Aftermarket Portfolio Management in Conflict between Customer Satisfaction and Cost Effectiveness
Extended model ranges and the longer product life-cycles of vehicles have led to longer periods during which spare parts must be available in automotive aftermarkets. However, that the produced and sold number of units of each part number is typically very low at the end of the product life-cycle. Many costs for managing each part number will be independent of this volume and just occur because of fact that the part is still available. The decision on when to delete parts from the offered range would depend on these fixed costs per part, but there is very little research on this issue. This paper describes a case study of an automotive company about the challenges of managing spare part availability, and it offers detailed insights into the selling, general, as well as administrative costs. The main focus of the case study is to examine the annual part number administration costs towards the end of product life cycle. The results, and the provided recommendations, may help managers make strategic decisions – for instance, prohibition of unprofitable part numbers or keeping it alive until the end of the delivery obligation.