Summary
Title: Spare Parts Distribution at Gambro Renal Products ?? Evaluation of Alternative Distribution Structures for the European Market
Authors: Fredrik Eklundh
Mikael Redin
Supervisors: Maria Björklund, Department of Industrial Management and Logistics, Division of Engineering Logistics, Lund Institute of Technology
Christer Kedström, Department of Business Administration, School of Economics and Management, Lund University
Issues: Logistics can be argued to have the potential to assist the organization when seeking both a cost/productivity advantage and a value advantage. This argument is also held true at the Global Supply Division in Gambro. The supply chains of disposables and monitors have been restructured in order to achieve these advantages. The distribution of spare parts is however currently not performing on desired service levels and gives rise to high costs. Today the spare parts are delivered from a distribution centre, DC, in Lund to the European sales subsidiaries, which keep stocks for further distribution to customers and service technicians. To achieve improvements in the distribution of spare parts two alternative distribution structures have been suggested. The first alternative is to eliminate sales subsidiaries?? stocks and deliver spare parts directly from Lund. The other alternative is to eliminate parts with a low turnover and only keep them at the DC.
There are few theories and methods directly applicable when companies wish to redesign their distribution structures. The main part of the research available is focused on changes that already have been made. Consequently, there is a lack of established tools and frames of reference concerned with how companies should act when ready to make changes in their distribution structures. The research that has been made, is often not conducted in an extensive manner, that is, it considers only aspects on costs or organization, when changing distribution structures. Further, the changes are rarely treated in a comprehensive manner for the supply chain as a whole.
There are even further scarcities in theory concerning the distribution of spare parts. That is, even though spare parts are recognized as an important element of customer service, little research has been made considering distribution of spares in the logistics literature. The more general theories are not always valid since spare parts possess special characteristics, e.g. low and irregular demand, differentiating them from other kinds of goods.
The situation, described and explained above, incorporates issues on both a practical and a theoretical level. From a Gambro perspective a world-class distribution channel might be an important competitive weapon. From an academic standpoint there is a need for system perspective theories of supply chain redesign, especially when focusing on spare parts. We can thus conclude that the situation in Gambro is appropriate for further examination from both these views.
Purpose: Our purpose is to evaluate the two alternative distribution structures for the supply of Gambro spare parts described above, towards the aim of lower costs and increased customer service levels.
Methodology: The conducted research can best be described as case studies within the systems approach. Hence, largely affecting the outcomes of the study is the definition of the system, which has the components; suppliers, DC Lund, sales subsidiaries, service technicians and customers, and the links between these components; transportations and information flows.
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