Thoughts on Spare Parts Planning for Public Transit
The Covid19 pandemic has placed unusual stress on public transit agencies. This stress forces agencies to look again at their spare parts planning processes, which is a key driver up ensuring uptime and balancing service parts inventory costs.
This blog focuses on bus systems and their practices for spare parts management and planning. However, there are lessons here for other types of public transit, including rail and light rail.
Back in 1995, the Transportation Research Board (TRB) of the National Research Council published a report that still has relevance. System-Specific Spare Bus Ratios: A Synthesis of Transit Practice stated
The purpose of this study was to document and examine the critical site-specific variables that affect the number of spare vehicles that bus systems need to maintain maximum service requirements. … Although transit managers generally acknowledged that right-sizing the fleet actually improves operations and lowers cost, many reported difficulties in achieving and consistently maintaining a 20 percent spare ratio as recommended by FTA… The respondents to the survey advocated that more emphasis be placed on developing improved and innovative bus maintenance techniques, which would assist them in minimizing downtime and improving vehicle availability, ultimately leading to reduced spare vehicles and labor and material costs.
Grossly simplified guidelines like “keep 20% spare buses” are easy to understand and measure but grossly mask more detailed tactics that can provide more tailored policies that better steward taxpayer dollars spent on spare parts while ensuring the highest levels of availability. If operational reliability can be improved for each bus, then fewer spares are needed.
One way to keep each bus up and running more often is to improve the management of inventories of spare parts – specifically by forecasting service parts usage and the required replenishment policies more accurately. Here is where modern supply chain management can make a significant contribution. The TRB noted this in their report:
Many agencies have been successful in limiting reliance on excess spare vehicles. Those transit officials agree that several factors and initiatives have led to their success and are critical to the success of any program [including] … Effective use of advanced technology to manage critical maintenance functions, including the orderly and timely replacement of parts… Failure to have available service parts and other components when they are needed will adversely affect any maintenance program.
As long as managers are cognizant of the issues and vigilant about what tools are available to them, the probability of buses [being] ‘out for no stock’ will greatly diminish.”
Effective spare parts inventory management requires a balance between “having enough” and “having too much.” What modern service parts planning software can do is make visible the tradeoff between these two goals so that transit managers can make fact-based decisions about spare parts inventories.
There are enough complications in finding the right balance to require moving beyond simple rules of thumb such as “keep ten days’ worth of demand on hand” or “reorder when you are down to five units in stock.” Factors that drive these decisions include both the average demand for a part, the volatility of that demand, the average replenishment lead time (which can be a problem when the part arrives by slow boat from Germany), the variability in lead time, and several cost factors: holding costs, ordering costs, and shortage costs (e.g., lost fares, loss of public goodwill).
Innovative supply chain analytics and spare parts planning software uses advanced probabilistic forecasting and stochastic optimization methods to manage these complexities and provide greater parts availability at lower cost. For instance, Minnesota’s Metro Transit documented a 4x increase in return on investment in the first six months of implementing a new system. To read more about how public transit agencies are exploiting innovative supply chain analytics, see:
You know the situation: You work out the best way to manage each inventory item by computing the proper reorder points and replenishment targets, then average demand increases or decreases, or demand volatility changes, or suppliers’ lead times change, or your own costs change.
You may remember the story of Goldilocks from your long-ago youth. Sometimes the porridge was too hot, sometimes it was too cold, but just once it was just right. Now that we are adults, we can translate that fairy tale into a professional principle for inventory planning: There can be too little or too much inventory, and there is some Goldilocks level that is “just right.” This blog is about finding that sweet spot.
Managing the inventory across multiple facilities arrayed in multiple echelons can be a huge challenge for any company. The complexity arises from the interactions among the echelons, with demands at the lower levels bubbling up and any shortages at the higher levels cascading down.
Smart Software VP of Research to Present at Business Analytics Conference, INFORMS 2022
Dr. Tom Willemain to lead INFORMS session “Dominating The Inventory Battlefield: Fighting Randomness With Randomness.”
Belmont, Mass., March 2022 – Smart Software, Inc., provider of industry-leading demand forecasting, planning, and inventory optimization solutions, today announced that Tom Willemain, Vice President for Research, will present at the INFORMS Business Analytics Conference, April 3-5, 2022, in Houston, TX.
Dr. Willemain will present a session on how next-generation analytics arms supply chain leaders in manufacturing, distribution, and MRO with tools to fight against randomness in demand and supply. During his session he will detail the following technologies:
(1) Regime change filtering to maintain data relevance against sudden shifts in the operating environment.
(2) Bootstrapping methods to generate large numbers of realistic demand and lead time scenarios to fuel models.
(3) Discrete event simulations to process the input scenarios and expose the links between management actions and key performance indicators.
(4) Stochastic optimization based on simulation experiments to tune each item for best results.
Without the analytics, inventory owners have two choices: sticking with rigid operating policies usually based on outdated and invalid rules of thumb or resorting to subjective, gut-feel guesswork that may not help and does not scale.
As the leading Business Analytics Conference, INFORMS provides the opportunity to interact with the world’s top forecasting researchers and practitioners. The attendance is large enough so that the best in the field are attracted, yet small enough that you can meet and discuss one-on-one. In addition, the conference features content from leading analytics professionals who share and showcase top analytics applications that save lives, save money, and solve problems.
About Dr. Thomas Willemain
Dr. Thomas Reed Willemain served as an Expert Statistical Consultant to the National Security Agency (NSA) at Ft. Meade, MD, and as a member of the Adjunct Research Staff at an affiliated think-tank, the Institute for Defense Analyses Center for Computing Sciences (IDA/CCS). He is Professor Emeritus of Industrial and Systems Engineering at Rensselaer Polytechnic Institute, having previously held faculty positions at Harvard’s Kennedy School of Government and Massachusetts Institute of Technology. He is also co-founder and Senior Vice President/Research at Smart Software, Inc. He is a member of the Association of Former Intelligence Officers, the Military Operations Research Society, the American Statistical Association, and several other professional organizations. Willemain received the BSE degree (summa cum laude, Phi Beta Kappa) from Princeton University and the MS and Ph.D. degrees from Massachusetts Institute of Technology. His other books include: Statistical Methods for Planners, Emergency Medical Systems Analysis (with R. C. Larson), and 80 articles in peer-reviewed journals on statistics, operations research, health care, and other topics. For more information, email: TomW@SmartCorp.com or visit www.TomWillemain.com.
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 Disney, Arizona Public Service, and Ameren. 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.
SmartForecasts and Smart IP&O have registered trademarks of Smart Software, Inc. All other trademarks are their respective owners’ property.
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 named a Microsoft Co-sell-ready partner
Inventory Optimization and Demand Planning now more accessible to extend Microsoft Dynamics
Belmont, Mass., February 2022 – Smart Software is pleased to announce that it has been named a Microsoft Co-sell-ready partner as a leading demand planning and inventory optimization solutions provider. Microsoft customers leverage Smart’s web-native platform for Inventory Planning and Optimization (Smart IP&O) to develop consensus forecasts, manage demand, and optimize stocking policies.
Co-selling with Microsoft sales teams and Microsoft partners will empower the Smart Software’s team to reach a vast community of Microsoft-managed customers to collaborate on various opportunities. This process includes building demand, sales planning, sharing sales leads, accelerating partner-to-partner empowered selling, and delivering marketplace-led commerce. Smart IP&O leverages field-proven analytics, probabilistic modeling, and the latest advancements in forecasting technology to predict future demand, prescribe optimal stocking policies, and identify opportunities for operational improvement. Users can transfer forecast results, order quantities, and stocking policies to Microsoft Dynamics in a few mouse clicks helping build additional value and extend the life of their Microsoft Solutions.
Greg Hartunian, CEO of Smart Software, stated, “The abilities to dynamically identify discontinuities in demand and supplier lead times, prescribe optimal stocking policies that yield the most profit, and accelerate planning frequency, are especially critical and central in today’s hyper fluid supply chains. As a result, customers leveraging Smart IP&O can effectively wield inventory assets, improve their operations, lower costs, improve customer service, and outperform the competition. We look forward to working closely with Microsoft to help our joint customers achieve these key benefits.
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 Disney, Arizona Public Service, and Ameren. 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.
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 2022
Smart Software President and CEO to present Epicor Insights 2022 Sessions on Creating Competitive Advantage with Smart Inventory Planning and Optimization
Belmont, MA, May, 2022 – Smart Software, Inc., provider of industry-leading demand forecasting, planning, and inventory optimization solutions, today announced that it will present at Epicor Insights 2022.
Greg Hartunian, CEO of Smart Software, will present two sessions and will explain Epicor Smart Inventory Planning and Optimization at this year’s Epicor Insights event in Nashville, TN. Greg will show how to empower planning teams to reduce inventory, improve service levels, and increase operational efficiency.
- The Prophet 21 presentation is scheduled for Wed May 25th, 11:30 am -12:15 pm (CST)
- The Kinetic presentation is scheduled for Wed May 25th, 2:30 pm – 3:20 pm (CST)
If you plan to attend this year, please join us at either session below and learn more about Smart Inventory Planning and Optimization as we highlight valuable features in our solutions. Epicor Insights 2022 will bring together more than 2,000 users of Epicor’s industry-specific ERP solutions for the manufacturing, distribution, and service industries. To learn more, visit INSIGHTS 2022.
Smart Software is an Epicor Platinum Partner and leading provider of demand planning, forecasting, inventory optimization, and analytics solutions. Our web platform, Smart IP&O, leverages probabilistic forecast modeling, machine learning, and collaborative demand planning to optimize inventory levels and increase forecast accuracy. You’ll use Smart IP&O to create accurate forecasts and optimal stocking policies that drive automated ordering in Epicor. The platform includes bi-directional integrations to both Epicor ERP and Prophet 21.
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 Disney, Arizona Public Service, and Ameren. 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.
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
Stay the course
I’ve stood in front of thousands of students. They’ve been more or less young, more or less technical, more or less experienced – and more or less interested. I’ve done this as a university faculty member since 1972, first at Massachusetts Institute of Technology, then at Harvard University, finally in the School of Engineering at Rensselaer Polytechnic Institute. Between Harvard and RPI I dropped out of academia temporarily to co-found Smart Software with Charlie Smart and Nelson Hartunian. So since then, I’ve also been busy training business users to exploit the power of advanced analytics for forecasting and inventory optimization.
As I write this, I’ve just returned to my office at RPI after introducing first-year Industrial Engineering students to the basic concepts of inventory management. If they stick with the program, they will go on to take required courses in supply chain, system simulation, statistical analysis, and optimization. I told them stories about how useful they will be to their companies should they decide to make a career in the world of supply chain. If I’d had more time, I would have mentioned how capable they will be when they graduate relative to many of their corporate peers. These freshmen and ready and willing to stay the course, soaking up all the techniques and theories we can throw at them, and honing their practical skills in summer jobs or coop assignments.
What I didn’t tell them is that many of them will have to work to keep their intensity when they are on the job. It’s a sad truth that, for whatever reason, many inventory practitioners settle into a kind of stasis that impedes their companies’ ability to exploit the latest technologies, such as cloud-based advanced demand forecasting and inventory optimization. Gather enough of such people in one place and agility and improved efficiency go out the window.
I think one of the factors that dulls people is that the process of implementation frequently feels painfully incremental and prolonged. It often begins with a sobering inventory of relevant data, its correctness, and its currency. Then it moves to an often-awkward discovery that there really is no systematic process in place and the subsequent need to design a good one going forward. Next is the need to learn to use a new software suite. That step involves learning new vocabulary, some level of probabilistic thought, an ability to interpret new graphs and tables, not to mention a new software interface. All this takes time and effort.
We’ve found that a few things help new customers stay the course. One is having a champion among management, an executive sponsor, who can vouch for the commercial importance of a successful implementation while ensuring the users are supported with continuing education. A second is identifying and training a super-user or two having unusual combinations of technical and communication skills. A third is breaking the training into bite-sized chunks and testing for comprehension after each chunk and repeating this process until it is clear that the new concepts, vocabulary, and process are fully absorbed. But all those maneuvers will come to naught without management being all-in and ready to stay the course. Inventory planning practices in place for many years are not going to be replaced entirely over a three-month implementation process. You’ve got to want it to get it.
You know the situation: You work out the best way to manage each inventory item by computing the proper reorder points and replenishment targets, then average demand increases or decreases, or demand volatility changes, or suppliers’ lead times change, or your own costs change.
You may remember the story of Goldilocks from your long-ago youth. Sometimes the porridge was too hot, sometimes it was too cold, but just once it was just right. Now that we are adults, we can translate that fairy tale into a professional principle for inventory planning: There can be too little or too much inventory, and there is some Goldilocks level that is “just right.” This blog is about finding that sweet spot.
Managing the inventory across multiple facilities arrayed in multiple echelons can be a huge challenge for any company. The complexity arises from the interactions among the echelons, with demands at the lower levels bubbling up and any shortages at the higher levels cascading down.
