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Challenges in spare part logistics: the role of digitalisation

17 September 2020

As a part of the aftersales market, spare parts logistics can be an extremely profitable business. However, the right approach is essential. Studies show that companies are currently only tapping into one quarter of the global sales potential in this sector. Unlocking this potential requires appropriate preparations and investments, says TGW.

Time is money in the B2B sector. That is why customers expect easy ordering options on all channels, fast deliveries, short response times and high availability. 

“Customers in the B2C segment are used to high quality, fast deliveries. B2B customers expect the same service. This is why high availability and agile logistics matter. In other words: only those who offer a high level of service can establish a close relationship with their customers and will survive in the market,” says Erich Schlenkrich, Industry Manager at TGW Logistics Group.

“To give an example from agricultural machinery. If a harvester breaks down in the field and is supposed to fill a dozen trailers with corn every hour, then one day of downtime due to an undelivered spare part will easily cost thousands of euros,” Schlenkrich says.

Automatisation is key

Just like in food or fashion logistics, a state-of-the-art logistics system has to feature the right degree of automation to ensure that the requirements for quick delivery in spare parts logistics can be fulfilled. Optimised processes and digitalisation create efficiency and transparency but establishing high availability in the distribution centre is not enough. Companies have to look at the entire supply chain, from one end to the other, and have to optimise the entire network. 

As recent events have shown, companies also have to factor in the possibility that the chain will be interrupted, by environmental disasters, strikes or a pandemic like Covid-19 for example. These situations have to be thought through in advance in order to have the right answers and solutions ready when they actually happen. An elaborate network and communication system including excellent logistics providers that can also handle unexpected events is an absolute necessity. Digitalisation is the foundation for such a network.

Smart solutions and data analysis 

The champions in spare parts logistics have established a global logistics network and a global, structured inventory management. And they have digitalised their processes. After all, the three most important questions for all logistics providers are the same: How can I respond to an unpredictable future and fluctuating demand? Second, how do I provide a customer service level that is both the highest and the most cost-effective? And third, how do I accomplish all this in view of the bottlenecks in personnel? Spare parts logistics are facing these same questions. 

Smart solutions and data analysis provide an answer to these challenges. But the implementation and application are different for every provider. Companies have different resources and skills at their disposal. That is why TGW is individually tailoring its solutions to the needs of every customer. 

FlashPick, TGW’s smart goods-to-person order fulfilment solution for single piece picking, provides an answer to general questions regarding efficiency and economy in a warehouse. It Is based on a shuttle system for automated storage and retrieval of containers, combined with a high-performance one-to-one picking workstation, where a robot or a person pick. The process is very simple for the picker: The system presents one SKU container to pick from and one order container to pick into. After the picking process SKU containers return to the system while order containers can be routed towards the shipping area. 

The design is flexible as well. Containers can be transported from any aisle to any pick station. In case a high level of automation is needed, FlashPick can be combined with TGW’s PickCenter Rovolution, an automated picking robot. “Our Rovolution is an automated cognitive robot which is intelligent, self-learning and flexible,” Schlenkrich added. 

It is also possible to add a digital twin of Rovolution to the system. This is a complete digital representation which is connected to the physical system in real time and grows with it. The digital twin makes the behaviour visible, comprehensible and predictable. With its help, the logistics provider can analyse the data, learn from it and visualise it in 3D models. This means that not only the current condition of Rovolution can be monitored, but with a replay function, it is also possible to look back at the past in order to detect causes of unexpected events.

Urban Outfitters

The fashion business has appointed TGW to design and implement an automation solution for its new fulfilment centre in the UK, which is due to go live in 2021.

The Peterborough facility will have FlashPick from TGW - the smart one-stop solution for automated split case picking - as its core automation element.

URBN International & European Logistics Director Iain Bartholomew said: “TGW impressed us during the RFP process, demonstrating a clarity of thinking which is necessary when considering a strategic solution for our complex product range.”

“Another example of data analysis is the measuring of the electrical current draw in the KingDrive rollers of our scalable conveying technology systems. If the actual value is different from the target value, the client can react promptly. Compared to conventional rollers, our high-performance rollers run nearly twice as long before they need replacement,” Schlenkrich said. 

Smart maintenance and support

TGW also has a complete array of state-of-the-art tools for maintenance and support. The smart glasses TGW has been using for several years now is only one example. They allow to send information, images and data to the on-site employees in a live stream in order to solve problems. 

Digital maintenance systems, such as TGW’s CMMS and condition-based monitoring are very useful tools. Condition-based monitoring uses sensors to acquire status data for central components, which are compared to the empirical data in TGW’s database. Based on this data, usage-based maintenance models are created. These allow for a faster intervention and a better prediction of required maintenance. 

Future challenges

More and more companies use 3D-printing technology for their spare parts, but Schlenkrich does not believe this trend will end the need for centralized spare part warehouses. “Technology is constantly improving, and a wide variety of materials can now be printed. But here again, the question is whether 3D printing is more cost-effective or whether conventional manufacturing is more feasible. It is clear that 3D printing will play an important role in the future for certain segments, such as discontinued spare parts. But, in my opinion, many fast-selling items will continue to be manufactured and delivered conventionally. In addition to cost-effectiveness, quality requirements are currently another reason to decide against 3D printers in some segments.”

The world is changing. And as the current coronavirus shows very clearly: it is changing very rapidly. Alternative drive technologies, autonomous vehicles and artificial intelligence will also have an impact on how autonomous workshops organise their work. This will also have an effect on spare parts logistics, which has to adapt to this new reality. As said before, only those who offer a high level of service will survive on the market.

For more information, please visit www.tgw-group.com

PUMA

The sports brand is pushing ahead with the centralisation of its European distribution network. Its new Central European Warehouse in Bavaria is scheduled to start operations in spring of 2021. At the core of the system is TGW’s FlashPick for automated single-item picking.

PUMA Senior Head of Logistics Maximilian Molkenthin said: “We will use TGW’s FlashPick at the new DC and we will have 713,000 storage locations, with some 122,000 SKUs. We envisage shipping 74m units per year, with our B2B Peak picking 13,500 cartons per hour, and the B2C Peak picking 124,000 pieces per day.”

 
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