Streamlining Spare Part Inventory Management in a Multi-Echelon Network of Service

Abstract

The research question of this thesis is: How could spare part inventory management of Cargotec Services be streamlined and unified? The motive behind this thesis was to strengthen Cargotec’s service business by creating common policies and by optimizing the tied up capital in the stocking network while providing suitable service level. The first target was to examine and describe the existing inventory management process. The second objective was to create guidelines for analyzing front line inventories and for determining inventory assortments at different levels. The final objective was to define how inventory management performance should be measured in future. This thesis is a mix of action oriented research and case study. The first step of the thesis was to create a theoretical framework which would be the foundation for developing and unifying inventory management policies of Cargotec Services. In this part of the thesis, scientific journals and literature were used as source material. The second part of this thesis is the empirical study. This part was begun by examining inventory management processes of both central and case front line unit. The present processes were defined by observation, interviewing responsible personnel, and examining internal documents. After the current processes were examined and described, the streamlining framework was constructed. The framework was based on the theoretical context, interviews, statistics, and benchmarking. This thesis presents a framework for streamlining inventory management process. The framework consists of different guidelines and instructions. The first guideline is for analyzing local item activity. Locally active items are divided into items that need to be stocked locally and items that should be stocked only centrally. Conversely, locally non-active items should be divided into returnable and non-returnable items. The study provides also guidelines for forming strategic stock in the network and performance measurements for inventory management in future. Besides the inventory management streamlining, Cargotec Services should also measure and develop performance of suppliers, haulers, and warehousing service providers. Cooperation and information sharing between different parties should be enhanced by interaction, communication, and exploitation of the new information system and collaboration tools.