Dynamic spare part control for performance-based service contracts
A discrete-event simulation study
Jasper van den Bussche, MSc student at the University of Twente, did research at Thales how to control dynamic spare parts for performance-based service contracts. He developed a tactical decision model that clarifies how to handle incoming failure data, and to dynamically adapt stock levels accordingly.
Thales in the Netherlands is primarily involved in naval defence systems, among others radar systems. A quite new concept within Thales is the offering of after-sales services with performance-based service contracts. To meet the performance requirements stated in the contracts, Thales needs to maintain a supply chain network for the handling of spare parts that reduces the risk of system downtime at the customer, possibly followed by penalties for underperformance. The estimated failure rates of parts form an important indicator of the spare part stock levels, but the accuracy of those estimates is unknown. Therefore, operational failure data will be gathered in the coming years to improve failure rate estimates. This may also lead to stock level updates.