i2 Service Parts Planner,™ part of i2 Service Parts Management™ is a web-based planning solution designed to
manage spare parts inventories. i2 Service Parts Planner can forecast demand for spare parts based on historical
data and equipment usage and failure rates, set parts target inventory levels, and generate replenishment plans
that consider the forecast for repairable and returned parts while considering alternate parts. i2 Service Parts
Planner can utilize logic specific to the service industry to optimize distribution of service parts and asset uptime.
Whether maintaining production equipment, servicing
equipment sold to customers, or providing aftermarket
spare parts sales, effective support requires having
the right parts on hand in the right location to meet
the demand for spare parts as it occurs. Typically,
planners deal with uncertainties in demand by the
costly approach of maintaining high parts inventories.
Despite this approach, stock-outs of mission-critical
parts still occur.
In large, complex service networks, manual systems or
simple parts ordering schemes in enterprise resource
planning (ERP) simply cannot deal effectively with the
large combinations of parts and stocking locations.
This complexity requires good spares forecasting,
inventory planning, and replenishment planning
capabilities that are focused on determining the
right quantities of the right parts to store in the
right locations.
i2 Service Parts Planner can enable companies to:
Model complex service chains more accurately
Improve forecast accuracy with methods tailored
for the service industry
Minimize inventory required to meet customer
service targets
Manage large volumes of parts efficiently through
exception-based reporting
i2 Service Parts Management is a web-based solution that can enable enterprises to maximize the utilization
of parts, financial resources, and facilities so that businesses can attain key performance objectives such as high
customer service, low operating costs, increased profitability, and market leadership.
Model complex service chains accurately
Many planning tools available today can only support
the simple situation of a single stocking location.
This is inadequate for large service organizations
with multiple stocking locations and a complex
supply network for parts. For example, there may
be a centralized warehouse, regional warehouses,
and field locations as shown in Figure 1. Planners
need to make intelligent decisions about where to
stock parts and in what quantities. In the case shown
in Figure 1, non-critical, slow-moving parts can be
stocked centrally, but critical parts may need to be
stocked in the field for immediate access. Often parts
need to be stored at multiple levels in the network.
i2 Service Parts Planner was designed for such complex
situations in which both central stocking and theater or
regional planning must be handled. Moreover, visibility
of inventories can make it possible to plan transfers of
parts from over-stocked locations to under-stocked ones
thereby reducing the need for new inventory purchases.
Another important element of modeling parts networks is
the ability to represent reverse logistics flows, including
the return of working equipment and parts as well as
parts requiring repair. i2 Service Parts Planner can allow
users to model these flows, including expected transit
times, repair times, and probabilities that returned parts
will be repairable.
While many industries process returns at a single tier
of repair centers, some industries, such as aerospace
and defense, are far more complex. In these industries,
locations for repair depend on the repair type and are
designated RTS (repairable this station) and NRTS (not
repairable this station). Station in these cases refers to
the repair center location. i2 Service Parts Planner has
been designed to have the flexibility to model complex
multi-echelon repair networks.
Modeling the network is not the only critical aspect.
Shipment and receiving calendars dictate when shipments
are planned to leave vendor distribution facilities
or arrive at receiving locations. Holiday calendars ensure
that these planned shipments do not coincide with days
when locations are closed.
i2 Service Parts Planner can recognize the mapping
between multiple vendor part numbers (VPN) and
so-called national stock numbers (NSN). Various
inputs for replenishment planning obtained at VPN/NSN
levels are aggregated to NSN levels. Final purchase
orders, however, can be issued by VPN according to
a user-defined priority.
Improve forecast accuracy
Uncertainty about the demand for a part is a primary
cause of inventory imbalances resulting in poor
customer service. Hence, forecast accuracy is
important. Demand forecasting for service parts
is complicated and requires different algorithms
than those utilized in manufacturing and distribution
forecasting. i2 Service Parts Planner can apply a
variety of statistical and causal based forecasting
methods (see “Key Features” section for specific
algorithms) to generate parts forecasts.
Many service parts are slow-moving parts and it is
not unusual to see demand values of less than one
unit over a time period. Since planners cannot order
fractions of parts, i2 Service Parts Planner is designed
to use a technique called “carry-forward rounding” to
convert the forecast numbers to true integer values
while remaining true to the original demand quantities.
In order to simplify the forecasting process for users
who are unsure of the most appropriate technique for a
given set of demands, a qualifier algorithm can propose
one that best fits the type of demand history.
i2 Service Parts Planner is designed to include the
ability to set parameters that qualify outliers in
historical data. By ignoring data points that were
caused by non-recurring events, the algorithm can
generate a more accurate forecast.
i2 Service Parts Planner can also develop forecasts
using installed base, and causal events.
Minimize inventory levels required to meet customer service targets
Improve accuracy of stock-level calculations to meet customer service targets
i2’s Part Criticality Planning Logic™ is a planning
approach that is designed to recognize part reliability
and criticality for end-equipment availability. This
approach can provide advanced planning capabilities,
much more than simple ABC/re-order point and
distribution requirements planning. This logic and the
criticality matrix (see Figure 2) can allow planners to
classify parts based on criticality and probability of
failure (failure rates or historical useage).
The criticality matrix has an added dimension: the
ability to consider the location or geography in the
planning equation (see Figure 3). This can permit
planners to make probability of failure or usage as well
as criticality a function of location. For example, cooling
units may be more likely to fail in regions with hotter climates. Moreover, they are also likely to be considered
more critical to be fixed in hotter climates than in
regions with cooler climates.
i2 Service Parts Planner can compute the “exchange
curve” of service level (probability that the part will
be in stock when needed at that location) versus the
inventory of part stocked. Primary inputs for this
calculation are:
Predicted demand and variability of demand
Lead times and variability of lead times needed
to obtain parts
Part criticality
Based on the service level objective set for the part in
the criticality matrix, i2 Service Parts Planner can
compute the desired stocking level. For small demands,
it can use the Poisson distribution to model demand, in
order to improve accuracy over the normal distribution.
Determine accurate replenishment plans
i2 Service Parts Planner can provide an integrated
environment for building accurate, time-phased,
replenishment plans based on the forecast input and
inventory data.
The tool is designed to take into consideration stocking
policies based on customer service levels and financial
objectives. It can also track the movement of inventory.
In building these plans, the software looks at returned and/or repairable items (with repair lead times and
yield rates) as a primary source of supply and can
account for other special factors such as lot size, freeze
periods, and shutdown periods. It also can consider
the impact of planning for different lifecycles of parts
ranging from new to end-of-support and end-of-life.
Replenishment plans also take into account advanced
part substitution capabilities that allow for one-way and
two-way substitution of parts and recommend the use
of a substitute part when the requested part is not
available. Moreover users can model complex part
chains between old and new parts. Several scenarios
observed in the service industry can be represented.
For example, there are situations where an old part has
to be taken out of service due to a defect. The old part
inventory is scrapped and any demand for the old part
is satisfied by a new part. There are other situations
where the old part is being discontinued but is not
defective. In this case, businesses may not procure any
additional stock of the old part after the discontinuation
date but will continue to deplete any existing inventory
of the old part by using it to satisfy demand for both
the old and newer version of the part.
Avoiding new buys
Fierce competition in the marketplace has forced severe
pricing pressures on manufacturers. In many industries,
returned items can be recycled-upgraded or repaired
and reused as new components. By managing the
stock of repairable items effectively, the expense of
purchasing new inventory can be offset. The software
can build a time-phased replenishment plan that
looks at repair lead times and yield rates, and uses
“repairable” inventory first before issuing “new buy”
orders in order to satisfy the demand for an item.
New purchases are further avoided by using
part substitution.
Effective use of “unproductive” inventory
Inventory is a closely watched part of any business due
to carrying costs, which include the cost of storage as
well as the cost of the parts. Spare parts inventory is
no different, and managing inventory effectively can
impact a service organization’s bottom line. i2 Service
Parts Planner’s replenishment planning module can
help control these costs by identifying inventory that
is not productive (in excess) in its current location and
recommending effective ways of dealing with this
inventory, for example, by shipping excess to other
locations with insufficient on-hand quantities, or
scrapping obsolete material.
Reverse logistics
Reverse logistics is the process involving returns
of items back to a supplier or manufacturer. In the service
industry, reverse logistics refers to both the returns of
good as well as defective parts and components.
Returns can be due to the following:
Defective parts
Parts requiring repair
Cores from exchange programs
Field engineer or customer ordered the wrong part
Wrong part shipped
Too many of a part ordered or sent
Excess supply at a distributor or customer
Good parts are returned, inspected, repackaged if
previously opened and then placed into active
inventory. For parts requiring repair, i2 Service Parts
Planner can handle selection of a repair center,
estimate transit time between sites, and track part
progress back to inventory or to scrap. Parts are
recommended for repair on an as-needed basis. This
extra computing effort can pay off in reduced new parts
purchases.
Manage large volumes of parts efficiently through
exception-based reporting
In a multi-echelon service network, inventory and
replenishment planning need to be done for each
part and location. With 10,000 parts and 100 locations,
there could be as many as 1 million part-location
combinations to plan and review. This can be an
impossible task unless planners restrict their attention
to only those issues that require a decision on their
part. Enter i2’s “exception-based” reporting approach.
i2 Service Parts Planner has pre-configured exception
reports that flag issues that need to be addressed.
Examples of exceptions flagged include forecast too
high/low, safety stock violations, and excess inventory
at a location. The exception framework has been
designed for flexibility and can support configuration
of new exceptions at a customer site.
Key features
Service-specific forecasting and planning
Moving average for forecasting parts with steady
demand or newly introduced parts
Modified Crostons for forecasting slow-moving parts
Periodicity and Triple Plus for parts with seasonality
and trend
Multiple regression to capture causal factors
–Replenishment planning can consider complex
part-chaining/supercession relationships
Several replenishment complexities can be considered
including alternate sources of supply, alternate
transport modes, minimum buys, lot sizes, and
receiving and shipping calendars
Extensible exception framework can improve
planner productivity
Usability
User interface contains workflow to guide
planner through individual tasks
Group parameter maintenance can allow maintenance
of data at a group level rather than
at each and every data point
Filters can be set to determine the set of parts and
locations to be displayed in reports
Consistency checks ensure that part-locations have
been assigned the required parameters
–Pure web-based client architecture can allow easy
access and maintenance
Graphs support include line, bar, and area graphs
Analysis
Ability to filter reports on multiple dimensions
of product, geography, and time
Reports can be customized to suit specific
business situations
Multiple graphical and spreadsheet data display
can promote easy analysis
Technology
Highly scalable
LDAP compliance
Integrated with i2 Service Budget OptimizerIntegrated with i2 Service Budget Optimizer
Integrated with i2 Demand ManagerIntegrated with i2 Demand Manager
Want to learn more?
at 877.926.9286, or contact your nearest i2 sales office.
