E-Business Platform for the Wind Turbine Aftermarket
Spares in Motion is an independent e-business platform for the wind turbine aftermarket. Its services range from spare parts to repair capabilities and used wind turbines. The wind turbine aftermarket is experiencing double-digit growth. To support turbines you need parts and services. By creating transparency in the wind turbine aftermarket the availability of parts and services will increase, leading to a higher, more efficient end turbine output with lower stocking costs.
By Marc Huyzer, Managing Partner, Spares in Motion, The Netherlands
Both founders of Spares in Motion have their background in aerospace and used to work for Fokker Services. Marc was responsible for the aftermarket support for several aircraft types, while Jochem was responsible for all logistic asset management programmes with Fokker Services. Jochem and Marc were positioned in the same management team and it became clear that both had the desire to start their own company. Based on their background and experience they started to look for an industry where they could use the lessons learned in aerospace and add value. Aerospace is a front-runner in logistics and support to optimize the use of the primary assets: aircraft. By identifying an industry with the same characteristics, they have targeted the wind turbine industry.
The characteristics of the wind industry can be compared with aerospace. For example, both assets are expensive and built in serial production; but profit is driven by availability. The availability is partly determined by good maintenance and the availability of parts. Also the industry characteristics are quite similar. For example, the assets are divided over many different owners and you see an increasing number of independent service providers entering the market. Although there are many similarities there is one main difference – the age of the industry. Aerospace can be seen as an old, mature industry while the wind turbine industry is relatively young, but developing rapidly.
Best Practices from Aerospace are Applicable to the Wind Turbine Aftermarket
The aerospace market can be seen as highly competitive and there is a constant focus on cost. On the other hand, profitability is also driven by availability of the asset, the aircraft. To limit the time lost during scheduled and unscheduled maintenance, stocking policies for components are extremely important. To reduce production loss, you must have the correct component available when it fails. As in the wind turbine industry, aircraft components are expensive and extensive stocks drive up capital employed. Having the correct parts becomes even more crucial when maintenance companies offer full service contracts with an uptime guarantee and penalty clauses.
Within aerospace there have been many studies to determine the optimal stocking position to accomplish a certain performance rate. These stocking models are based on removal rates of the component, the repair time, the average repair cost and the replacement cost of the component.
To increase availability and reduce the investment in stock the aerospace industry is making use of virtual stocking locations. At these virtual stock locations maintenance companies sell their overstock or slow-moving stock and buy parts when they need them. These e-business platforms have resulted in an increased availability with a reduced capital employed.
Another advantage of these platforms is to solve obsolescence issues. As many turbine types are not produced any more, the production of spare parts may have been stopped. If these parts break down the supply of replacement parts becomes a problem. The easiest way to solve an obsolescence issue is to repair or to replace the part. These virtual stock locations will increase the transparency and help the maintenance companies to locate the ‘out-of-production’ parts they need. It will also give them an opportunity to buy/sell second-hand parts.
How Does Spares in Motion Work?
Spares in Motion is a platform that connects demand and supply of parts, repairs and second-hand wind turbines. Sellers can place their products, and the repair capabilities that they can perform, on the site. Buyers can then locate the part they need and contact the seller. To be completely independent Spares in Motion does not have its own stock and is also not within the transaction. All deals are done directly between buyer and seller. For buyers it is free of charge to use the platform to look for parts, repairs and used wind turbines. For those companies that present their products and services for increased (online) exposure, a monthly fee is required to be paid to Spares in Motion.Spares in Motion has a cross-border focus. This means that all content on Spares in Motion is published in four different languages: English, Spanish, German and French (available the beginning of March). This gives local professionals the opportunity to search globally in the language they prefer. This cross-border focus will give sellers the opportunity to reach customers that they would not have been able to reach before. It is Spares in Motion’s goal to connect demand and supply. If a buyer is looking for certain parts, and we have it on our platform, it is our job to make sure they find the part.
The Market Development
As the global wind services market is expected to grow from € 4.6 billion to € 10.8 billion by 2020 there is likely to be an even stronger growth in the need for parts and repairs. This strong growth is driven by aging turbines that require maintenance. The European wind service market is around € 2.3 billion and has the largest number of aging turbines. To support these out-of-warranty turbines independent service providers are entering the market with their focus on cost efficiency, quality and customer service. There is also likely to be a trend where wind turbine owners, such as utility companies, will start their own maintenance programmes.
Looking at the out-of-warranty segment, the growth of the installed base in the past five years can be seen as the growth for the upcoming five years. This double-digit growth creates significant opportunities for the independent service providers as well as the OEMs. To support this growth there will be a need for spare parts. Spares in Motion can help the industry to increase the availability of these parts at lower cost.
Are E-Business Platforms a Threat or an Opportunity?
Looking at our experience in aerospace, e-business platforms are an opportunity and not a threat. For example, e-business platforms help the OEM to support their out-of-production turbines, sell slow-moving stock and solve obsolescence issues. The support of out-of-production turbines is very important for the image of the OEM. E-business platforms will help independent service providers to find an alternative source to increase the availability of spare parts, reduce their capital employed, and generate a sales channel to sell their slow-moving stock.
Spares in Motion on Track to Become the E-business Platform in Europe
Spares in Motion started its platform in September 2012 and now supports over 20 companies from Germany, the UK, Denmark and the Netherlands to create (online) exposure for their products and services. With 350 registered users from Europe, the USA and Asia, Spares in Motion truly enhances global trading in the wind turbine aftermarket.
Spares in Motion is an independent e-business platform for the wind turbine aftermarket. Its services range from spare parts to repair capabilities and used wind turbines. The wind turbine aftermarket is experiencing double-digit growth. To support turbines you need parts and services. By creating transparency in the wind turbine aftermarket the availability of parts and services will increase, leading to a higher, more efficient end turbine output with lower stocking costs.By Marc Huyzer, Managing Partner, Spares in Motion, The Netherlands
Both founders of Spares in Motion have their background in aerospace and used to work for Fokker Services. Marc was responsible for the aftermarket support for several aircraft types, while Jochem was responsible for all logistic asset management programmes with Fokker Services. Jochem and Marc were positioned in the same management team and it became clear that both had the desire to start their own company. Based on their background and experience they started to look for an industry where they could use the lessons learned in aerospace and add value. Aerospace is a front-runner in logistics and support to optimize the use of the primary assets: aircraft. By identifying an industry with the same characteristics, they have targeted the wind turbine industry.
The characteristics of the wind industry can be compared with aerospace. For example, both assets are expensive and built in serial production; but profit is driven by availability. The availability is partly determined by good maintenance and the availability of parts. Also the industry characteristics are quite similar. For example, the assets are divided over many different owners and you see an increasing number of independent service providers entering the market. Although there are many similarities there is one main difference – the age of the industry. Aerospace can be seen as an old, mature industry while the wind turbine industry is relatively young, but developing rapidly.
Best Practices from Aerospace are Applicable to the Wind Turbine Aftermarket
The aerospace market can be seen as highly competitive and there is a constant focus on cost. On the other hand, profitability is also driven by availability of the asset, the aircraft. To limit the time lost during scheduled and unscheduled maintenance, stocking policies for components are extremely important. To reduce production loss, you must have the correct component available when it fails. As in the wind turbine industry, aircraft components are expensive and extensive stocks drive up capital employed. Having the correct parts becomes even more crucial when maintenance companies offer full service contracts with an uptime guarantee and penalty clauses.
Within aerospace there have been many studies to determine the optimal stocking position to accomplish a certain performance rate. These stocking models are based on removal rates of the component, the repair time, the average repair cost and the replacement cost of the component.
To increase availability and reduce the investment in stock the aerospace industry is making use of virtual stocking locations. At these virtual stock locations maintenance companies sell their overstock or slow-moving stock and buy parts when they need them. These e-business platforms have resulted in an increased availability with a reduced capital employed.
Another advantage of these platforms is to solve obsolescence issues. As many turbine types are not produced any more, the production of spare parts may have been stopped. If these parts break down the supply of replacement parts becomes a problem. The easiest way to solve an obsolescence issue is to repair or to replace the part. These virtual stock locations will increase the transparency and help the maintenance companies to locate the ‘out-of-production’ parts they need. It will also give them an opportunity to buy/sell second-hand parts.
How Does Spares in Motion Work?
Spares in Motion is a platform that connects demand and supply of parts, repairs and second-hand wind turbines. Sellers can place their products, and the repair capabilities that they can perform, on the site. Buyers can then locate the part they need and contact the seller. To be completely independent Spares in Motion does not have its own stock and is also not within the transaction. All deals are done directly between buyer and seller. For buyers it is free of charge to use the platform to look for parts, repairs and used wind turbines. For those companies that present their products and services for increased (online) exposure, a monthly fee is required to be paid to Spares in Motion.Spares in Motion has a cross-border focus. This means that all content on Spares in Motion is published in four different languages: English, Spanish, German and French (available the beginning of March). This gives local professionals the opportunity to search globally in the language they prefer. This cross-border focus will give sellers the opportunity to reach customers that they would not have been able to reach before. It is Spares in Motion’s goal to connect demand and supply. If a buyer is looking for certain parts, and we have it on our platform, it is our job to make sure they find the part.
The Market Development
As the global wind services market is expected to grow from € 4.6 billion to € 10.8 billion by 2020 there is likely to be an even stronger growth in the need for parts and repairs. This strong growth is driven by aging turbines that require maintenance. The European wind service market is around € 2.3 billion and has the largest number of aging turbines. To support these out-of-warranty turbines independent service providers are entering the market with their focus on cost efficiency, quality and customer service. There is also likely to be a trend where wind turbine owners, such as utility companies, will start their own maintenance programmes.
Looking at the out-of-warranty segment, the growth of the installed base in the past five years can be seen as the growth for the upcoming five years. This double-digit growth creates significant opportunities for the independent service providers as well as the OEMs. To support this growth there will be a need for spare parts. Spares in Motion can help the industry to increase the availability of these parts at lower cost.
Are E-Business Platforms a Threat or an Opportunity?
Looking at our experience in aerospace, e-business platforms are an opportunity and not a threat. For example, e-business platforms help the OEM to support their out-of-production turbines, sell slow-moving stock and solve obsolescence issues. The support of out-of-production turbines is very important for the image of the OEM. E-business platforms will help independent service providers to find an alternative source to increase the availability of spare parts, reduce their capital employed, and generate a sales channel to sell their slow-moving stock.
Spares in Motion on Track to Become the E-business Platform in Europe
Spares in Motion started its platform in September 2012 and now supports over 20 companies from Germany, the UK, Denmark and the Netherlands to create (online) exposure for their products and services. With 350 registered users from Europe, the USA and Asia, Spares in Motion truly enhances global trading in the wind turbine aftermarket.
