Two Very Different Supply Chains: Aftermarket Vs. Manufacturing

There are key differences between manufacturing supply chains and aftermarket supply chains. Cohen et al. (2006) have summarised them (Table 1).

Table 1. Two supply chains compared. (Adapting Cohen et. al., 2006)

In practice, these come down to two main points:

• In spare parts management, it is not possible to reach the same goals as in manufacturing supply chains, nor is it helpful to aim to do so.
• Management concepts developed for manufacturing supply chains typically produce poor results when applied to spare parts supply chains.

Manufacturing supply chains are designed to provide good service levels while maximizing stock turnover. Conversely, spare parts are primarily there to act as insurance when a break-down occurs. In many breakdown situations time lost equals expense. Spares supply chain management is therefore all about stocking items which the end user hopes will never be needed but that when they are needed are required fast. Therefore, maximising inventory turnover is never the main goal in spare parts supply management. In fact, the average turnover in supply chains of companies with a strong reputation for spare parts management is as low as 0.87 (Cohen et. al., 1997).