SERVICE PARTS MANAGEMENT
Logistics and Parts Just Can’t
Go Their Separate Ways
The top strategic action tied to
improving parts management
for service and support organizations in a recent Aberdeen
research study on service parts
logistics was to integrate service parts planning, forecasting
and execution with overall
logistics functions (i.e., procurement, supply chain management, inventory management) to ensure the delivery
of the right part to the end
customer when an asset goes
down or is not operating at
full efficiency.
—Aly Pinder Jr., senior research associ-
ate, Aberdeen Group
rganizations can no longer view their service and support oper-
ations (i.e., logistics, parts management) as disparate silos. In a
2011 survey of more than 200 spare parts and logistics execu-
tives, nearly 70 percent of all respondents stated that they view
parts management and logistics as linked. These two aspects of the organiza-
tion have a direct impact on the customer experience in a number of ways. Cus-
tomers feel most of the same challenges as the OEM or service provider in this
current economy (i.e., shrinking margins) and can ill afford to have non-per-
forming equipment. As customers face uncertainty, the top pressure facing
service organizations in regard to improving parts management continues to be
a push for better and more efficient service ( 56 percent of respondents). Not
only are organizations facing external pressures for this need to deliver better
service, they are also finding that inventory management and visibility into the
entire lifecycle of parts is becoming more of a challenge ( 41 percent and 36 per-
cent of respondents, respectively). With all of these issues coming to a head,
organizations must begin to focus on and excel in a few areas:
• Integrate parts management and logistics under Service oversight. Best-in-
class organizations (the top 20 percent of performers) have begun to re-evaluate
the relationship between parts management and logistics execution. Fifty-five per-
cent of top performers have integrated procurement, logistics and parts forecast-
ing under Service oversight to provide the support teams with the added visibility
and control into the delivery of these valuable parts to the customer.
• Analyze customer and product service parts data to aid in forecasting.
Over half of top-performing organizations ( 55 percent) analyze parts data to
ensure that they can manage their service operations to meet and exceed their
customer’s needs.
• Link performance with incentives. Top-performing organizations have
aligned incentive recognition with the behaviors needed to provide the customer service experience required. Organizations that provide incentives for
field technicians and regional service depots to return/transfer parts for repair
in a timely manner have an average of 5 percent returned parts accounted for in
comparison to 8 percent for those who do not.
O
The Outlook
These findings above come from Aberdeen’s Service Part Logistics 2011 report.
In it, fully 50 percent of respondents said it was paramount to integrate service
parts planning, forecasting and execution with overall logistics functions.
Going forward, successful companies—those that can supply the needed part
on time—will have to deliver on that resolution first.
