Is Your Service Parts Supply Chain Consumer Driven?
When it’s time for end customers to get the products they purchased repaired or serviced—or perhaps enhanced with a new accessory—they likely will have the same expectations for convenience, service and speed as they did during the initial sale.
Customers, say global management consultants McKinsey & Co., view their experience with a product or brand through the lens of an end-to-end journey—not a series of designated touch points. When they buy products with long life cycles, such as home appliances, lawn and garden equipment, power tools or electronics, that journey could last well beyond the date of purchase.
It’s no secret that customer expectations are on the rise; so, what does this mean for your operational practices after the sale?
Service Is Key
In a consumer-driven world, service levels should be a priority, and your service parts operations should be structured around meeting them. This includes the contractors and technicians you service and upon whom consumers of your products rely.
If you aren’t meeting desired levels with your current solution, you might want to consider partnering with an experienced supply chain management firm who can help you. Great service reputations can lead to competitive advantage, which can positively impact profitability.
Make sure the partner you’re considering understands the difference between finished goods and service parts supply chains.
Lots of SKUs, Lots of Suppliers
Managing a service parts business means dealing with a variety of suppliers that are oftentimes geographically dispersed, located in countries around the world. Since there typically is little or no supplier integration, there is little or no ability to track or gain visibility to inventory. Managing lead times can be challenging, too, depending on from where the inventory is coming.
The right supply chain partner will have experience working with suppliers across the globe, as well as monitoring and managing their performance.
Exceptional Supply Chain Management Delivers Exceptional Customer Experience
Service parts supply chains are more complicated than those of finished goods. Typically, there are more SKUs, more suppliers and more unpredictable and uneven demand. If not well managed, these complexities can lead to inconsistencies in service due to inventory availability or stock outs, speed of response or the inability to customize the order experience.
Maintaining Service Levels: A Balancing Act
The decision to stock a part is oftentimes driven by the cost to hold it—not customer demand. There are fast movers and slow movers to consider, as well as how much stock to hold with more costly parts, or parts supporting newly introduced products. The challenge lies in what and how much to stock—and where.
Your supply chain partner should be able to help you strike a balance between improving service levels to your customers and reducing inventory costs. With an increasing number of SKUs, an international supplier base and unpredictable demand, companies seek experienced partners who can deploy forecasting technology, manage international suppliers, provide inventory management and execute order fulfillment—thus, managing the end-to end supply chain.
Tackling the Forecasting Challenge
Forecasting can be tricky with service parts inventory. Unlike forecasting for finished goods, which considers sales projections, promotions, seasonality and assumed growth, assessing inventory needs for a wide variety of parts with uneven or unknown demand may require analyzing historical data, service levels, breakage patterns and new product introductions.
A partner with experience in this kind of forecasting can help you with smart planning that leads to maximizing your inventory investment.
Functions Outside Your Core Competency
Perhaps you want to have your partner set up relationships with your suppliers and do vendor management with manufacturers. What is their track record in vendor managed inventory?
From an operational standpoint, the decision to outsource should be based on the desire to optimize productivity that leads you to focus on your core competency. You should be looking for agility and efficiency. Also, do they have systems in place for visibility and accurate and speedy fulfillment?
Delivering on Expectations
Ultimately, the goal in effective service parts management is to not lose sight of the customer experience. Loyalty is at stake. A knowledgeable and trustworthy partner can help you take complexity out and put profitability in, while supporting you as you build your business and grow your relationships with customers.
What challenges are you facing in your service parts supply chain? Is it consumer driven? Let us know your thoughts.