Managing the After Sales Logistic Network - A Simulation Study of a Spare Parts Supply Chain

The after-sales services and in particular the spare parts business have acquired, in recent years, a strategic role for firms manufacturing durable or capital goods, as they represent a source of revenue, profit and a mean to achieve customer satisfaction and retention. Nonetheless, the huge variety and the characteristics of the demand of spare parts make the configuration and management of the spare parts inventory and distribution systems critical decision areas for managers. These decisions, in fact, may lead to very different cost and service performance by the system itself. The case study analyzed concern a world player of heavy equipment based in Sweden. Its spare parts distribution system is described, and the paper analyzes the configuration and allocation decisions concerning a second European warehouse and the transfer to that warehouse of a set of suppliers. A simulation model has been developed in order to support these choices. Discrete event simulation is well suited for studies where time-dependant relations are analyzed. Supply Chain Simulation applied to the case study provides useful insights on the decision choices and the cost structure related to the spare parts distribution system.