Why Investing in a Sophisticated Inventory Management Solution is Time-Critical

With after-sales service becoming an increasingly important and strategic focus area for manufacturers around the world, why is it that so many organizations are resisting investing in solutions dedicated solely to its optimization? OEMs that continue to rely on homegrown parts planning solutions face hidden costs from capital, service, time and resources. And what they don’t see is that these costs are adding up to more than what they’d be investing in a sophisticated inventory management solution.

So, what’s the hold up? For many, it’s the reality that after-sales service is already profitable as-is – which can be a barrier to change. OEMs are in a perfect conflict of interest, because most of their service organizations are already profitable, so they’re not demanding any major changes right now. In fact, many see change as a potential detriment to the profit extraction of the after-sales service side business. But, the reality is, the sooner you make a change that you know you’re likely to make in the future, the lesser the disruption to operations will be today.

Why Homegrown Parts Planning Isn’t Always the Answer

The fact is: many manufacturers today face higher customer expectations than ever before. So, to maintain customer loyalty and elevate the overall integrity of the brand, parts must be delivered immediately and at a low cost to the after-sales service organization. And, while homegrown parts planning solutions can leave companies in the dark about the relationship between inventory and customer service, the right inventory management solutions can help bridge that gap. Ultimately, an in-house solution puts the company at long term financial risk for the following reasons:

1. It’s all manual.

Relying on a homegrown solution for parts planning still requires manual processes (not to mention multiple reviewers) to achieve acceptable inventory performance. This means time and funding are being spent managing the process rather than on worthwhile cost saving projects like IT initiatives or a more optimal inventory management solution.

2. It’s not predictive.

In-house parts planning processes generally lack the necessary analytical tools to predict the impact of changing service level, stock level and invested capital targets. Balancing service level against inventory level can pose a big risk, with significant cost implications. Inventory analysis and simulation, provided by a sophisticated inventory management solution, can help improve decision-making and produce “what-if” scenarios before implementing policy changes.

3. It’s not global.

Most homegrown solutions are simply not designed for global multi-location service part distribution networks. But, global inventory management solutions are designed specifically for multi-level inventory management, producing an accurate forecast at all points in the supply chain and planning across the entire supply chain to optimize and right size inventory. Not to mention, inventory management solutions that can provide users with full network inventory levels from a single screen equip companies with the best possible information for decision making.

4. It’s disconnected.

Many companies have locations that operate through in-house solutions, but these disconnected systems add levels and levels of inefficiency throughout a global supply chain. A single service parts inventory management solution, however, lays the foundation for a coordinated global supply chain across multiple systems. It’s hard to argue with the immediate benefits of a coordinated system, like improved excess material utilization and better global inventory positioning.

5. It’s antiquated.

Most homegrown solutions lack advanced functionality, which is required for modern service parts planning. One such example is planning for rotable parts, which is different than planning for consumable parts. Automated service part inventory management systems provide advanced optimization for rotable items and dynamic inventory policies. Sophisticated inventory management systems manage scenarios that take into account the repair lead time vs. supplier lead time, providing a more comprehensive view.

Inventory Management – At Scale

Of course, balancing the company’s immediate needs with its long-term growth is both paramount and challenging – especially if your business is a currently in a period of growth. Challenging questions arise, such as whether you should invest aggressively in long-term initiatives or take the less expensive and more conservative approach in the short-term. And, in the case of after-sales service, the debate between homegrown processes and vetted, sophisticated solutions is a significant decision that many manufacturers will face as they scale and grow. Below are a few ways the right inventory management solution can help make your business more scalable over time:

  • Competitive advantage. When you rely on a homegrown parts planning solution while your rival implements a sophisticated inventory management solution, it’s that much more difficult to outperform them. But, by leveraging the knowledge of a solution that was designed solely to suit your specific business operations, you can garner a competitive advantage relative to your competitors.
  • Increased productivity. A solution that’s specifically designed with the manufacturer’s needs in mind can enable teams to work faster and smarter. By relying on one comprehensive technology platform as opposed to using multiple different in-house programs, manufacturers can yield major efficiency gains.
  • Faster reaction time. Rapid growth almost always results in increased manual intervention by planners and buyers, decreasing efficiencies and increasing additional excess inventory. But, a sophisticated inventory management solution can manage your growth more efficiently. And, as your business needs change and your industry evolves, being able to quickly shift strategies can mean the difference between market dominance and obsolesces.

When it comes to after-sales service, reaching these milestones is ultimately about taking the time to shift priorities toward a more collaborative after-sales service ecosystem that’s going to drive the most change. Implementing a sophisticated inventory management solution like Syncron Inventory – even during periods of rapid growth – will allow for multiple options in deployment, increasing the likelihood of better adoption rates, smoother transitions and fewer mishaps.