Creating the Spare Parts Logistics Business of the Future

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From the Pony Express to next-day deliveries to retailers experimenting with drones delivering packages to your doorstep within hours, response times continue to get shorter, and expectations have never been higher for logistics and the spare parts supply chain.

“For want of a nail . . . the kingdom was lost.”

Logistics

So goes the old proverb that illustrates how critical it is to have the right part, at the right place, at the right time. From the Pony Express to next-day deliveries to retailers experimenting with drones delivering packages to your doorstep within hours, response times continue to get shorter, and expectations have never been higher for logistics and the spare parts supply chain.

 

A Hot Topic in the Tech Industry

Spare parts logistics is a hot topic in the technology industry today, registering as one of the top TSIA inquiries of 2013. Why? The impact on the “kingdom” is huge in terms of both financial performance and customer satisfaction. Spare parts and logistics costs can be upwards of 10 percent of service revenue, and the lack of a part can result in significant downtime and lost output.

Further, global market and technology trends will continue to generate new requirements toward end-to-end process optimization of the supply chain. For instance, “green” initiatives will put additional pressure on reverse logistics and depot repair operations by increasing the flow of parts two to three times per spare part order. To meet these challenges, new logistics concepts will be needed to create the spare parts business of the future.

 

A Unique Opportunity

These are the underlying trends that have led TSIA to launch the 2014 Spare Parts Logistics & Supply Chain Survey. We have opened up the study to all TSIA members to take advantage of a fairly common spare parts logistics process with no major differences across industries. This also presents a unique opportunity to benchmark and analyze different business models and their effectiveness. Survey objectives include:

  • Answering the question, “How efficient is my spare parts supply chain logistics vs. the industry?”
  • Identifying emerging trends and advanced logistics concepts.
  • The impact of software tools and outsourcing partners on financial and operational performance.
  • The impact of data transparency and data intelligence on the efficiency of the supply chain.

As the industry is driven toward an “outcome-based” focus,1, 2 increasing uptime will lead to improved customer outcomes―the key to revenue growth in a B4B world.

So, not only can an efficient spare parts supply chain prevent the loss of a “kingdom”; it can also serve as a point of differentiation that leads to growth. We are looking forward to a great study and some interesting findings.

 

To Participate

The survey is open to TSIA members only, with participants receiving a detailed summary of the survey findings in March of 2014. The deadline for participating in the survey is February 14, 2014. As with every validated study conducted by TSIA, respondent anonymity is maintained for all participants. To participate in the survey, please email me at vele.galovski@tsia.com.

 

References

1. Wood, J.B., Todd Hewlin, and Thomas Lah. 2013. B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship. Technology Services Industry Association.

2. Galovski, Vele. 2013. “The Impact of B4B on Field Services.” Technology Services Industry Association white paper.

 

About the Author

vele-galovski

Vele Galovski is vice president of research, Field Services, for TSIA. Using his nearly 30 years of industry experience, he has consistently helped companies both large and small drive double-digit top-line growth with a proven retain, gain, and grow strategy. Vele has also written a book, The Perpetual Innovation Machine, which describes a holistic approach to management based on ambitious goal setting, data driven analysis, skillful prioritization, inspiring leadership, and the lost art of employee engagement. He may be contacted at vele.galovski@tsia.com

Read more from Vele on these topics:
Field Services | Intro to IoT | Spare Parts Logistics | Benchmarking

 

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Topics: outcome-based services, B4B, service revenue, customer satisfaction, spare parts logistics, field services

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