Spare Parts Logistics: An Essential Part of Global Supply Chain Management
Armstrong & Associates estimates the global spare parts logistics (SPL) market is $52.7 billion a year, representing approximately 6.9 percent of total third-party logistics (3PL) revenue. Since its last publication of a report on this logistics sector, the industry betweeen 2008 and 2016 saw compound annual growth rate (CAGR) of 5.5 percent.
The report includes global SPL market estimates, which are further calculated at the country/region level and for major industry verticals. The spare parts logistics market is driven by high-value manufactured products and their maintenance, particularly in the automotive, industrial, and technological industry verticals.
The automotive industry accounts for $18.1 billion, or 34.3 percent, of total SPL revenue. This is closely followed by the technology industry, at $17.7 billion, or 33.5 percent. The industrial sector accounts for $10.9 billion, or 20.7 percent of total SPL revenue. Elements and healthcare make up smaller portions of the total: $3.9 billion, or 7.4 percent, and $2.1 billion—4.0 percent—respectively.
Shippers rely on third-party logistics providers to optimize short turn-around inventory fulfillment while minimizing costs. To support shippers’ SPL needs, 3PL providers offer services such as parts distribution, order fulfillment, inventory management, reverse logistics, network and parts planning, and transportation and warehouse management. Additionally, some providers offer repair and refurbishment services, call center staffing, field technician training, and value-added services. 3PLs meet shipper needs with their strategically positioned global networks, integrated IT systems, value-added services, reporting and analytics, flexibility, scalability, and standardized processes.
For each of the eight leading providers profiled in the report—UPS, FedEx, DHL, DB Schenker, Dachser, Ryder, SEKO, and CEVA—the report describes services, markets and industries served, technology supporting SPL activities, customers, and case studies. Network scope is also reported, including control tower and forward stocking locations.
UPS, for example, has more than 1,000 forward stocking locations, five global control towers, and over 23,000 global UPS Access Points, over 7,500 of the latter in the United States. FSLs are located within two hours from 79 percent of the U.S. population, and within four hours of 99 percent of the population. In Europe, 99 percent of businesses are located within four hours of a UPS FSL. Extensive use is made of courier services for same-day deliveries and next flight out as needed.