Daily Archives: April 24, 2008

MCA Solutions – A Strategic Service Parts Management Platform

MCA Solutions, a Philadelphia, PA company, is not only one of the few companies I know of that has an advanced strategic service parts management solution, but one of the very few that only does service parts management. Recognizing that many large manufacturing, semiconductor, high-tech, aerospace and defense companies often have tens of millions, if not hundreds of millions, of dollars tied up in inventory, and that an inventory planning and optimization solution that is off even by a few percentage points can cost these companies millions, if not tens of millions, of dollars annually, the founder of MCA Solutions, Dr. Morris Cohen, who has worked with IBM, Cisco, Applied Materials, Intel, GM, Saturn, Teradyne, and the U.S. Navy, decided to focus the company on this problem alone.

Why? Because the problem is a lot harder than you think. Just like a product has a life-cycle, so does a service part. Not only do you have to accurately forecast how many replacement parts you’re going to need in your network (as well as where they need to be), you have to manage the return, repair, and re-introduction of the repaired part into your inventory. (Remember, many parts are sub-assemblies because it can be too time consuming to replace an individual part – so it needs to be repaired once it is replaced; just like your IT department doesn’t throw out the desktop they just replaced when only the hard-drive needs to be replaced.)

To accurately solve the problem, MCA Solutions allows you to model your entire multi-echelon parts demand network. What does this mean? You can model all of your primary (warehouse) locations, forward locations, forward-forward locations, etc. to as many levels as you need; you can define all of the production lines, aircraft, or other equipment at each location; define the required replacement parts and desired availability and / or target stock levels for each part; define any and all (performance-based) contractual commitments if you are in the business of servicing lines, aircraft, or other commitments for your customer; define historical demand, service requirements, or maintenance plans; and specify the best type of statistical model for the part in question (poisson, normal, or negative binomial – as low volume, high-volume, and sporadic demand parts need to be modeled differently), as well as any location or usage-specific criteria that influences demand.

Furthermore, MCA Solutions’ platform not only allows you to strategically plan cost-optimal inventory levels for target stock and availability levels, but also takes into account current network stock levels and will give you an executable tactical implementation plan which will tell you what needs to be shifted between locations, what needs to be ordered – and when, and which parts should be repaired (and when) and which parts should be retired. In other words, not only does their solution understand product life-cycles, but it also allows understands the entire part life-cycle.

How well does it work? For their target industries, very well. It was chosen by the Navy, who spent almost a year exhaustively evaluating COTS (Commercial Off The Shelf) solutions against their own in-house solution, it’s used by KLA-Tencor and Cisco – who have some of the most extensive parts supply chains in the IT world, and their solution has been chosen by SAP as their preferred parts planning solution. Furthermore, it’s very well designed. You can work at the aggregate network, network (as it allows you to define different part networks if you have to meet different geographies, different environmental regulations, or just want to separate your internal service networks from those of your customers), forward location, location, equipment / contract, or part level, depending on your need; you can compare the current plan to various “what-if” plans that let you see how your altered stock levels / availability levels affect cost or how shifting forward locations (central warehouses) changes stock levels and affected costs; and you can do extensive reporting, graphing, and, if required, data export to Excel (and Power Point). Plus, you can export orders to your external procurement / ERP / MRP systems and import supplier response data. If the lead-times in the responses differ from what the plan expects, the system will automatically update and re-balance the plan.

If you’re in one of their target industries, it’s certainly worth an investigation. Not only is it designed well, but it appears to be very efficient. The average response time for an update even in a fairly sophisticated what-if network model (with hundreds of locations and thousands of parts) is under two seconds. That’s impressive where optimization is involved given the complexity of a multi-echelon network model.