Application of Lean Six Sigma in Spare Parts Inventory Management

After-sales business is a rich resource of profits, and in-time response for service spare parts needs is a guarantee for realizing promise made to customers. Due to uncertainty and non-predictability, the spare parts inventory and lead time management becomes relatively difficult, requiring a balance between enhancing service quality and reducing inventory cost. This paper introduced Lean six-sigma and applied it on a project of spare parts inventory improvement for Air Compressors in Ingersoll Rand to verify Lean six-sigma is feasible and efficient to solve our problem. Lean six-sigma integrates lean thinking and six-sigma improve, utilize DMAICL to identify non value-added activities in process in order to cope with changing customer needs and fasten the service response, connecting value identifying and data analysis together, focusing on inventory turnover and lead time to meet customer needs. In the improve stage, safety stock is set based on service level. The practical result is that inventory turnover increased from 2.5 to 4, and purchasing order fulfillment lead time reduced by 21%, showcasing feasibility and effectiveness in solving this kind of problems. Characteristics and innovativeness presented are:1)Lean-sigma consider service spare parts inventory management and delivery as processes, take inventory turnover and lead time into account, making breakthrough results; 2)At the improve stage of Lean-sigma projects, a proposal to set safety stock based on service level and equipment demand forecast achieve balance covering as much as demand uncertainty and reducing as much as inventory cost; 3)A practical case of Inventory management for service spare parts in Air Compressors in Ingersoll Rand is elaborated, make a clear presentation of DMAICL and pinpoint where are the generality and particularity of Lean-sigma. Finally, the research outlook is made.