For some time SAP has been promoting its product lifecycle management (PLM) solution. We should say at the outset that we don’t find the term PLM very useful. Yes there are lifecycle implications to the software, however this category of software could more accurately be described as bill of material management software. However, there is no fighting city hall, so PLM it will continue to be known as.

Analyzing SAP PLM

When we did an analysis of SAP PLM for a client, we learned that PLM was not an actual product, but was in fact a “solution.” What his means is that various pre-existing modules have been Jerry-rigged around the material master in order to meet PLM requirements. This is much like SAP’s non-existent digital asset management solution – where digital media are entered as materials into SAP. Actually digital asset management and PLM have a lot in common because both solutions require a lot of functionality in terms of multi-media files. For PLM these files take the form of images and schematics, while in digital asset management the files take the form of images, music and video. However, the material master functionality in SAP is not designed to manage these files, or make them easy to find or reference. There is no big surprise why. The material management functionality was first and foremost designed to hold textural data on products for the purposes of accounting and supply chain management. Changing this functionality around to meet the needs of asset and document management is no easy task.

Lifecycle Planning in SCM

SAP lifecycle planning exists in the supply chain planning suite offered by SAP. For instance, in Demand Planner, which is the forecasting module of SAP SCM, lifecycle planning exists. DP allows you to introduce an existing product at a different location – using profiles to base historical data from current locations. Phase in profiles allows the reduction of the forecast for the period of introduction. We describe this more fully here:

http://sapplanning.wordpress.com/2009/04/21/plm-and-lifecycle-planning-in-scm-dp/

However, this capability in DP, and the product interchangeability functionality that is available in other modules of the SCM suite (notably SNP, CTM, PPDS and GATP) is quite a bit different from the integrated PLM solution that SAP pitches to clients. Again, this gets back to the problem we have with the term “PLM.” PLM functionality can exist in different areas of supply chain applications, however, it does not mean that the solution is offering advanced bill of material management functionality which includes:

• Multimedia file management
• Document management
• Engineering change management
• Collaboration management (between marketing, engineering and production)

SAP Has Had Its Shot in PLM

SAP PLM has not taken off, and it does not appear to be an area they have or intend to put real development effort behind. However, they still make their white papers available on the topic, but the white papers and literature ring a bit hollow at this late date. SAP entry into the PLM market’s main effect has been to discourage companies from implementing real PLM solutions and hurting PLM’s image more generally.

Here you can see one of the main graphics for SAP PLM (listed under Life-Cycle Data Management at the top). However the flaw in this diagram is apparent. PLM is based upon document management, but SAP does not have any serious document management capability. The best evidence of this is the state of SAP Solution Manager that is causing project heartburn on SAP projects globally as we write this. We have first hand experience with Solution Manager and consider only Microsoft SharePoint to be a worse document management solution. (see this link for details)

http://infoknowledge.wordpress.com/2008/12/17/why-sharepoint-for-rss/

This is a market SAP would be wise to cede to other vendors and strengthen their core offerings which more development attention. Our recommendations for how to do this are listed here.

http://sapplanning.wordpress.com/2009/04/10/sap-should-stabalize-functionality-focus-on-quality/

PLM and Service Parts

PLM is of course extremely important for service parts. Many of the service parts planning applications have built in control fields in the form of things like shelf life; and of course supersession is a manifestation of product life cycle needs (out with the old – in with the new). While doing some research on PLM for service parts we came upon a company called Arena Solutions and we have tested their software extensively. We think its time many other companies gave it a try. It is extremely easy to use, offers hosted solutions and just has tons of PLM functionality.

SAP’s Approach

As for SAP PLM, its time to give up on it if you have significant PLM needs. It is dysfunctional for these different software verticals for SAP to use marketing literature and personal relationships with executives and major consulting companies to push their way into software areas for which you really have either no product, or a vastly inferior product to offer. Our view is if many companies had adopted Arena Solutions several years ago they would be way ahead of the game and would have a real solution for their BOM management and life-cycle issues. If these companies are concerned about integration issues with SAP ERP, it is most definitely worth the extra effort given all of the functionality your gain.

For more details on Arena Solutions see this post.

http://spplan.wordpress.com/2008/12/12/arena-solutions-and-where-used-view/

References

http://www.amazon.com/Sales-Inventory-Planning-SAP-APO/dp/1592291236

Lets start off by discussing what we originally intended to do in this post. We thought we would do some Internet research and easily find some of the best service parts management companies and describe what they were doing that set them apart. However, because of the lack of data we were not able to do this. Thus we have another topic to discuss; namely, where are the listings for service parts management or at least service management?

History of Business Ratings

Lets discuss the history of business ratings. The concept of rating a business’s performance in a formalized manner is while not that new, still not all that widely practiced. The pre-eminent rater of products in the US is Consumer Union, which publishes Consumer Reports.

Consumer Reports provides initial ratings or reviews of products and services. This in itself is not that rare except for the fact that Consumer Reports has set itself apart from other rating companies (such as Epinions and JD Power and Associates) for buffering itself form company influence. The way this is done is by being subscriber supported and not accepting advertising or allowing the use of Consumer Reports results to be used in advertising. Another thing that is relatively unique to Consumer Reports is their tracking of long term reliability of automobiles and the brand reliability of things like washers and dryers and computers. These ratings influence purchases and were and continue to be critical of lower quality products. Before this rating system existed every car company could claim to make a high quality product, but the ratings showed otherwise. The Consumer Reports rating system in addition to word of mouth was instrumental in bringing down the US car industry, which was and continues to make inferior products, and promoting the Japanese car industry for the opposite reason.

The Consumer Reports reliability rating for a Saab.

Service Ratings

Manufacturing ratings are relatively common, as any search on Google will demonstrate. IndustryWeek maintains a prominent one here..

http://www.industryweek.com/articles/the_iw_50_best_manufacturing_companies_corporate_gold_mines_16355.aspx?SectionID=42

However, we did not find a rating for excellent service parts firms. Recently JD Power and Associates has begun tracking excellent service organizations, a list of which was recently published in Business Week. However, if you look at the list, only seven are manufacturing operations.

• Cadillac
• Toyota
• Porche
• Apple
• Lexus
• Buick
• Lincoln

The majority are services (i.e. banking, hotels) which do not have service parts operations. And of the top list in customer service, Buick, Porsche and Cadillac do not make reliable cars according to Consumer Reports, so the rating must be for the customer experience in sales and service. Alternatively, these three care makers may excel at service parts management. However, because the rating is so broad, it is difficult to tell. This is not to say the ratings looks illegitimate. In fact, we have had personal experience with many of the companies on the list and the ratings check out with our personal experiences. One final point is that the ratings are all consumer brands, however what about industrial brands like John Deere, we see no industrial brands on the list. Industrial brands should be pitted head to head against consumer brands. In our optimal rating system, Raytheon would be on the same list, and competing against Acura.

A Service Parts Management Rating Index

What is really needed is a service management index, which would include service parts. Tracking this would go a long way towards bringing more focus on the topic. Things like initial price are easy to compare, but without a service management rating, products with a low initial cost, but high long -term maintenance cost can become more popular. This gives companies less of an incentive to build serviceable items, and to invest in their service infrastructure. This is the present situation that many US firms find themselves. One of the great positives of the Japanese culture is that it focuses on quality and assumes good things will flow from this. US culture is different. We will produce quality if we believe we can earn an ROI on it. This is a very different approach.

Measuring ROI From Quality

However, measuring ROI on quality is not something that is a very well developed capability. However, this brings up a topic that we can’t resist discussing, although it is a slight digression. In the 1980’s Japanese manufacturing was all the rage, and a number of books came out and consultants supported the notion that conventional inventory management formulas were incorrect. This was because, they said, the benefits of inventory decreases did not show in the numbers. Therefore inventory should essentially be slashed willy-nilly and then good things would follow. This proved to be completely false, yet companies to this day are obsessed with inventory reduction.  However, the formulas for inventory management were correct and company after company that we see carries too little inventory, which negatively affects their service fill and their manufacturing efficiency. However, the relationship between quality and ROI exists, it is difficult to measure. This is because of the existence of monopoly power. Microsoft has terrible software quality. However, their monopoly position protects them from the effects of poor quality. What is interesting is the message that was really taken from Japan was its low inventory levels (also a consequence of having manufacturers and suppliers close to one another, which is not the case in the US) even though there was zero evidence the inventory formulas were calculating excess inventory. However, this message was appealing because it meant less investment – at least in the short term, which is what executives want to hear. Quality requires more investment up-front, and provides long term benefits which executives are less interested in because of how US executives are compensated with stock options. What this case study indicates is that some messages, while false, become popular, because they dovetail with organizational and personal incentives. Other messages, which while true, fall on deaf ears, because they do not dovetail with incentives.

When selling concepts to US executives, the truthfulness of a course of action takes a back seat to the personal incentives of the individual.

Benefits of a Ranking System

So US industry needs to be put on the spot – or exposed through a ranking system – in order to have the proper incentive to invest in service. There is an old saying that goes something to the effect of “there is no reason to improve something if no one is measuring it.”

Book Availability

We have written a number of times about how under-emphasized both service management and service parts planning in particular is and continues to be in companies. However, what surprised us to an equal degree was a recent search for books on this topic. We stopped by Amazon.com and performed a search for “service parts planning” and received this result.

For those that do not search Amazon.com very frequently, we can tell you how unusual this result is. By the third result, we are already getting into books that are so unpopular, there is no image posted. Also notice that this third listing has nothing at all to do with service parts, but came into the results in any case because there are so few books on this topic. One of the books is completely dedicated to service parts planning in SAP. However, what if you are a company that does not use SAP? This book will probably not cover what you need then. The second book is related to algorithms for service parts supply chain. This would probably answer a few questions for the technically inclined, but it can not be considered a book for business people trying to understand service parts planning and does not cover the topic generally. In other words, it is a very niche and academic book. If we change the search to “spare parts planning” we get similar results, so the terminology used does not change the results much.

You can do the search yourself and see the full results. However, of the next few pages of results, we only found the following book to be applicable.

And this is not a book specialized on service parts planning per say, but simply service parts.

Best Books and Articles

This is a listing of the top books and articles in the field. The list can certainly grow. If you have any recommendations please contact us at spplan@gmail.com.

Books

1. Analysis and Algorithms for Service Parts Supply Chains – John A. Muckstadt – http://www.amazon.com/Analysis-Algorithms-Operations-Financial-Engineering/dp/0387227156/ref=sr_1_1/105-0952385-1563663?ie=UTF8&s=books&qid=1185121839&sr=1-1

2. Service Parts Planning with mySAP SCM: Processes, Structures, and Functions – Jörg T. Dickersbach – http://www.amazon.com/Service-Parts-Planning-mySAP-SCM/dp/3540326502/ref=sr_1_1/105-0952385-1563663?ie=UTF8&s=books&qid=1185125847&sr=8-1

Articles

1. Winning in the Aftermarket – HBR June 1006 – Cohen, Agrawal, Agrawal

Conclusion

How are the next generation of service parts planners and consultants to be trained if there is not literature commonly available on the topic? Our conclusion is that considering the size of the service market, this is quite unusual. If anyone knows of any good books on the topic, please feel free to recommend them by posing a comment.

We have been using the demo system that was nicely provided by Arena Solutions, and we found a very interesting feature called the where used view. What this allows you to do is find where a component is used and then select that parent component. Something else you should notice, is that the item number that is listed is a specific revision. Thus, the change tracking and management capability within Arena allows a component to be part of one revision but not necessarily part of another. This allows the tracking of the lifecycle of a part through its association with different parent components.

Now we select that parent item and are taken directly to it.

So now we know one of the highest-level products that uses this subcomponent. If we want to see the costing of this router, we can select the costing tab, and we can see a number of different cost items.

We can also find out the history of this item by going to the revisions tab.

What this tells us is at a glance where the item is in the product lifecycle. This is particularly beneficial is even a person unfamiliar with this product of the PLM process can tell both the lifecycle workflow for this company for this product, and where this product currently stands.

Here are the modified views, with notes so that we can see where the status of different views is.

We just learned a huge amount about this product and it only took a few screen views that were easy to naviage to. Remember, this all began with the where used view.

To learn about the webcentic model that Arena is following, see this post.

http://supplychaininnovation.wordpress.com/2009/06/07/supply-chain-software-and-the-google-model/

Service Parts Forecasting

The main way service parts are currently forecasted is through the development of a MTBF. The MTBF is often developed from using similar parts and can be derived mathematically. However, there are also companies that perform physical testing to develop the MTBF number. One such company is called Reliatech.

http://reliateck.com/new/index.php?option=com_content&task=view&id=32&Itemid=95

You send your products to them, and they perform the reliability testing. This type of testing goes beyond simply testing an overall component. This is explained below.

Reliability testing may be performed at several levels. Complex systems may be tested at component, circuit board, unit, assembly, subsystem and system levels. (The test level nomenclature varies among applications.) For example, performing environmental stress screening tests at lower levels, such as piece parts or small assemblies, catches problems before they cause failures at higher levels. – Wikipedia

Specialty Area

These vendors work in what is called the “reliability prediction” area or sub-industry. This page gives a good overview of how this is done.

http://www.relex.com/resources/art/art_data.asp

A few other MTBF services out there provide you with an MTBF when you provide your BOM to them. Optionally, instead of having them do the work, there is also reliability software. In either case you correlate the MTBF to your BOM.(This actually brings up the topic of PLM which we will discuss in our next post.) See the MTBF service below.

http://www.itemsoft.com/relpred.html

Generally, there is a high level of frustration at clients we have seen in developing and managing their MTBF. Reliability testing and prediction is a difficult area and one should not shy away from bringing in expertise in this area to get the MTBFs as accurate as possible.

References

Article on MTBF

We found this to be an informative article on the topic, in terms of why MTBF is used as well as different MTBF options.

http://www.pump-zone.com/pumps/pumps/understanding-dirty-data-comparing-mtbr-mtbf-and-mtbpm.html

Service parts require extensive documentation because of the need to capture information from service calls. Successive service calls (in addition to other research performed by the service technicians). This is of critical importance to service organizations, and the requirements for doing this would not seem to vary greatly from company to company. Desirable traits in this software would be:

1. The ability to easily update the service part data
2. A distributable web based system
3. Volume and security capabilities
4. The capability to handle image, video and audio files in addition to various document attachments

These are all capabilities met by a CMS or by blogging software like WordPress or Typepad. We were curious about how service parts and maintenance databases are being developed generally. What we found surprised us in that we did not find anywhere near the activity in this area that we expected.

__________________________________

Nomenclature

It is important to recognize that this is not the only name for this type of software. It also goes by the name electronic parts catalog or EPC. We define this other term in this post.

http://spplan.wordpress.com/2009/05/30/electronic-parts-catalog-and-service-parts-databases/

__________________________________

Generally Available Applications

Here are a few we ran into. One is called Aligni, which specializes in component management

You can test the trial yourself. However, they seem to be more of a parts management system rather than a part service management database. In fact the shortage of vendors or even announced programs in this area was erie. However, service parts are a greatly under-serviced market from a software perspective. If our initial research is correct, there are huge benefits to be received by using blogging software to build and maintain parts databases.

Another is called Engima, which develops service parts databases for purchasing decision support. They create what is known in the industry as an electronic part catalog which is then used as the basis for the purchasing engine.

http://www.aligni.com

http://www.enigma.com

Interaction with Planning Applications

The service part and service maintenance database interact with the planning system in some cases. But in others cases they do not. For instance, the transaction system can feed both the service part planning system and the service part maintenance database (SPMDB)

SAP Equipment Master

There is some confusion, which is only encouraged by SAP product marketing, that the SAP Plant Maintenance module maintains a capability in service management. Their argument is supported by the master data object called the Equipment Master. The equipment master is to the service part what the material master is to the finished good. The equipment master has a very large number of fields. However, while SAP proposes that the equipment master can be pushed out to a portal to allow for the creation of a service maintenance database, the SAP Portal is not designed for this purpose.

A Logical Design

What makes the most sense for clients that use SAP ERP (or other transaction processing software) is to integrate the service parts database with blog software and to periodically bring across new parts to the SPMDB and not worry about sending the maintenance data back to SAP ERP.

Conclusion

The lack of focus or commitment of resources into developing service parts maintenance databases is strange and a missed opportunity. We can not say for sure, but we can imagine how service part maintenance databases may have become commingled with Product Life Cycle management. We hope that is not the case, as PLM is focused on the beginning of a product’s life, service parts maintenance databases are focused on the end, and are really a different animal.

Performance Based Logistics is a much discussed concept in the military and among defense contractors. However, this post questions whether it is an authentic trend based upon the incentive structures of the military and their suppliers. PBL as a Trend

PBL has become a strong trend among the management class of companies in the A&D environment PBL. PBL based upon a kernel of truth that may or may not spread from management conferences. This paper discusses PBL and makes some educated guesses as to where PBL might be in 5 years from now.

Basis for PBL is introduced as a way to improve service levels and increase the responsibilities of supplier service parts management and in some cases service part service operations. In this way it may be viewed as a form of outsourcing where the part planning and management is moved from the client to the suppliers. In cases where the military is the customer, it can be seen as a light form of military privatization.

Supporting Case Studies

The outstanding case study for PBL in the A&D environment is Rolls Royce. While not called “PBL,” Rolls’ TotalCare engine service program is in fact a long term service contract where Rolls controls the engine service parts inventory and in a way goes beyond PBL by offering direct guidance and instruction when certain parts are due for maintenance. Rolls actively monitors over 3000 engines aggregating a strong level of service intelligence about engine maintenance. Rolls
has, by most accounts, leveraged this capability to grow its market share, take business from larger competitors and reinforce the premium reputation of its industry leading engines.

Deviations Between the Strong Case Study and Other Projects PBLClients and Environments

It would be a mistake to assume that the success at Rolls can be duplicated to every A&D supplier or can be generalized to other areas outside of engines. By comparison there were certain organization differences between Toyota and US manufacturing firms as well as geographic differences between the locations of the suppliers that make up the supply base in Japan vs. the US that prevented other companies from ever duplicating Toyota’s success with JIT, regardless of decades of attempts across
thousands of factories. What this means is that the case for PBL with Rolls must be observed in terms of how Rolls as a company, and Rolls business is different than other companies that want to implement PBL type programs. Some of differences are listed below:

1. Rolls is only managing a small proportion of the overall service
parts of an airplane. They are providing 100% of the parts for the
engines under the TotalCare program. This means that a 95%
availability actually does mean a 95% availability for the engine as
there are no other suppliers. However, this is not true with companies
that provide the entire airplane. Therefore it must be considered that
Rolls is solving a much more simple problem than a supplier that
supplies the entire airplane would be.
2. Rolls appears to be on the outward edge of competence within the
industry. Secondly, this is not a new philosophy for Rolls. Their
”Power by the Hour” program, which is essentially similar to the
TotalCare program dates at least back to the 1930’s. This means that
Rolls has been organizationally oriented towards service for
generations. This is not necessarily the case for other A&D suppliers.

The Cultural and Business Model Changes Required

We have found several articles on how well this new concept fits into the existing culture of A&D suppliers.  The consensus is that a great deal of cultural change will be required to move A&D suppliers to a PBL environment. However, less discussed is how PBL fits into A&D, and particularly defense contractor’s business models. There is probably good reason for this. The reality of the defense service parts business model would not be very popular if it were generally known. Enough documentation is available to demonstrate a strong and lengthy line of continuity in service parts pricing.

Service parts are priced at the beginning of the program, and in subsequent years the service parts rise terrifically. This is true of so-called unique parts, but is also true of what appear to be commodity items. Many of the oversight bodies for regulating part increases were removed in past 6 years in particular, but have been even before then as the public furor over military contracting overcharging died down from a decade and a half ago. Therefore, the part price escalation continues.

If this is a strategy of defense contractors, and there is good evidence that it is, its difficult to see how they would want to move towards a PBL environment. The PBL contract would certainly be for several years, and if defense contractors intend to continue their price increases, the PBL would need to reflect that year-to-year increase. This would raise flags, so again its not something a defense contractor would want to do.

Power Dynamic

There is a hidden assumption in the discussion of PBL in relation to defense. It presumes the DLA is very powerful vis-à-vis its suppliers. Certainly as a monopsony (one buyer, many sellers) the DLA could be a powerful actor, if it wanted to be. However, there is a good deal of evidence that it does not want to be. The existence of strong relationship ties between the DLA and the defense contractors and the fact that at the decision making level many of the DLA and more broadly the procurement decision making apparatus in the armed forces look to defense contractors for their next job results in the military being less willing to press their claims and hold defense contractors accountable. The evidence for this is the large year to year increases in service parts costs the military accepts, combined with the large cost over-runs in weapons systems they accept, and the well known policy they have for not going back to defense contractors and asking for refunds when parts break far before their stated expected lifetimes. If the military will not confront defense contractors on these more basic issues, its difficult to see how they intend to punish the contractors for missing service level targets that are part of enforcing a PBL contract.

Coming Trends Limiting PBL’s Adoption for Defense

The US is at the high end of a cyclical spending upswing due to a highly pro-military administration and a war with two counties. However, there are a number of bills that are coming due for these wars that have not been fully funded.

There is great evidence that the veterans health care and long term care have been greatly under-funded. Secondly, a large amount of equipment which is neither service-able, nor economically repairable, has not been written off of the books. When these costs become apparent, the US military may move from strategy to having contractors provide “PBL” to continuing to do it themselves (in order to save money). Extended service contract is a luxury good, Rolls is considered an excellent
provider of “PBL” type service, and however it is also widely recognized as expensive. This is to say that the US military may move away from PBL itself when it has less money to spend. For the reasons given above, PBL does not appear to be a trend with any staying power.

References

On the lack of funding for the warhttp://www.cfr.org/publication/13418/cq.html

On the need for procurement reform

http://www.pogo.org/p/defense/do-990920-reform.htm

Service Level in Planning

Service level is much discussed as an important way to plan. However, once you get past the general principle, operationalizing service level planning brings up the following topics that must be answered:

1. Where in the supply chain are service levels being set?
2. Should the service levels be set at the location?
3. Service levels for a product line (say iPods vs. MacBooks) or within product lines (20 GB vs. 40 GB Ipods). Thus is there is a “service matrix” that an organization implicitly or explicitly maintains?
4. Service levels can be set for particular customers and inventory can be planned as separate “pools.” How will this be managed?

The end result of this is there is no “one service level” and companies need to be able to change their service levels based upon item profitability, strategy, growth potential, competitive situation, etc.. The service levels are dynamic across geographic, product and time dimensions, and the technical service infrastructure needs to support this.

Technology Enablement

A planning system can allow you to operationalize these service planning objectives by bringing up its complex service planning functionality. However, the execution system needs to be synchronized to with the service planning system in terms of these different service level objectives.

Planning vs. Execution

One of the difficulties is managing or limiting the discussion of service level management between the planning engine and the execution system. A planning system attempts to set up the correct conditions to maintain a particular service level, however, it is the execution system that is responsible for meeting it, and or course which has great control over whether it is met. For instance, imagine that two customers have a service contract, one of them which is currently over its contractual service level, and the other which is under the level. When a demand comes in from both for the same part, an important question is who gets priority for that part. The execution systems would ideally have the ability to provide this to the customer which is under the agreed upon service level rather than the one which is over the agreed upon service level. However this assumes a number of things:

1. The company has very good metrics on the current service level provided to its service contract customers
2. Authority to issue to part to the correct customer is decentralized to the part manager.

More details to follow on how planning systems and execution systems can be configured to manage matricide service levels.

To find out more about service level planning see this post.

http://spplan.wordpress.com/2008/04/05/service-level-planning/

This article has been moved to my multi-echelon and inventory optimization blog.

http://invoptmultiechelon.com/2008/04/drp-vs-multiechelon-inventory-optimization/

<img class=”alignnone size-medium wp-image-909″ title=”Forecast” src=”http://spplan.org/wp-content/uploads/2009/06/forecast1.jpg?w=300″ alt=”Forecast” width=”300″ height=”225″ /><strong>Different Approaches</strong><span style=”color:#000000;”>There are several different approaches to generating the forecast in MCA SPO. Each Location-Part combination can be configured to follow one of these approaches:</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Computed: Based upon historical demand and leading indicators such as causals and installed population. Blends the history based and causal forecasts. The blending of these two forecast streams is called composite forecasting</span></li><li><span style=”color:#000000;”>Replacement: Forecasts are computed as a function of parent Part forecasts using replacement rates</span></li><li><span style=”color:#000000;”>External: Forecasts are uploaded from an external system</span></li></ol><span style=”color:#000000;”>These are defined in the tables (Computed, Replacement, External) in the DEMAND_FORECAST_TYPE field in the LP_ATTRIBUTE interface.</span><span style=”color:#000000;”><strong>LP ATTRIBUTE Table</strong></span><span style=”color:#000000;”>LP_ATTRIBUTE fields include:</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Location</span></li><li><span style=”color:#000000;”>Part</span></li><li><span style=”color:#000000;”>Condemnation Rate</span></li><li><span style=”color:#000000;”>Passup Rate</span></li><li><span style=”color:#000000;”>Criticality</span></li><li><span style=”color:#000000;”>Variance to Mean Ratio</span></li></ol><span style=”color:#000000;”>The types of forecasts include</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Moving average</span></li><li><span style=”color:#000000;”>Constant with smoothing parameters (parameters can be set in the PARAMETER table) however overrides can be provided using the Forecast Detail View</span></li><li><span style=”color:#000000;”>MCA smoothing forecast is a variant of the single exponential smoothing forecast tailored specifically for sparse and intermittent demand forecasting.</span></li><li><span style=”color:#000000;”>Trend (factors here are also set in the PARAMETER table)</span></li><li><span style=”color:#000000;”>Seasonality Forecast (factors here are also set in the PARAMETER table</span></li><li><span style=”color:#000000;”>Trend Seasonality (factors here are also set in the PARAMETER table)</span></li></ol><span style=”color:#000000;”>SPO uses a best fit to select the best of the available forecasting methodologies</span><span style=”color:#000000;”>The composite forecasts (Time Series + MCBF/MTBF) using parameters in the PARAMETER table</span><span style=”color:#000000;”>____________________________</span><h2><span style=”color:#3366ff;”>MTBF Development</span></h2><span style=”color:#000000;”>Developing an MTBF is much more work than commonly thought. Because not a lot of companies do causal forecasting, they often do not maintain good data for even one MTBF. However there is another reason for this related to the companies interest in investing in the long term. This is described in this post. </span><a href=”http://spplan.wordpress.com/2007/07/22/service-parts-and-mtbf-forecasting/”>http://spplan.org/2007/07/22/service-parts-and-mtbf-forecasting/</a><span style=”color:#000000;”>There are companies that can help develop and capture MTBF data. See this post to see a description of one. </span><a href=”http://spplan.wordpress.com/2008/12/09/determining-mtbf/”>http://spplan.org/2008/12/09/determining-mtbf/</a><span style=”color:#000000;”>____________________________
</span><span style=”color:#000000;”>Forecasting will be done for reparable parts. The flag for this is set in the PART.IS_REPARABLE field (set to T for reparable) in the PART table. The PART table has a large number of fields that are critical:</span><span style=”color:#000000;”><strong>PART Table
</strong></span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Part Type</span></li><li><span style=”color:#000000;”>Cost</span></li><li><span style=”color:#000000;”>Begin Date</span></li><li><span style=”color:#000000;”>End Date</span></li><li><span style=”color:#000000;”>Is Planned (T or F)</span></li><li><span style=”color:#000000;”>Is Seasonal (T or F)</span></li><li><span style=”color:#000000;”>Is Reparable (T or F)</span></li><li><span style=”color:#000000;”>Repair Cost</span></li><li><span style=”color:#000000;”>Is Order Policy ROQ Based</span></li><li><span style=”color:#000000;”>Holding Cost Rate</span></li><li><span style=”color:#000000;”>Fixed Order Cost</span></li><li><span style=”color:#000000;”>Decay Rate</span></li><li><span style=”color:#000000;”>Generate New Buy (T or F)</span></li><li><span style=”color:#000000;”>Generate Repair (T or F)</span></li><li><span style=”color:#000000;”>Generate Allocation (T or F)</span></li><li><span style=”color:#000000;”>Generate Transshipment (T or F)</span></li><li><span style=”color:#000000;”>Max Qty Allowable</span></li><li><span style=”color:#000000;”>Max Total TSL</span></li><li><span style=”color:#000000;”>Is Exempt (T or F)</span></li><li><span style=”color:#000000;”>Ignore Weight and Volume (T or F)</span></li><li><span style=”color:#000000;”>Material Class</span></li><li><span style=”color:#000000;”>Is Cannabalizable (T or F)</span></li><li><span style=”color:#000000;”>Partial One Way Supersession</span></li></ol><span style=”color:#000000;”>By default SPO includes demands for non stockable parts such as exempt parts (see Is Exempt field above) or parts with fixed overrides, in Fill Rate Optimization. This causes SPO to increase Target Stock Levels of other stockable parts while trying to meet a Location Fill Rate.</span>