Meeting Goals in a Cost-Effective Way
It is 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 benefits 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 organization. One example is a company that failed to have their 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 highlights the importance that metrics are balanced across your company encourage positive behavior and benefits consistently throughout 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 are getting the part to the customer on time, but you’re doing it in a really expensive way, then you really are not doing your company a service 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 will 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 supported. 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 product that is being de-installed in the field and harvest the end-of-life components for re-use.
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 sure 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 your them accountable to 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 that 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 at site, 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 used 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 the what has been learned from past service events, when a similar call comes in tool 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.
- KPI’S and metrics settings are critical to making sure we 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
- AI, 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.