Service bulletin inventory management and modeling for aerospace parts in customer service organization

• Main Author: Pardede, Erna K. (Erna Kertasasmita)
• Other Authors: Donald B. Rosenfield and Olivier L. de Weck.
• Format: Others
• Language: English
• Published: Massachusetts Institute of Technology 2013
• Subjects: Sloan School of Management.; Engineering Systems Division.; Leaders for Global Operations Program.
• Online Access: http://hdl.handle.net/1721.1/81011

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2013. === Cataloged from PDF version of thesis. === Includes bibliographical references (p. 73-74). === The Customer Service department of United Technology Corporation (UTC) Aerospace System is primarily responsible for providing spare parts, repair services, training, and technical support for products that UTC Aerospace Systems develops. The goal for spares turn-around time is a 7-day or less and for repair turn-around time is a 15 -day or less. In reality, most of parts needed to support spare parts' order and repair operations have lead times that are greater than the targeted turn-around time, which leads to a costly build-to-stock inventory policy. Proper inventory management becomes the focus of the department, given that both inadequate and excess inventory can have a financial impact and damage the overall health of the business. This thesis presents a project to develop a method and implement improvements to the current inventory management. Service Bulletins (SBs) are recommended procedures for repairing products. A SB is issued by UTC Aerospace Systems Customer Service to their customers when there is a safety concern to the current product, or when improvement to the original product design results in either increased performance or lower maintenance costs. Management of a Service Bulletin begins with an engineered solution to an existing product, followed by a ramp up in inventory to support the retrofit activities. Management of the inventory to support these Service Bulletins can be complex and very difficult as it depends on estimates of units in service and timing of units to be returned to UTC Aerospace Systems Repair, and part replacement rate estimates of certain components. Actual units returned, the timing of the returns, and the actual part replacement may vary from earlier estimates made by UTC Aerospace Systems technical personnel during the preparation stages, and therefore require good inventory planning. The author began the project by conducting interviews with key personnel., assessing the current state of service bulletin process, and documenting challenges faced with the current process. An initial hypothesis of the units returned model was made based on the nature of service bulletins (Safety, Retrofit, and Attrition). Data extraction and analysis of existing service bulletin units returned was conducted, focusing on the descriptive texts that were provided by repair personnel. Detailed reviews with subject matter experts were conducted to confirm the observations and analysis. Finally, a consensus was reached on the type of service bulletin that the author should focus on assessing. Mechanistic growth models of units returned were developed and proposed. The models could be used to determine order points based on average return rates and variance. Utilizing the models to build process monitoring tool in turn could support inventory reduction by at least 30% while reducing the amount of work order shortages. === by Erna K. Pardede. === S.M. === M.B.A.