The business of managing spare parts is complex and under constant pressure to become leaner and more efficient while maintaining, or improving, key performance indicators and service level agreements. Not an easy task, by any means. Why is the business of service spare parts under this continual pressure? Well, there are three main reasons for this.
Top 3 Reasons Spare Parts are Under Pressure
First, parts are a critical component of the overall field service value chain. Parts replacement is a common activity when an engineer must be dispatched to a customer site. In fact, according to the TSIA Field Service Benchmark Survey, TSIA members reported that 59 percent of service calls require parts.
Second, the traditional revenue base is expanding globally, and emerging markets are becoming increasingly pertinent in top-line revenue growth. So, field service and parts organizations have to support this global expansion in the face of many unknowns.
Lastly, TSIA has been reporting that quarterly product revenues are declining and service revenues are on the rise (based on results of the TSIA Service 50 report for Q1 2013). Hence, service executives are under increased pressure to reduce costs, increase efficiencies, and grow services revenues.
Creating Efficient Spare Parts Management
For technology companies, efficient spare parts management is no small task. For these organizations, the typical number of parts in any given product (as well as the complexity) is higher than those of non-technology organizations. As well, consumers of technology have become more demanding as products have become faster and more powerful. They rely on these products to do more, which means high levels of uptime is a must!
As a result, it is generally unacceptable for field service to fail in getting a customer up and running on the first visit. Having to make multiple visits to a customer site in order to address the same issue results in higher costs (with the average cost of an on-site visit being just over $1,000) and lower customer satisfaction. Therefore, ensuring that the field service engineer has the right parts on hand for each visit is a critical component of successful incident resolulution, regardless of what country you are operating in. All of this simply means that the linkage between the spare parts and field service organizations must be tight, and they must operate as one unit.
If you are struggling with the many challenges of running a spare parts operation, one of the most frustrating issues is feeling like you have nowhere to turn for answers. Wouldn't it be great if you had a group of experts at your disposal to get candid feedback on your top concerns? At TSIA, we couldn't agree more. And so we've created a great opportunity that specifically addresses this need.
Next week we will be hosting our annual Technology Services World (TSW) Best Practices conference in Silicon Valley. During this event, we are offering the chance for attendees to address their most pressing issues related to service parts management. To facilitate this, we have created a session aptly titled, Make Over Your Spare Parts Management Business. We have assembled a panel of experts from Eastman Kodak, HP, Applied Materials, and PwC. This live session will focus on those challenges that are most pertinent to your service parts management business. For this session, we encourage attendees to come equipped with questions related to these topic areas:
- Inventory management/planning and forecasting.
- Reverse logistics - reducing scrap rates/recycling/green initiatives.
- Supporting global markets/regional challenges.
- Driving revenue through spare parts.
Our panel of industry experts will take your questions and provide lessons learned and actionable recommendations to address your real-world challenges and opportunities for transforming your spare parts business. Because this will be an open and frank discussion, session participants will also have the opportunity (and are encouraged) to offer their own advice and insights. The net is that we can all come together and learn from one other in an open and supportive environment. We are looking forward to a great session and hope that you will make it a point to not miss this unique opportunity!
About the Author
Ravi Naidu is the former director of field services research for TSIA. He managed TSIA's efforts in industry benchmarking, research, and thought leadership in this important service discipline. Ravi has been involved in the technology services industry for more than 16 years, with previous posts at IBM and Internet Security Systems (ISS).