Real-Time Spare Parts: Paving the Way for IoT Transformation

Written by: David Stephenson

Spare parts.

The term itself turns most progressive managers off. It conjures up images of a grimy auto parts shop and a clerk pawing through piles of boxes to find a distributor for a ’71 DeSoto. At best, no matter what industry you’re in, making, storing and delivering spare parts have always been necessary evils at best.

That was, until the IoT and the breakthrough technology of 3D printing came on the scene. Combined, they will allow a total reinvention of spare parts production and use, converting spare parts into a strategic differentiator (see PTC’s Parts for Progress, which dealt with the software aspect of the transformation). Going forward, both the production and delivery of spare parts will become a testbed for the transition to “precision manufacturing,” which will increase quality, reduce inventory and other costs, and even delight customers and potentially lead to a marketing transformation away from sales of products to providing comprehensive services over the product lifecycle.

Who ever thought spare parts operations could be a strategic differentiator on this scale?

The transition to real-time spare parts will be equal parts of new production technology and data management — an ideal example of the physical/digital convergence.

As “Parts for Progress” explained, shifting economics mean after-sale service has become a lucrative source of revenue: “With aftermarkets now reaching four to five times the size of original equipment sales in many industries, a manufacturer’s prime drivers of revenue and profit growth are likeliest today to come from service. This is, in fact, where the company’s main opportunities for competitive advantage may lie. Superior service parts management is thus strategically key.”

The obstacle to this profitability is service’s complexity: “Managing replacement parts for field service is very different from standard inventory planning on the production side of a product’s lifecycle. Aftersales supply chains are more complicated and tougher to manage. They complete only one to four inventory turns per year, versus six to 50 turns for manufacturing supply chains. In practically every such case, the parts management system’s inadequacies have put the company at risk of falling short of their customers’ expectations for good service. Service teams cannot optimize spare parts usage with the technological tools at hand. The downsides can be severe. Parts inventories may run too high. Customer satisfaction can sink. Service costs may rise, service revenue and profits drop – and opportunities for continued relationships with many of the company’s hardest-won customers may be lost forever.”

Software such as PTC’s Service Parts Management solution will help with much of the transformation, but that doesn't deal with a more fundamental problem: in the past we knew next-to-nothing about when and where the repairs (and thus the spare part) would be needed, leading to a passive and reactive approach: you produced and stockpiled what you hoped would be an adequate number of parts, then sat by and waited for the call that something had broken or worn out, and tried to get it to the repair site ASAP.

By switching to an IoT-based predictive maintenance strategy you can take control of the situation, initiate service at the earliest time that’s convenient for all parties when sensor data indicates a problem is beginning to evolve, and boost customer satisfaction by minimizing their cost.

That’s where the physical side of the digital/physical convergence comes in, with the growing ability to produce replacement parts through 3D printing.

This is an astounding change from our Industrial Age past. We can now do additive manufacturing, in which ribbons or powder is deposited in layers that fuse to create products that are monolithic rather than bolted together or welded from components, and therefore may function more efficiently and be inherently stronger and less likely to break.

In many cases, because of IoT-derived field data on points of failure and other factors that let designers know exactly how parts function (or don’t), the replacement part may actually be superior to the one it replaces, reducing the need for further service while increasing customer satisfaction.

According to PWC, the benefits of 3D parts are impressive:

  • 51% production cost reductions
  • 53% logistics/transportation cost reductions
  • perhaps most important, a whopping 84% reduction in warehousing costs. 

In isolation, both the IoT and 3D printing are amazing. Combined, they can be transformative. Imagine a day in the near future when the data from sensors on products in the field will be analyzed by software that will create a warning pop-up that a key part may break in the near future. Instead of someone having to call the warehouse and order a replacement part, there will be M2M communication that will automatically trigger a 3D printer at a distribution hub near the point of use — or, even more incredible — one that’s owned by the customer itself, so that the OEM’s only responsibility will be to provide the digital download to guide the machine. 

When the product comes back at the end of the work day, the spare part will be right there ready to be installed (oh, and the repair technician won’t have to needlessly disassemble many parts of the apparatus to find the problem: she/he will just don an AR headset and instantly see an exploded view of the product that will show where the problem is).

Nor will the potential benefits of the IoT/3D, digital/physical convergence end with the reduction of time and cost in repairs. Smart companies will use their 3D printed repair initiatives as a testing ground for the day when faster, larger 3D printers will make it feasible to use 3D parts in the original products. In addition to cheaper, stronger parts, that could mean new mass-customized products that would delight customers and bring higher profits. In fact, mainstream manufacturers are already embracing the concept, most notably GE, whose 3D parts include an advanced jet turbine fuel nozzle that would be impossible to produce with conventional techniques.

One 3D expert has a blunt warning: “Only those who recognize the additional value of 3D printing and invest into it will be successful in the future.” —Reinhard Ortner, Krones AG.

Don’t say I didn’t warn you!



Tags: CAD Industrial Internet of Things Automotive Additive Manufacturing Digital Transformation

About the Author

David Stephenson

W. David Stephenson is an internationally-recognized Internet of Things thought leader, strategist, theorist and writer, and long-time futurist. He is principal of Stephenson Strategies and Google ranks his blog as the top non-corporate one on the IoT. He founded the 2,500 member Boston-New England Internet of Things Meetup, and currently heads a crowdsourced/crowdfunded campaign to create a free, citywide IoT data network in Boston. Stephenson is the author of an e-book, SmartStuff: an introduction to the Internet of Things; Managing the Internet of Things Revolution, an i-guide introduction for C-level executives to managing the IoT (sponsored by SAP); and of Data Dynamite: how liberating information will transform our world (Data4All Press, 2011).