On the Service Level Disparities between Spare Parts Segments - A Case Study at Tetra Pak Technical Service

Abstract: Tetra Pack Technical Services provides spare parts for Packaging and Processing product segments. Despite similar inventory management, the processing segment consistently has a lower spare parts service level. Understanding the reasons behind this disparity is crucial, especially with the anticipated increased growth of the Processing segment in the future. The purpose of this thesis is twofold: firstly, to investigate and understand the factors and root causes behind the difference in service levels for spare parts; and secondly, to propose and evaluate potential implementations aimed at increasing the service level for processing materials, from an impact-effort standpoint. The research questions address why the service level is higher for Packaging Spare Parts compared to Processing and what factors and root causes are responsible, as well as how these factors and root causes can be counteracted. An exploratory case study is performed using documentation, archival records, and interviews. Qualitative and quantitative analysis is conducted on the collected data to determine the root causes. The conclusions drawn include that processing spare parts have lower target service levels due to lower sales volumes, processing suppliers exhibit higher lead time variability that is not accounted for, the processing customer base is less likely to communicate demand planning in advance for maintenance, and processing spare parts contain less detailed information for the planning process due to a more decentralized organization. Recommendations include accounting for lead time variability, differentiation between Packaging and Processing item segmentation methods, revising Target Service Level criteria, increasing Planned Ratio for Processing, and understanding supplier behavior differences.