanding of usage patterns, supplier lead times, and the criticality of each part for the business.

In this blog, our primary emphasis will be on the crucial aspect of inventory optimization and demand forecasting. However, other approaches highlighted below for spare parts optimization, such as predictive maintenance and 3D printing, Master Data Management, and collaborative planning should be investigated and deployed as appropriate.

  1. Predictive Maintenance: Using predictive analytics to anticipate when a part is likely to fail and proactively replace it, rather than waiting for it to break down. This approach can help companies reduce downtime and maintenance costs, as well as improve overall equipment effectiveness.
  2. 3D printing: Advancements in 3D printing technology are enabling companies to produce spare parts on demand, reducing the need for excess inventory. This not only saves space and reduces costs but also ensures that parts are available when needed.
  3. Master Data Management: Data Management platforms ensure that part data is properly identified, cataloged, cleansed, and organized. All too often, MRO organizations hold the same part number under different SKUs. These duplicate parts serve the same purpose but require different SKU numbers to ensure regulatory compliance or security.  For example, a part used to support a government contract may be required be sourced from a US manufacturer to stay in compliance with “Buy America” regulations.  It’s critical that these part numbers be identified and consolidated into one SKU, when possible, to keep inventory investments in check.
  4. Collaborative Planning: Collaborating with suppliers and customers to share data, forecasts, and plan demand can help companies reduce lead times, improve accuracy, and reduce inventory levels. Forecasting plays an essential role in collaboration as sharing insights on purchases, demand, and buying behavior ensures suppliers have the information they need to ensure stock availability for customers.

Inventory Optimization
Abraham Lincoln was once quoted as saying, “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe”? Lincoln knew that preparation and optimization were key to success, just like organizations need to have the right tools, such as inventory optimization software, to optimize their supply chain and stay ahead in the market. With inventory optimization software, organizations can improve their forecasting accuracy, lower inventory costs, improve service levels, and reduce lead times. Lincoln knew that sharpening the axe was necessary to accomplish the job effectively without overexerting.  Inventory Optimization ensures that inventory dollars are allocated effectively across thousands of parts helping ensure service levels while minimizing excess stock.

Spare parts play a decisive role in maintaining operational efficiency, and the lack of critical parts can lead to downtime and reduced productivity. The sporadic nature of spare parts demand makes it difficult to predict when a specific part will be required, resulting in the risk of overstocking or understocking, both of which can incur costs for the organization.  Additionally, managing lead times for spare parts poses its own set of challenges. Some parts may have lengthy delivery times, necessitating the maintenance of adequate inventory levels to avoid shortages. However, carrying excess inventory can be costly, tying up capital and storage space.

Given the myriad of challenges facing materials management departments and spare parts planners, planning demand, stocking levels, and replenishment of spare parts without an effective inventory optimization solution is akin to attempting to chop down a tree with a very blunt axe! The sharper the axe, the better your organization will be able to contend with these challenges.

Smart Software’s Axe is the Sharpest
Smart Inventory Optimization and Demand Planning Software uses a unique empirical probabilistic forecasting approach that results in accurate forecasts of inventory requirements, even where demand is intermittent. Since nearly 90% of spare and service parts are intermittent, an accurate solution to handle this type of demand is required.   Smart’s solution was patented in 2001 and additional innovations were recently patented in May of 2023 (announcements coming soon!).  The solution was awarded as a finalist in the APICS Technological Innovation Category for its role in helping transform the resource management industry.

The Role of Intermittent Demand
Intermittent demand does not conform to a simple normal or bell-shaped distribution that makes it impossible to forecast accurately with traditional, smoothing-based forecasting methods.  Parts and items with intermittent demand – also known as lumpy, volatile, variable or unpredictable demand – have many zero or low-volume values interspersed with random spikes of demand that are often many times larger than the average. This problem is especially prevalent in companies that manage large inventories of service and spare parts in industries such as aviation, aerospace, power and water supply and utilities, automotive, heavy asset management, high tech, as well as in MRO (Maintenance, Repair, and Overhaul).

Scenario Analysis
Smart’s patented and award-winning technology rapidly generates tens of thousands of possible scenarios of future demand sequences and cumulative demand values over an item’s lead time. These scenarios are statistically similar to the item’s observed data, and they capture the relevant details of intermittent demand without relying on the assumptions commonly made about the nature of demand distributions by traditional forecasting methods. The result is a highly accurate forecast of the entire distribution of cumulative demand over an item’s lead time. The bottom line is that with the information these demand distributions provide, companies can easily plan safety stock and service level inventory requirements for thousands of intermittently demanded items with nearly 100% accuracy.

Benefits
Implementing innovative solutions from Smart Software such as SmartForecasts for statistical forecasting, Demand Planner for consensus parts planning, and Inventory Optimization for developing accurate replenishment drivers such as min/max and safety stock levels will provide forward-thinking executives and planners with better control over their organization’s operations.  It will result in the following benefits:

  1. Improved Forecasting Accuracy: Accurate demand forecasting is fundamental for any organization that deals with spare parts inventory management. Inventory optimization software uses sophisticated algorithms to analyze historical usage patterns, identify trends and forecast future demand with a high degree of accuracy. With this level of precision in forecasting, organizations can avoid the risk of overstocking or understocking their spare parts inventory.
  2. Lower Inventory Costs: One major challenge that supply chain leaders face when dealing with spare parts inventory management is the cost associated with maintaining an optimal stock of spares at all times. By optimizing inventory levels using modern technology systems like artificial intelligence (AI), machine learning (ML), and predictive analytics, organizations can reduce carrying costs while ensuring they have adequate stocks available when needed.
  3. Improved Service Levels: When it comes to repair and maintenance services, time is money! Downtime due to the unavailability of critical spare parts can result in lost productivity and revenue for businesses across industries such as manufacturing plants, power generation facilities, or data centers managing IT infrastructure equipment. Optimizing your spare parts inventory ensures that you always have the right amount on hand, reducing downtime caused by waiting for deliveries from suppliers.
  4. Reduced Lead Times: Another benefit that accrues from accurate demand forecasting through modern warehouse technologies is reduced lead time in delivery which leads to better customer satisfaction since customers will receive their orders faster than before thus improving brand loyalty. Therefore, the adoption of new strategies driven by AI/ML tools creates value within supply chain operations leading to increased efficiency gains not only limited reductionism cost but also streamlining processes related to production scheduling, logistics transportation planning among others

Conclusion
Through the utilization of inventory optimization and demand planning software, organizations can overcome various challenges such as supply chain disruptions, rising interest rates, and volatile demand. This enables them to reduce costs associated with excess storage space and obsolete inventory items. By leveraging sophisticated algorithms, inventory optimization software enhances forecasting accuracy, ensuring organizations can avoid overstocking or under-stocking their spare parts inventory. Additionally, it helps lower inventory costs by optimizing levels and leveraging technologies like artificial intelligence (AI), machine learning (ML), and predictive analytics. Improved service levels are achieved as organizations have the right quantity of spare parts readily available, reducing downtime caused by waiting for deliveries. Furthermore, accurate demand forecasting leads to reduced lead times, enhancing customer satisfaction and fostering brand loyalty. Adopting such strategies driven by AI/ML tools not only reduces costs but also streamlines processes, including production scheduling and logistics transportation planning, ultimately increasing efficiency gains within the supply chain.

 

White Paper:

What you Need to know about Forecasting and Planning Service Parts

 

This paper describes Smart Software’s patented methodology for forecasting demand, safety stocks, and reorder points on items such as service parts and components with intermittent demand, and provides several examples of customer success.

 

    Smart Software Customer, Arizona Public Service to Present at USMA 2023

    Belmont, MA, – Smart Software, Inc., provider of industry-leading demand forecasting, planning, and inventory optimization solutions, today announced that its customer, Arizona Public Service (APS) will present at USMA 2023.

    Joseph Neuheisel, Inventory & Logistics Manager at APS, will lead the session at USMA 2023. The presentation will focus on how APS implemented Smart Inventory Planning and Optimization (Smart IP&O) as part of the company’s strategic supply chain optimization initiative. Mr. Neuheisel will detail their prior process, implementation, challenges they faced, results, and lessons learned. Smart IP&O was implemented in just 90 days and now enables APS to optimize its reorder points and order quantities for over 250,000 spare parts helping to reduce inventory and maintain service levels.

     

    The Utility Supply Management Alliance  (USMA )
    The USMA is a multi-national association of individuals serving the electric, gas, and water utilities. With deregulation and re-regulation of the Electric and Gas Utilities industries, the demands of the customer are also changing, making it necessary for the Electric and Gas Utilities to pay significant attention to cost and competition. The supply chain for material and equipment services has a significant impact on the cost of electricity and gas. Hence there are great opportunities to contribute to the bottom line through reduced cost as a result of improved reorganization and management of the supply chain process. The role of the USMA is to understand the sophisticated workings of the supply chain to provide its customers (utilities, suppliers, manufacturers, etc.) with skills and tools to realize profit opportunities in the supply chain. These skills and tools will be provided to the USMA customer through workshops at its annual conference.

     

    About Smart Software, Inc.
    Founded in 1981, Smart Software, Inc. is a leader in providing businesses with enterprise-wide demand forecasting, planning, and inventory optimization solutions.  Smart Software’s demand forecasting and inventory optimization solutions have helped thousands of users worldwide, including customers such as Otis Elevator, Hitachi, Arizona Public Service, Ameren, and The American Red Cross.  Smart’s Inventory Planning & Optimization Platform, Smart IP&O gives demand planners the tools to handle sales seasonality, promotions, new and aging products, multi-dimensional hierarchies, and intermittently demanded service parts and capital goods items.  It also provides inventory managers with accurate estimates of the optimal inventory and safety stock required to meet future orders and achieve desired service levels.  Smart Software is headquartered in Belmont, Massachusetts, and our website is www.smartcorp.com.

     

    For more information, please contact Smart Software, Inc., Four Hill Road, Belmont, MA 02478.
    Phone: 1-800-SMART-99 (800-762-7899); FAX: 1-617-489-2748; E-mail: info@smartcorp.com

     

     

    Smart Software to Present at Epicor Insights 2023

    Smart Software to present Epicor Insights 2023 sessions on how to extend Epicor forecasting and inventory planning with Smart IP&O

    Belmont, MA, May 2023 – Smart Software, Inc., provider of industry-leading demand forecasting, planning, and inventory optimization solutions, today announced that it will present at Epicor Insights 2023 in Las Vegas, NV.

    Smart Software will lead two sessions focusing on specific approaches to demand forecasting and inventory planning that enable Epicor Kinetic and Epicor Prophet 21 users to increase profitability, improve service levels, and reduce inventory holding costs.  A third customer led session will profile how the use of The Smart IP&O Inventory Planning and Optimization platform drove substantial reductions in stockouts for a leading automotive mobility manufacturer.

    Epicor Insight’s attendees may participate in any of the following sessions and are welcome to visit us at the Smart Software booth for a one-on-one consultation.

     

    • The Prophet 21 presentation is scheduled for Tuesday, May 16th, 1:20 pm (CST) 

    Extend Prophet 21’s Forecasting & Inventory Planning with Smart IP&O

     

    • The Kinetic presentation is scheduled for Tuesday, May 16th, 2:25 pm (CST) 

    Extend Your Kinetic Forecasting and Inventory Planning with Smart IP&O

     

    • The Customer Led presentation is scheduled for Wednesday May 17th, 2:20 pm (CST) 

    Customer-Led Optimizing Critical Parts Inventory Using Smart Inventory Solutions

     

    To learn more about Epicor Insights, visit here: https://www.epicor.com/en-us/customers/insights

     

    About Smart Software, Inc.
    Founded in 1981, Smart Software, Inc. is a leader in providing businesses with enterprise-wide demand forecasting, planning, and inventory optimization solutions.  Smart Software’s demand forecasting and inventory optimization solutions have helped thousands of users worldwide, including customers such as Otis Elevator, Hitachi, Arizona Public Service, Ameren, and The American Red Cross.  Smart’s Inventory Planning & Optimization Platform, Smart IP&O gives demand planners the tools to handle sales seasonality, promotions, new and aging products, multi-dimensional hierarchies, and intermittently demanded service parts and capital goods items.  It also provides inventory managers with accurate estimates of the optimal inventory and safety stock required to meet future orders and achieve desired service levels.  Smart Software is headquartered in Belmont, Massachusetts, and our website is www.smartcorp.com.

     


    For more information, please contact Smart Software, Inc., Four Hill Road, Belmont, MA 02478.
    Phone: 1-800-SMART-99 (800-762-7899); FAX: 1-617-489-2748; E-mail: info@smartcorp.com

     

     

    Smart Software and Optimum Consulting Announce Strategic Partnership

    Belmont, Mass., May 2023 – Smart Software, Inventory optimization, demand planning, and forecasting software leader, and Optimum Consulting, today announced their partnership to address the supply chain planning needs of the Manufacturing, Wholesale, and Retail industries in Australia and New Zealand. Optimum Consulting will sell and deploy Smart’s next-generation cloud platform, Smart Inventory Planning & Optimization (Smart IP&O™), as an integral part of its Sales, Operations, and Inventory Planning (SIOP) practice.

    Smart Software is a Microsoft Co-sell-ready partner and, over the years, has created a flawless connector to integrate tools with Microsoft Dynamics. The integration brings the cloud-based Smart IP&O (Inventory Planning and Optimization) into the latest version of Microsoft Dynamic solution. By seamlessly integrating strategic planning in Smart IP&O with operational execution in Dynamics, business users can continuously predict, respond, and plan more effectively in today’s uncertain business environment. Smart’s unique approach to planning intermittent demand is especially impactful for public utilities and transit agencies, given the prevalence of spare parts with highly sporadic, seemingly unforecastable usage.

    Optimum Consulting is a Microsoft Dynamics 365 Solutions Partner who is totally committed to the Manufacturing, Wholesale, and Retail industries in Australia and New Zealand. The Team’s experts help clients build agile operating models, drive business process improvements, and turn customers into advocates by delivering end-to-end Microsoft Dynamics 365, Microsoft Power Apps, Business Intelligence & Analytics, and Managed Services Solutions.

    “Smart Software helps our customers by delivering insightful business analytics for inventory modeling and forecasting that drive ordering and replenishment in the latest version of Microsoft Dynamics. With Smart IP&O, our customers gain a means to shape inventory strategy to align with the business objectives while empowering their planning teams to reduce inventory and improve service,” says  Matthew Lingard, CEO at  Optimum Consulting

    “Maximizing the benefits our solutions can provide requires the expertise and perspective to consider requirements, set goals, and to develop the supporting business process that ensures adoption and benefits. These are the qualities that The New Partner brings to the table and we look forward to our joint success,”…. says Greg Hartunian, President, and CEO at Smart Software

     

    About Smart Software, Inc.

    Founded in 1981, Smart Software, Inc. is a leader in providing businesses with enterprise-wide demand forecasting, planning and inventory optimization solutions.  Smart Software’s demand forecasting and inventory optimization solutions have helped thousands of users worldwide, including customers at mid-market enterprises and Fortune 500 companies, such as Otis Elevator, Mitsubishi, Siemens, Disney, FedEx, MARS, and The Home Depot.  Smart Inventory Planning & Optimization gives demand planners the tools to handle sales seasonality, promotions, new and aging products, multi-dimensional hierarchies, and intermittently demanded service parts and capital goods items.  It also provides inventory managers with accurate estimates of the optimal inventory and safety stock required to meet future orders and achieve desired service levels.  Smart Software is headquartered in Belmont, Massachusetts and can be found on the World Wide Web at www.smartcorp.com.

     

    About the Partner, Inc.

    Optimum Consulting is a Microsoft Dynamics 365 Solutions Partner who is totally committed to the Manufacturing, Wholesale, and Retail industries in Australia and New Zealand. The Team’s experts help clients build agile operating models, drive business process improvements, and turn customers into advocates by delivering end-to-end Microsoft Dynamics 365, Microsoft Power Apps, Business Intelligence & Analytics, and Managed Services Solutions. The Team’s functional expertise covers eCommerce, Retail, Pricing & Promotions, Customer Data Platform, Customer Journey Mapping, Customer Experience, Forecasting & Master Planning, Advanced Warehouse, and Production Planning.  Optimum Consulting’s technical capabilities span across Commerce Design and Development, Commerce Server, Point of Sale (POS) Development, Finance and Supply Chain Management (SCM) Development, Artificial Intelligence (AI) and Machine Learning (ML), Data Warehouse and Data Lake, and related Microsoft Cloud solutions.

     

     


    For more information, please contact Smart Software, Inc., Four Hill Road, Belmont, MA 02478.
    Phone: 1-800-SMART-99 (800-762-7899); FAX: 1-617-489-2748; E-mail: info@smartcorp.com

     

     

    How to Select the Right Forecasting Method with Epicor Smart IPO

    Smart Software is pleased to introduce our new series of educational webinars, offered exclusively for Epicor Users. In this webinar, Erik Subatis, Enterprise Solution Engineer at Smart Software, will reveal the statistical models Epicor Smart IP&O uses to forecast and how the automatic “best pick” system works. While automatic modeling is invaluable for large-scale forecasting, occasionally, these forecasts don’t reflect our expectations and/or business knowledge. Understanding how and when to override the model selection can be a valuable tool in a forecaster’s toolbox. Finally, the presentation will conclude by showing how to increase profitability with software-enhanced inventory planning processes in a Live Demo.

    Attending this webinar, you will learn about the statistical models Smart IP&O uses to forecast and how to catch the exceptions so you can make the most of your forecasting tool.

    WEBINAR REGISTRATION FORM

     

    Please register to attend the webinar. If you are interested but not cannot attend, please register anyway – we will record our session and will send you a link to the replay.

    We hope you will be able to join us!

     

    SmartForecasts and Smart IP&O are registered trademarks of Smart Software, Inc.  All other trademarks are the property of their respective owners.


    For more information, please contact Smart Software,Inc., Four Hill Road, Belmont, MA 02478.
    Phone: 1-800-SMART-99 (800-762-7899); E-mail: info@smartcorp.com