Why Spare Parts Tradeoff Curves are Mission-Critical for Parts Planning
When managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think.
What to do when a statistical forecast doesn’t make sense
Sometimes a statistical forecast just doesn’t make sense. Every forecaster has been there. They may double-check that the data was input correctly or review the model settings but are still left scratching their head over why the forecast looks very unlike the demand history. When the occasional forecast doesn’t make sense, it can erode confidence in the entire statistical forecasting process.
Spare Parts Planning Isn’t as Hard as You Think
When managing service parts, you don’t know what will break and when because part failures are random and sudden. As a result, demand patterns are most often extremely intermittent and lack significant trend or seasonal structure. The number of part-by-location combinations is often in the hundreds of thousands, so it’s not feasible to manually review demand for individual parts. Nevertheless, it is much more straightforward to implement a planning and forecasting system to support spare parts planning than you might think.
The Role of Trust in the Demand Forecasting Process Part 2: What do you Trust
Regardless of how much effort is poured into training forecasters and developing elaborate forecast support systems, decision-makers will either modify or discard the predictions if they do not trust them.”
The Role of Trust in the Demand Forecasting Process Part 1: Who do you Trust
Trust is always a two-way street, but let’s stay on the demand forecaster’s side. What characteristics of and actions by forecasters and demand planners build trust in their work? Key to building trust among the users of forecasts are perceptions of forecaster and demand planner competence and objectivity.
Service-Level-Driven Planning for Service Parts Businesses
Service-Level-Driven Service Parts Planning is a four-step process that extends beyond simplified forecasting and rule-of-thumb safety stocks. It provides service parts planners with data-driven, risk-adjusted decision support.
Implementing Demand Planning and Inventory Optimization Software with the Right Data
Data verification and validation are essential to the success of the implementation of software that performs statistical analysis of data, like Smart IP&O. This article describes the issue and serves as a practical guide to doing the job right, especially for the user of the new application.
7 Digital Transformations for Utilities that will Boost MRO Performance
Utilities in the electrical, natural gas, urban water, and telecommunications fields are all asset-intensive and reliant on physical infrastructure that must be properly maintained, updated, and upgraded over time. Maximizing asset uptime and the reliability of physical infrastructure demands effective inventory management, spare parts forecasting, and supplier management. A utility that executes these processes effectively will outperform its peers, provide better returns for its investors and higher service levels for its customers, while reducing its environmental impact.
Statistical Forecasting: How Automatic method selection works in Smart IP&O
Smart IP&O offers automated statistical forecasting that selects the right forecast method that best forecasts the data. It does this for each time-series in the data set. This blog will help a laymen understand how the forecast methods are chosen automatically
How much time should it take to compute statistical forecasts?
How long should it take for a demand forecast to be computed using statistical methods? This question is often asked by customers and prospects. The answer truly depends. Forecast results for a single item can be computed in the blink of an eye, in as little as a few hundredths of a second, but sometimes they may require as much as five seconds. To understand the differences, it’s important to understand that there is more involved than grinding through the forecast arithmetic itself. Here are six factors that influence the speed of your forecast engine.
6 Do’s and Don’ts for Spare Parts Planning
Managing spare parts inventories can feel impossible. You don’t know what will break and when. Feedback from mechanical departments and maintenance teams is often inaccurate. Planned maintenance schedules are often shifted around, making them anything but “planned.” Usage (i.e., demand) patterns are most often extremely intermittent, i.e., demand jumps randomly between zero and something else, often a surprisingly big number.
Do your statistical forecasts suffer from the wiggle effect?
What is the wiggle effect? It’s when your statistical forecast incorrectly predicts the ups and downs observed in your demand history when there really isn’t a pattern. It’s important to make sure your forecasts don’t wiggle unless there is a real pattern. Here is a transcript from a recent customer where this issue was discussed:
Extend Microsoft 365 F&SC and AX with Smart IP&O
Microsoft Dynamics 365 F&SC and AX can manage replenishment by suggesting what to order and when via reorder point-based inventory policies. A challenge that customers face is that efforts to maintain these levels are very detailed oriented and that the ERP system requires that the user manually specify these reorder points and/or forecasts. In this article, we will review the inventory ordering functionality in AX / D365 F&SC, explain its limitations, and summarize how to reduce inventory, minimize and controlle stockouts.
How to Handle Statistical Forecasts of Zero
A statistical forecast of zero can cause lots of confusion for forecasters, especially when the historical demand is non-zero. Sure, it’s obvious that demand is trending downward, but should it trend to zero?
Probabilistic Forecasting for Intermittent Demand
The New Forecasting Technology derives from Probabilistic Forecasting, a statistical method that accurately forecasts both average product demand per period and customer service level inventory requirements.
Recent Posts
Prepare your spare parts planning for unexpected shocksIn 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. […]
Uncover data facts and improve inventory performanceThe best inventory planning processes rely on statistical analysis to uncover relevant facts about the data. When you have the facts and add your business knowledge, you can make more informed stocking decisions that will generate significant returns. You'll also set proper expectations with internal and external stakeholders, ensuring there are fewer unwelcome surprises. […]
Electric Utilities’ Problems with Spare PartsEvery organization that runs equipment needs spare parts. All of them must cope with issues that are generic no matter what their business. Some of the problems, however, are industry specific. This post discusses one universal problem that manifested in a nuclear plant and one that is especially acute for any electric utility. […]
Correlation vs Causation: Is This Relevant to Your Job?Outside of work, you may have heard the famous dictum “Correlation is not causation.” It may sound like a piece of theoretical fluff that, though involved in a recent Noble Prize in economics, isn’t relevant to your work as a demand planner. Is so, you may be only partially correct. […]
Smart Software Customer, Arizona Public Service to Present at USMA 2023Smart Software CEO and APS Inventory & Logistics Manager to present USMA 2023 Session on APS supply chain transformation project and the role of inventory optimization technology in their new process. […]
Inventory Optimization for Manufacturers, Distributors, and MRO
- Prepare your spare parts planning for unexpected shocksIn 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. […]
- Electric Utilities’ Problems with Spare PartsEvery organization that runs equipment needs spare parts. All of them must cope with issues that are generic no matter what their business. Some of the problems, however, are industry specific. This post discusses one universal problem that manifested in a nuclear plant and one that is especially acute for any electric utility. […]
How to Forecast Spare Parts with Low UsageWhat do you do when you are forecasting an intermittently demanded item, such as a spare part, with an average demand of less than one unit per month? Most of the time, the demand is zero, but the part is significant in a business sense; it can’t be ignored and must be forecasted to be sure you have adequate stock. […]
Spare Parts, Replacement Parts, Rotables, and Aftermarket PartsThose new to the parts planning game are often confused by the many variations in the names of parts. This blog points out distinctions that do or do not have operational significance for someone managing a fleet of spare parts and how those differences impact inventory planning. […]