Customer Information Driven After Sales Service ... - RePub

2. After Sales Service
on-hand inventory.
We now discuss execution management practices in spare parts logistics. We should
highlight the interaction between inventory planning and execution management. The
interaction is due to the fact that for any inventory planning setting, the nature of
the execution rule or allocation policy is an exogenous input. The most widely used
allocation policy in supply chain execution is a FIFO policy, where the stock units at any
stock location are allocated to the customers on a FIFO basis. (Recall the distribution
network structures 1, 2, and 3 in Figure 2.3.) In these distribution networks, any arriving
customer, regardless of the type of service contract it possesses or the criticality of its
demand, is served from the nearest FSL. If that FSL is out of stock, then the customer’s
demand is lost or backordered until the next replenishment arrival at that FSL. In the
above inventory planning solutions, the execution rule is limited to FIFO. Advanced
execution rules accommodating lateral transshipments or customer based heterogeneity
are not considered.
In this section, we review the academic literature that attempts to accommodate more
advanced allocation rules during execution management. Similar to the earlier sections,
we will restrict our discussion to the relevant research that studies supply chain execution
management in network settings. It should be noted that typically two approaches are
utilized to accommodate advanced execution rules in the literature. The first approach is
similar to the FIFO approach in inventory planning, where the advanced execution policy
(other than FIFO) is fixed and used in subsequent inventory planning. In other words,
the allocation rule is studied in conjunction with the inventory planning policy. Examples
of such a situation are the cases in which lateral transshipments are accommodated (or
not) in conjunction with rationing that is static (or dynamic). The second approach
is different in that an attempt is made to delineate inventory planning and execution.
A dynamic rationing rule is utilized in such situations for execution management. The
inventory planning is based on the long term aggregation of the execution policy behavior.
One may argue that the second approach is perhaps better suited to exploit short term
demand fluctuations. In general, the allocation rules for execution management can be
subdivided into four categories.
• No Lateral Transshipments with Rationing. Such situations exist in hierarchical
distribution networks where there are no lateral transshipments among the downstream
FSLs. In addition to the replenishment of the downstream locations, the
38