The determination of the number of spare parts is a function that involves various activities, such as ensuring that a spare part is available whenever needed and the availability of the number of elements required. The process of determining the necessity of the spare parts depends on the availability of different aspects that should be considered. Therefore, the safety of stock is a critical element of every business or commerce irrespective of the inventory management applied. For example, a company may be using either the minimum/maximum inventory system, seasonal or cyclical consumer patterns. Spare parts are characterized by the presence of seasonal demand patterns that increase the desire for implementing the stock safety protection approach. In other situations, additional parts may have stock experiencing high costs than they would experience about the value of the component of the product. Maintenance of safety stock is an essential aspect of increasing opportunistic sales and happiness among the customers.
Proper managing of inventory spare parts creates an opportunity for organizations to measure their effectiveness in offering services to customers. The ability to maintain safety levels enables organizations to explore the trends associated with the demand and supply of the parts. Tracking of the trends plays a critical because it contributes to monitoring the aspects that influence the uncertainty avoidance associated with the supply and demand of spare parts. Stock safety involves keeping track of materials present in the store such that a company is in a position to fulfill the needs of the customers (Ibrahim et al., 2017). Consequently, stock safety makes it possible for inventory management to know the materials at hand, thus making orders considering the avoidance of unnecessary costs. The cyclical demand patterns witnessed in the market for spare parts indicate that there are times when demand is zero, and occasions where there is none zero order. However, the level of protection and desired safety helps an organization to offset the unnecessary costs associated with the seasonal demand in the spare part market.
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Considering the level of protection required when determining spare part quantities plays a critical role in promoting continuous production in an organization operating in the industry. Organizations engage in stock management to prevent the occurrence of shortfall of raw materials that would affect the services received by customers. On some occasions, the demand for spare parts may increase to exceed the level of supply that is created by the company. However, the stock protection approach, when determining the quantities of spare parts to be stocked, helps a company in handling such uncertainties (Dombi, Jónás, & Tóth, 2018). In the absence of a stock safety protection exercise, some organizations may end up overstocking or offering insufficient services to clients. Traditionally, most of the companies operating in the spare parts industry experienced challenges in determining what inventory of the spare part they should have in the organization. The introduction of the concept of the spare part safety or protection has played a critical role in assisting such organizations in identifying the strategic approaches for identifying the most profitable spare parts they should offer to customers.
Safety protection plays a critical role in determining the criticality of spare parts before stocking such materials. The importance of a content to be invested in an organization depends on the costs for understocking and overstocking of particular spare parts. In most cases, companies have opportunities for different stock types of products that are likely to serve the interests of customers. However, the costs and benefits for stocking these spare parts have different values in a company, thus influencing the decision on whether to share particular materials or not. However, the stock safety concept enables investors to evaluate the costs and benefits for spare parts, thus taking precautionary mechanisms to minimize the losses (Israel et al., 2017). Highly critical spare parts are categorized to be those vital to an operation or mission to succeed. Since these materials are essential, companies chose to keep these materials in the market to avoid delay in situations where customers need such materials.
Safety stock plays a critical role in enabling an entity to support its suppliers in situations where it becomes impossible to acquire additional numbers, especially in cases where low levels of raw materials are available. This role becomes useful in circumstances where spare part organizations are in a position to keep a large stock of spare parts. The supply conditions of the flow of materials are an essential determinant determining the state of the suppliers in the flow of products for supply in the market (Ibrahim et al., 2017). For slow-moving materials, the flow of materials ordered may take approximately months, while fast-moving elements can take days. As a result, significant stock safety considers the lead time, thus determining the products that are designed to achieve likely to be kept in the store to fulfill future needs. Through the order, the safety of products can create production lead time, increasing profitability.
In conclusion, considering the level of protection required when determining the spare part quantities plays a critical role in helping a company to serve the interests of customers. Proper management of stock safety creates a chance for ensuring that companies are in a position to increase effectiveness by avoiding uncertainty associated with demand and supply. The criticality of spare parts and lead time requires an organization to have access to supplier’s conditions, thus coming up with materials needed to maintain the number of elements in the market. Through this process, companies remain profitable, thus increasing efficiency.
References
Dombi, J., Jónás, T., & Tóth, Z. E. (2018). Modeling and long-term forecasting demand in spare parts logistics businesses. International Journal of Production Economics, 201, 1-17.
Ibrahim, M. A. M., Abdelmoneim, O. E. M., & Babiker, A. M. B. (2017). Spare Parts Inventory Management in Engine Repair Shops (Case Study) (Doctoral dissertation, Sudan University of Science and Technology).
Israel, E. F., Albrecht, A., Frazzon, E. M., & Hellingrath, B. (2017). Operational supply chain planning method for integrating spare parts supply chains and intelligent maintenance systems. IFAC-PapersOnLine, 50(1), 12428-12433.
