A cost-perspective on redistribution of aftermarket parts at Sandvik Stationary Crushing and Screening
(2024) MIOM05 20241Department of Mechanical Engineering Sciences
Production Management
- Abstract
- Manufacturing companies face mounting pressure to reduce inventory levels because of high interest rates, while simultaneously meeting an increase in customer demands for shorter lead times and customizable products, increasing strain on supply chains. The logistics department (SMCL) within Sandvik, the investigated company, operates several warehouses around the world. Their supplier network is built up by a central warehouse located in the Netherlands which supplies local distribution centers spread out across the globe. For Sandvik’s aftermarket parts, there has been a build-up of overstock in the different distribution centers. Because of this, SMCL is currently investigating how redistribution of the overstocked aftermarket parts back... (More)
- Manufacturing companies face mounting pressure to reduce inventory levels because of high interest rates, while simultaneously meeting an increase in customer demands for shorter lead times and customizable products, increasing strain on supply chains. The logistics department (SMCL) within Sandvik, the investigated company, operates several warehouses around the world. Their supplier network is built up by a central warehouse located in the Netherlands which supplies local distribution centers spread out across the globe. For Sandvik’s aftermarket parts, there has been a build-up of overstock in the different distribution centers. Because of this, SMCL is currently investigating how redistribution of the overstocked aftermarket parts back to the central warehouse could alleviate some of the pressure. Based on this, the purpose of this thesis is to analyze and define the major cost bearers associated with the redistribution of aftermarket parts, and to analyze if redistribution from Sandvik’s regional warehouses back to the central warehouse would decrease their stock levels throughout their warehouses. Based on the analysis, a framework will be presented that will aid Sandvik in understanding which components are most advantageous from a cost-perspective to redistribute. As a foundation for the framework the following three questions will be answered.
Does redistribution back to the central warehouse increase the probability that an item will be sold?
What are the major cost-bearers associated with redistribution within SMCL?
In what situations is redistribution advantageous from a cost-perspective?
The employed methodology for this thesis was a case-study as it offers an in-depth examination of a specific phenomenon. In conclusion, it could not be found that an arbitrary item in the central warehouse had a higher probability of being sold than the same item would have in a distribution center. Furthermore, the major cost-bearers for redistribution were found to be the logistics cost, the fixed order handling cost and the inventory carrying cost. Lastly, two criteria were found for a redistribution to be advantageous from a cost-perspective. Based on these two criteria and the analysis of the redistribution costs, a framework was constructed. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9166136
- author
- Söderpalm, Erik LU
- supervisor
- organization
- course
- MIOM05 20241
- year
- 2024
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Redistriubtion, Inventory Management, OSMI, Inventory turnover rate
- other publication id
- 24/5294
- language
- English
- id
- 9166136
- date added to LUP
- 2024-06-25 15:20:07
- date last changed
- 2024-06-26 17:45:48
@misc{9166136,
abstract = {{Manufacturing companies face mounting pressure to reduce inventory levels because of high interest rates, while simultaneously meeting an increase in customer demands for shorter lead times and customizable products, increasing strain on supply chains. The logistics department (SMCL) within Sandvik, the investigated company, operates several warehouses around the world. Their supplier network is built up by a central warehouse located in the Netherlands which supplies local distribution centers spread out across the globe. For Sandvik’s aftermarket parts, there has been a build-up of overstock in the different distribution centers. Because of this, SMCL is currently investigating how redistribution of the overstocked aftermarket parts back to the central warehouse could alleviate some of the pressure. Based on this, the purpose of this thesis is to analyze and define the major cost bearers associated with the redistribution of aftermarket parts, and to analyze if redistribution from Sandvik’s regional warehouses back to the central warehouse would decrease their stock levels throughout their warehouses. Based on the analysis, a framework will be presented that will aid Sandvik in understanding which components are most advantageous from a cost-perspective to redistribute. As a foundation for the framework the following three questions will be answered.
Does redistribution back to the central warehouse increase the probability that an item will be sold?
What are the major cost-bearers associated with redistribution within SMCL?
In what situations is redistribution advantageous from a cost-perspective?
The employed methodology for this thesis was a case-study as it offers an in-depth examination of a specific phenomenon. In conclusion, it could not be found that an arbitrary item in the central warehouse had a higher probability of being sold than the same item would have in a distribution center. Furthermore, the major cost-bearers for redistribution were found to be the logistics cost, the fixed order handling cost and the inventory carrying cost. Lastly, two criteria were found for a redistribution to be advantageous from a cost-perspective. Based on these two criteria and the analysis of the redistribution costs, a framework was constructed.}},
author = {{Söderpalm, Erik}},
language = {{eng}},
note = {{Student Paper}},
title = {{A cost-perspective on redistribution of aftermarket parts at Sandvik Stationary Crushing and Screening}},
year = {{2024}},
}