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1. Introduction
Demand for spare parts arises whenever a component fails or requires replacement, and as such it is different from that associated with a "typical" stock keeping unit (SKU) ([21] Fortuin and Martin, 1999). Managing spare parts is an important task in modern societies, with tremendous cost implications for the organisations that are holding relevant inventories. From a theoretical perspective, the intermittent nature of the underlying demand patterns creates significant difficulties as far as both forecasting and stock control are concerned. From a practitioner perspective, the considerable investments in spare parts availability signify that very small improvements in this area may lead to substantial cost savings.
An important operational issue involved in the management of spare parts is that of categorising the relevant SKUs in order to facilitate decision-making, i.e. select appropriate forecasting and stock control methods, and enable managers to focus their attention on the most "important" SKUs (however that is judged). This issue has been overlooked in the academic literature although it constitutes a significant opportunity for increasing spare parts availability and/or reducing inventory costs. In a recent investigation that deals with inventory control related issues for spare parts, [11] Dekker and Bayindir (2004) noticed that despite the huge literature, developed since the 1970s, dealing with this problem, very few studies are actually considering solution implementation and with few exceptions ([3] Ashayeri et al. , 1996; [5] Botter and Fortuin, 2000; [7] Boylan et al. , 2008; [35] Porras and Dekker, 2008) case studies are lacking.
In this paper, we explore demand classification and stock control-related opportunities for increasing service levels and reducing costs in the spare parts industry. We analyse pertinent issues through a case study of a big Japanese electronics manufacturer. Our research work has been launched along with the initiation of a project in the organisation under concern that aimed at restructuring their spare parts logistics network at the European level. The ultimate objective was to reduce lead-times and increase service availability as well as lower the overall stock levels in Europe.
Our work has been conducted in collaboration with a dedicated working group in the organisation under concern, responsible for the project. The European spare parts logistics director acted as the project sponsor; the team consisted of four...