Service parts management, Purchasing Strategies, Product Life Cycle (synthèse en anglais)

The Nether lands, Eindhoven, Apr il 2011

Student Identity Number 0548869

in partial fulfilment of the requirements for the degree of

Master of Science

in Innovation Management

Supervisors:

Ir. B. Mollen, Philips Healthcare

Dr. Ir. W. van der Valk, TU/e, ITEM

Prof. Dr. A.J. van Weele TU/e, ITEM

Ir.Dr. S.D.P. Flapper, TU/e, OPAC

Identification of Purchasing and

Supply Strategies for Service Parts:

A lifecycle perspective

by

Ronald Beekhuizen

II

TUE. Department Industrial Engineering & Innovation Sciences

Series Master Theses Innovation Management

Subject headings: Service parts management, Purchasing Strategies, Product Life Cycle

III

“A business absolutely devoted to service will

have only one worry about profits, they will be

embarrassingly large”

Henry Ford (1863 – 1947)

Founder of the Ford Motor Company

IV

Abstract

This master thesis project is a single holistic case study executed at Philips Healthcare. The goal of this

study has been to investigate how the purchasing strategies of OEMs producing capital goods should be

organized to assure availability of service parts during the decline stage of the lifecycle while minimizing

costs. This study has generated useful insights to introduce, adapt and expand some of the policies within

Philips Healthcare with regard to purchasing Service Parts. Furthermore, it has also identified five

additional strategies for purchasing service parts in addition to the work of Chenoweth et al. (2011) and

has provided insight in the drivers influencing these strategies.

V

Preface and acknowledgements

Best, April 20th, 2011

This report is the result of my Master Thesis project, for the Master Innovation Management from the

Eindhoven University of Technology in the Netherlands. I conducted this project from September 2010 to

April 2011 for Philips Healthcare in Best. During this project, I got to know how much about purchasing,

service parts management and the challenges related to purchasing service parts at Philips Healthcare.

During the project, I have had the pleasure to work with inspiring people from both Philips Healthcare and

the Eindhoven University of Technology.

From Philips Healthcare, I would like to thank Bert Mollen, the initiator and company supervisor of the

project. I have enjoyed our biweekly meetings and appreciate the support and insights you provided me

with during the project. I have learned a lot from you during this project and I expect this to continue in the

near future. Furthermore, I would also like to thank my colleagues from Supply Management and

specially the members of the Service Purchasing Program. I own thanks to every one of you that made

the time in his or her hectic day to provide me with the required information I needed for my project.

From the Eindhoven University of Technology, my thanks go to Wendy van der Valk and Professor van

Weele who sequentially have been my primary supervisor. I have enjoyed the discussions I had with both

of you about my project. You have both been a source of inspiration and support of which I am very

grateful. As my second supervisor, I want to thank Simme Douwe Flapper for his time and critical reviews

of my work.

This project puts an end to my incredibly pleasant years as a student. I will never forget how much fun

these years have been. For this I have to thank my family and friends. Special thanks go to my parents,

who supported me in all possible ways throughout my studies.

Ronald Beekhuizen

VI

Management Summary

In the academic purchasing literature, there has been very little attention for purchasing strategies linked

to the decline stage of the lifecycle. Although Birou (1997) describes it is troublesome and she suggests

her colleagues to investigate this, fifteen years later nothing has changed. Strategies for purchasing

service parts, which can be seen as an important subset of strategies in the decline stage for OEMs of

capital goods, are also not described in the academic purchasing literature. Only the RAND institute has

recently published a study about purchasing strategies for service parts (Chenoweth et al. 2010). Studies

from an operations research perspective do provide suitable solutions to improve operational

performance of the after sales network (e.g. Cohen et al. 2006, Kranenburg & Van Houtum 2008). These

studies however omit the management of the buyer-supplier relationship and the potential benefits that

arise

...