ASM Sparing Model How effective is your spares inventory at maximizing system availability? - PDF

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ASM Sparing Model How effective is your spares inventory at maximizing system availability? Sparing for a system is challenging. You want to have enough parts on hand to maintain a level of system availability
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ASM Sparing Model How effective is your spares inventory at maximizing system availability? Sparing for a system is challenging. You want to have enough parts on hand to maintain a level of system availability that s high enough to meet your operational and customer support commitments, but you also don t want to invest in unnecessary service parts. The ASM sparing model gives you the ability to pick an inventory strategy that balances operational risk and cost. Sparing to System Availability Traditional cost minimization inventory models set their policies one spare at a time based upon item-oriented metrics such as fill rate. These approaches for optimizing inventory investment are designed for situations such as conventional retail sales. However, these tools are inappropriate if you re managing highly engineered service parts for a fielded system, and your objective is ensuring that system s operational availability or uptime. Using an item-oriented tool for your system-level needs is an inefficient way to compute your service parts inventory levels. The ASM sparing model is specifically designed to optimize inventory investment to achieve a desired level of system availability, so it s naturally going to produce better solutions. In fact, ASM s solutions typically require 20 to 30 percent less investment than item-oriented methods to produce the same level of system availability. In order to optimize your inventory for system-level availability, you need to strike the correct balance between stocking major components and their associated service parts. While components are expensive, they do get the system up and running quickly. On the other hand, service parts are less expensive, but it means you re a repair time away from getting your system operational. ASM uses advanced mathematics, explicitly recognizing the indentured nature of complex equipment, to find the right balance of spares. The ASM sparing model also assesses the placement of service parts at different echelons in the network. Parts at the actual operating location are immediately available to get the system operational again. Parts stocked at a central location may delay getting the system up and running again, but it often requires fewer parts than stocking at multiple operating locations. The ASM sparing model analyzes operational information such as fleet size, network structure, operating hours, and maintenance policies as well as item-specific data such as demand rates, repair times, unit cost, shipping times, and procurement leadtimes. It uses all of this information to assess the improvement in system availability associated with each candidate purchase of additional service parts. Cover photo courtesy of NASA ASM is a registered trademark of the Logistics Management Institute. Advanced System-Level Inventory Optimization Typically, ASM produces a savings in spares inventory of 20 to 30% over itemoriented methods. The Shopping List Item Unit Cost Item Total Cost System 13th A $11, st C $1, $13, th A $13, th B $ $14, nd C $1, $15, th A $16, th B $ $17, ASM uses marginal analysis to identify the service parts that will contribute the greatest availability benefit per dollar. It iteratively adds the part with the biggest bang per buck to a proposed shopping list. The cost-availability curve above is how the sparing model graphically displays a manager s inventory strategy options. As the ASM sparing model adds parts to the shopping list, both the cost and system availability increase. Every point on this curve represents the cost and availability associated with a specific shopping list. Each point is the optimal choice for a given cost and availability level, explains Rob Kline, one of the creators of the model and LMI s product manager for ASM. You can t achieve that availability for any less, and it s the best availability you can achieve at that cost. What this means in practice is that you can pick the inventory solution that meets your system availability goal and know that the shopping list corresponding to that point is your lowest-cost strategy. Similarly, if you re operating with a fixed budget, you can pick the point within that budget and know that you re getting the most system availability out of your limited funding. You can also pick a point based upon a tradeoff between cost and availability that efficiently balances your organization s specific priorities. As you move up the cost-availability curve, you experience diminishing marginal returns it takes more and more inventory to achieve the next increment of additional availability. At this point on the curve, the ASM sparing model can help managers evaluate investment alternative types of resources in order to achieve the desired level of availability. 25 Years of Inventory Optimization Excellence ASM is a mature readiness-based sparing tool with over 25 years of implementation experience. Balancing Availability and Cost for the Air Force The Air Force has been using ASM for the past 25 years to compute the most efficient mix of spare parts to go into the spares packages that they take when aircraft deploy to farflung locations. This capability is especially beneficial when budgets are constrained, explains Dr. Randy King, one of the creators of the ASM sparing model. The Air Force can directly relate their budget to the number of available aircraft and minimize the impact on their mission if they have to take cuts. Sparing for Space The National Aeronautics and Space Administration (NASA) has been using the sparing model for more than a decade to set spares levels for the international space station, the space shuttle, and new ground-based launch systems. Although we typically configure ASM for a cost-availability tradeoff, cost wasn t as important to NASA as weight, described Kline, so we created a tailored version for NASA that optimized inventory based upon the weight-availability tradeoff. The NASA version of ASM ensures that every ounce of spares they lift into space is contributing as much as possible to maintaining the availability of their system. Is ASM Right for You? If system availability is your primary concern, the ASM sparing model can help you build an efficient mix of service parts that maximizes your uptime. The model is particularly valuable when your system has expensive parts with long lead-times. ASM is ideally suited for capitalintensive applications such as transportation fleets, manufacturing operations, mining and oil exploration, communications, and power generation. To learn more about how LMI is helping organizations implement readiness-based sparing methods, watch our videos at About LMI LMI was founded in 1961 to deliver creative, sustainable and proven solutions to senior management of the largest global enterprises. Originally the Logistics Management Institute, LMI now employs more than 1,300 experienced, talented consultants that bring advanced analytical approaches to solve complex logistics, resource and infrastructure challenges. LMI s Logistics Management expertise includes Inventory Optimization Transportation and Distribution Network Optimization Information Systems Management and Architecture Supply Chain Visibility and Asset Tracking Supply Chain Risk Management Procurement and Supplier Relationship Management Supply Chain Cost Analysis Life-Cycle Asset Management Sustainability and Energy Management Supply Chain Organization and Talent Management. Contact: Rob Kline Scan for videos and more
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