Meeting Goals in a Cost-Effective Way
It’s important to point out that metrics can be a challenging topic; often people’s job performance, and sometimes compensation, are tied to them. People may meet their assigned metrics goals, but in a way that doesn’t benefit the company. We have seen practical examples of companies where poorly defined metrics allowed not only the metric to be circumvented, but at an operational cost to the organization. One example is a company that failed to have its excess inventory measurements aligned globally. The timing for measuring excess inventory was inconsistent globally and planners in the Americas would coordinate with planners in other regions to ship pallets of excess inventory back and forth internationally just to meet their personal excess goals! Now, this is an extreme example–but based on a true story–and it highlights the importance that metrics are balanced across your company, encourage positive behavior, and offer consistent benefits across your organization.
Measuring Part Planning Effectiveness
While SLA compliance and customer satisfaction are key measurements, there’s an important flip side to consider: Are you meeting your goals in the most cost-effective way? Measuring if the right part is in the right place, at the right time should not be overlooked.
If you’re getting the part to the customer on time, but you’re doing it in a really expensive way, then you really aren’t benefitting your company in the long run.
For example, if your organization is doing a large amount of expedited shipping such as Next Flight Out (NFO) or long, expensive courier deliveries to get parts into the hands of the correct technician or customer, you may still be meeting the customer’s SLA and keeping the customer happy, but at a higher cost to providing service. Part planning effectiveness–the right part, at the right place, at the right time–is a key pillar to ensure you keep operational costs down.
What to do When End-of-life Spares are Unavailable or are Very Expensive
Businesses sometimes approach last time buy as the only solution to supporting products after manufacturing discontinues certain parts, and this can lead to inventory issues later. When you do a last time buy, you’re typically not going to be correct, and you’ll be left with either too much or not enough inventory to support the full product lifecycle.
The first thing to consider is if there is a great service revenue stream that the product is still supporting. If this is the case, service can easily fund a redesign or validation effort of a possible replacement part, which can be a lower-cost solution over the full lifecycle of the product.
Another strategy is to look for the opportunity to reclaim products that are being de-installed in the field and harvest the end-of-life (EOL) components for reuse.
A final strategy can be looking for the opportunity to substitute the EOL part with a higher-level replacement. The newer revision may have continuing supply capabilities through purchase or repair.
If none of these alternative approaches to a last-time buy are practical, then a disciplined process is key to ensure last buy decisions are made using a repeatable, scientific approach to minimize risk of excess or shortage.
Best Ways to Build Relationships With Logistics Partners for Parts Efficiency
When you have a demand for parts on a 24/7 basis, you likely need to leverage 3PL (third-party logistics) organization(s).
When working with a 3PL partner, here are some important items to consider:
- Communicate regularly. Have a formal, scheduled meetings with a set agenda to avoid things getting lost in all the back and forth of emails.
- Ask what technology the 3PL uses and take advantage of capabilities they can make available to you.
- Hold them accountable for the SLAs you have on your contract.
- Request compensation (in whatever form) in your contract if their side of the contract is not met.
- Ensure you’re taking advantage of the network flexibility afforded to you by engaging with a 3PL so you get the value you’ve bought into and periodically evaluate if your network is aligned with your customer base as it evolves.
- Discuss performance on their side, but also ask what your organization can do to help them perform better.
Innovative Tech and Its Impact on Spare Parts Management
Supply chain does not work in a vacuum; it works in the whole service atmosphere. Technology solutions can have positive impacts on the supply chain. For example, an augmented reality tool can help with having the right parts available to complete service calls. An augmented reality tool can show your engineer virtually what the exact problem is on a mobile device, or if the engineer is onsite, they can use the same tool to communicate with the technical expert back in the headquarters. This really pinpoints what the issue is and helps the engineer order the correct spare parts needed for the fix.
Machine learning tools can use the past three or four years of your service history and analyze what problems the customer had, how different types of problems were the resolved, and what spare parts were used in the resolution of those calls. This way, using what you’ve learned from past service events when a similar call comes in, you can recommend with high confidence which spare parts will solve the problem. The engineer will order the exact parts needed.
Business Intelligence Dashboards
BI dashboards can provide all kinds of beneficial data to inform your long-term strategy in regard to technology and then building it into your scheduling engine. You can then work with your scheduling partner and have a high confidence level on the needed part being available to complete service events on the first visit.
All these new technology items have been long anticipated but are now really becoming reality. The benefits are exciting; ultimately improving the quality of forecasting and part placement and enabling your company to achieve the highest possible first-time fix results.
- KPIs and metrics settings are critical in making sure you have a full view of performance, but metrics must be aligned with all parts of the service delivery teams.
- When tackling end-of-life spare parts, the last time buy should be your last resort.
- Artificial intelligence (AI), the Internet of Things (IoT), and other new technologies are here and if you as a practitioner understand what you want from this data, your technology vendors can harness that data to give you actionable insights to enable you to achieve a high first-time fix.
For even more on this topic, watch the panel recording here.