Four Trends in Service Parts Management for 2024

Service parts management is an ever-evolving art benefiting from rapidly advancing science. 2024 promises to be a transformative year with key trends impacting various industries, including automotive, aerospace and defense, medical devices, industrial equipment, electronics, and high tech. Let’s review this year's prominent trends and assess their impact on OEMs, operators, and MROs.

As OEMs, Operators, and MROs navigate the complexities of today's business environment, the role of effective service parts management cannot be overstated. It is vital to unlock numerous benefits for Operators and MROs, including improved maintenance (MX) schedule adherence and aviation maintenance technician (AMT) productivity, reduced shop disruptions due to parts, and reduced overall maintenance costs. Corollary benefits impacting OEMs also include sustainability outcomes and maximizing operational excellence, customer satisfaction, brand equity, parts availability, and profitability, but it also plays a pivotal role in achieving competitive differentiation and enterprise goals.

Trend 1: Multi-Echelon Optimization as the Standard for Excellence

Acknowledging the critical role of multi-echelon optimization, industry thought leaders unanimously agree that it has become the gold standard for service supply chain optimization. However, it is a horribly abused term, with some in the industry diluting it and obfuscating its impact. Industry experts have demystified multi-echelon optimization and added a clear definition.

Ed Wodarski, a service supply chain subject matter expert with 43 years of experience, defines it well. “True optimization algorithms must calculate every part at every location for the entire planning horizon in one run and process in a short time window. Additionally, the algorithms must be able to comprehend the real-world realities such as budget and space constraints while meeting an array of service goals.” Wodarski continued, “As soon as you don’t account for everything, by definition, you are sub-optimizing.” As supply chains become more disrupted and things seem to change faster and faster, we should not overlook the value delivered through MEO’s ability to model essentially any strategic input. Forecasts, lead times, service goals, reverse material flows for reparable parts, network structure, and the size and configuration of the supported fleet are just a few examples of scenarios that can be modeled within the optimization engine for operators and MROs. Being prepared for a range of possible eventualities can deliver first-mover advantages and serve as a competitive differentiator for all organizations.

Dr. Vipul Agrawal, Vice President of Servigistics Product Management, emphasizes, "Self-healing autonomous planning systems powered by AI/ML and advanced data science are the gold standard for optimizing complex service supply chains. Multi-Echelon Optimization is crucial to achieve excellence."

Trend 2: The Rise of AI-Powered Decision Support Systems (and connection to Digital Thread)

Vivek Dube, Vice President of Servigistics Research & Development, highlights the innovative strides made in decision support systems, stating, "Servigistics is a decision support system which operates on extremely large amounts of data. Over the last 20-25 years, we’ve innovated to ensure the fastest performance and deliver the greatest value to the world’s largest service supply chain customers." This trend emphasizes the need for AI-driven solutions to make optimal decisions under uncertainty, a crucial aspect in today's dynamic market. Next-generation planning tools will need to evaluate enterprise performance relative to shop performance, part availability, and budget targets and proactively identify opportunities to ensure alignment with the desired outcomes.

Decision support is valuable within the service supply chain. Still, the value grows when you expand across the digital thread and incorporate more enterprise data in a two-way data flow. This strengthens the asset-centric approach that PTC is championing. With the asset at the center, all available data is used to improve service execution, delivery, and optimization. PTC’s acquisition of ServiceMax in 2023 has set the stage for accelerated innovation. In January 2024, an integration between ServiceMax and Servigistics was announced, enabling the optimization of forward stocking locations, technician vans, and backpacks to maximize the effectiveness of service execution in the field. The innovation was very well received.

Service parts management plays a crucial role in fortifying the digital thread within an enterprise by seamlessly integrating and optimizing various aspects of the supply chain. As organizations increasingly rely on complex and interconnected digital systems, service parts management acts as a linchpin, ensuring that the flow of information is synchronized throughout the entire lifecycle of a product. By effectively managing spare parts, organizations can enhance visibility into inventory levels, demand forecasting, and order fulfillment. This strengthens the digital thread by providing real-time data and insights that enable agile decision-making and proactive problem-solving. With an efficiently managed service parts ecosystem, enterprises can achieve better traceability, reduce downtime, and enhance overall customer satisfaction. The digital thread is thus woven more tightly, fostering a holistic and interconnected approach to managing the enterprise's resources, processes, and information. Boeing’s vision illustrates this potential.

Trend 3: Real-Time Visibility and Issue Resolution

Aly Pinder, Vice President, Aftermarket Services Strategies, IDC, reinforces the importance of real-time visibility and issue resolution in service parts planning. He notes, "When service organizations know what service parts are available and where, along with what issues need to be resolved, service can prioritize the right parts for the right problem at the right cost." This trend reflects the evolving expectations of aviation customers and the need for quick, efficient issue resolution in the service supply chain.

With the accelerated pace of innovation expected in 2024, real-time visibility and rapid issue resolution will be must-haves for discerning OEMs, airline operators, warfighters, and the maintenance organizations that support them.

An enhanced circular economy significantly enriches service parts management, creating a symbiotic relationship that maximizes sustainability efforts, client outcomes, and original equipment manufacturer (OEM) performance. Adopting circular economy principles, such as product refurbishment, remanufacturing, and recycling, aligns seamlessly with service parts management strategies. By incorporating reusable components and materials into the supply chain, organizations can extend the lifespan of products, reduce waste, and minimize environmental impact. This contributes to a more sustainable business model and optimizes service parts availability. The partnership between OnProcess, part of Accenture and PTC’s Servigistics platform showcase a best-of-breed approach. Clients benefit from a more resilient and eco-friendly supply chain, experiencing reduced lead times and improved reliability. Moreover, OEMs can enhance their overall performance by tapping into the economic and environmental advantages of circular practices, fostering innovation and meeting the growing demand for environmentally conscious products and services. In essence, an improved circular economy enriches service parts management, resulting in a holistic approach that aligns economic, environmental, and operational goals.

Trend 4: Revolutionizing Forecasting Through Innovation

A paradigm shift is occurring in the realm of service parts management forecasting, moving away from simplistic models, which are overly reliant on demand history, towards a more nuanced and broader data-driven approach. Driven by the understanding that one-size-fits-all MTBUR models are not particularly effective, the industry is witnessing a surge in the adoption of Causal Forecasting. This technique computes failure rates based on historical failures, applying them in a metric scaled by the fleet and its activity profile (hours and cycles), and install base. The result is a precision-oriented forecasting strategy that accounts for diverse allocation and operational tempo of the aircraft, product lifecycles, varying operating environments, different usage profiles, and other considerations that are either not represented or are misrepresented by history. Further precision can be attained by computing a matrix of MTBUR values, which could vary by geography, application of the asset, the age of the equipment, or the asset in which the part is installed.

As organizations mature in service parts management sophistication, forecasting methodologies become a focal point as organizations recognize the limitations of traditional approaches and embrace cutting-edge solutions like Servigistics.

Steven Caldwell, Vice President of Servigistics Technical Solutions, illustrates the challenge, “The most common approach we see to forecasting is organizations defaulting to a global failure rate for a part. That's extraordinarily error-prone. The next approach would be using an instinct or gut feeling to estimate the right dimension by which to calculate the failure rate. That could be by region, by certain product families, etc.”

Caldwell continued illustrating the unique solution, “What we now have, with Servigistics' advanced data science and machine learning, is the ability for the system to interrogate historical demand for the part globally. Looking at the various attributes of that demand, the system uses machine learning techniques to determine which attributes, and signals are significant in predicting, a deviation from the average of that demand, and therefore stratify the demand accordingly and calculate the failure rate at the right level of granularity to achieve a more accurate forecast.”

Forward Thinking Trailblazers and Industry Leaders:

Several industry leaders are already reaping the benefits of advanced service parts management solutions. Southwest Airlines, Kubota, Volkswagen, the United States Coast Guard (USCG), and Thermo Fisher Scientific are exemplary models of high performance and operational excellence.

• Southwest Airlines, a pioneer in the airline industry, leverages Servigistics’ Enhanced Supply Chain Modeling (ESCM) and Multi-Echelon Optimization to maximize aircraft utilization and decrease aircraft on ground (AOG), showcasing the versatility of Servigistics across industries
• Kubota's outstanding achievements in forecasting and demand planning led to impressive inventory optimization in 2023, illustrating the tangible improvements an OEM can achieve by implementing proven best practices
• Volkswagen's bold decision to displace SAP in favor of the Servigistics solution underscores the immense value proposition, including inventory optimization savings and service level improvements, positioning them for unparalleled success in 2024.
• The United States Coast Guard’s use of advanced software to maximize aircraft readiness showcases the transformative impact of technology on mission-critical operations, achieving accurate, cost-effective initial provisioning for its air bases despite challenging budget constraints.
• Thermo Fisher Scientific’s award-winning utilization of Servigistics leveraging advanced simulation capabilities to identify the most critical parts to maximize equipment uptime during challenging service supply chain disruption.

Embracing Exponential Technology for Future Success

As exponential technology and growing complexity reshape the service parts management landscape, OEMs aspiring to stay ahead of the competition should invest in Servigistics. Dr. Vipul Agrawal's words echo the sentiment, "We are pleased to enable OEMs with the power of industrial AI to achieve exponential results, improving the lives of end customers while operating an efficient, sustainable, and profitable service supply chain."

Innovation is the key to success. Servigistics stands as the beacon guiding OEMs towards a future where service parts management is not just a necessity but a strategic differentiator, unlocking unprecedented benefits for both enterprises and their customers. As we look ahead to 2024 and beyond, the time is now for OEMs and operators to embrace Servigistics' transformative power and set the stage for unparalleled success in service parts management.

If you are interested, you can watch the full Servigistics discussion on advanced data science and innovation.