Service spare parts versus production parts: A centralised or decentralised warehouse?

The management of service spare parts has been a challenging problem for decades. Considering the case in which components are used for both production and spare parts, there are two basic strategies in inventory management: 1) warehouse centralisation, in which production parts and spare parts are stored together in the same warehouse; 2) warehouse decentralisation, in which production parts and spare parts are stored in two different warehouses. Each of these two strategies presents benefits and drawbacks. In the real industrial environment it is possible to find both these strategies. On the other hand, the definition of the warehouse centralisation/decentralisation strategy seems to be related more to following some rules of thumb than to following a structured decision-making process. The aim of this paper is first to define a set of influencing factors driving the decision. Secondly, starting from wide experimental data derived from Italian companies, it provides a rapid and easy heuristic procedure for practitioners based on a decision tree approach to the correct definition of the service spare parts warehouse centralisation/decentralisation strategy.