What are the Benefits of Spare Parts Inventory Management Software for OEMs?
While we’ve spent on a lot of time here on the blog explaining why optimizing your spare parts inventory is so important, this week we thought it might be good to take a step back and look at one specific aspect at a higher level: Why should you use spare parts inventory management software?
As you’re probably aware, in recent years, after-sales service has become increasingly important for OEMs. As customer expectations continue to rise, you need to deliver parts faster. You need insight into inventory levels and customer service demands across locations. And you need to serve networks that are increasingly spread out and disconnected. The global pandemic has made after-sales service even more of a strategic focus, with the down economy resulting in many manufacturers falling short of sales goals. Strategic inventory management offers a great opportunity to reduce costs and make up for lost revenue.
At the same time, many OEMs are reluctant to start using spare parts inventory management software, choosing instead to stick with a homegrown or legacy solution. Maybe you think a modern solution is too expensive. Maybe it’s because your after-sales service is already profitable. Or maybe it’s just because that’s the way you’ve always done things. Whatever the reason, we’re here to tell you why inventory management software using off-the-shelf tools is not only a good investment—it’s a must for controlling costs and avoiding long-term financial risk.
Move beyond manual
If you’re using a basic software system with limited features, a number of separate systems that don’t talk to each other, or purely manual methods like Excel spreadsheets, the majority of your time and resources are going towards managing these processes—when it should be spent on optimizing your inventory and looking for efficiency gains. A single, centralized system allows you to easily track inventory needs and availability across your entire network. Having this insight at your fingertips is a game changer—you can make quick decisions at any time, for any location, based on accurate information. Homegrown solutions simply lack the functionality that’s required for modern service parts planning.
Automate, analyze, and anticipate
A modern inventory management system combines AI, analytics, and strategic reordering policies to optimize inventory. You can track your spare parts stock levels across dealers, markets, or locations, and set automatic alerts or orders to keep what’s on the shelf aligned to actual customer needs. A sophisticated system can also take into account things like supplier and repair lead times, helping to reduce backlog and improve service. Advanced analytics also help you balance service levels against inventory to reduce risk. And a good inventory simulation module can predict the impact of changing targeted service levels, stock levels, and invested capital – running “what if” scenarios before changing your policies helps you make better decisions.
Go global and get connected
Whether you’re serving a handful of locations in different parts of town or thousands of dealerships around the world, you need a modern solution to support multi-location distribution networks. Disconnected systems create inefficiencies at many levels—the more systems you’re using, the less efficient your operation becomes. A modern, centralized system lays the foundation for a coordinated global supply chain. And global inventory management solutions can support multi-level management and planning across the entire supply chain. It’s a huge advantage to be able to optimize inventory levels and gain visibility into your full network from a single screen.
Find new ways to reduce costs and balance risk
Warehousing spare parts is expensive—typically around 20-30% of the value of the inventory. With a sophisticated solution that supports strategic stocking, you can lower warehousing costs without impacting service. You can stock inventory where it’s needed or choose local suppliers to slash lead times and lower shipping costs without slowing down repairs. A centralized system will provide the insight you need to understand which items are in demand in which markets, and redistribute stock by location. It also allows you to balance excess inventory stocking with the need for resiliency in your supply chain. Automating supply-level monitoring and top-ups will also help to ensure you have the parts you need on hand, when you need them. Plus, consolidating data makes it easier to identify obsolete inventory that you can recycle or write off—freeing up warehouse space for the parts you really need.
Optimize at scale
This year has been difficult for businesses around the globe, and balancing immediate needs with long-term growth goals is always a challenge. Making the decision to replace existing tools and processes with a modern, sophisticated solution is hard. But it’s an investment that will give you a competitive advantage right out of the gate—and that advantage will only increase as your business grows.
If your competitors have already made the move, you’re already falling behind. Boost productivity and efficiency across the board by giving your teams the tools to work smarter and faster. Minimizing manual processes lets you react faster and support rapid growth efficiently, without a lot of manual intervention by planners and buyers. As your business and your needs evolve, a sophisticated system will allow you to pivot quickly—embracing new strategies that can make all the difference to how well you perform in new markets.
If you’re ready to step into the future of spare parts inventory management or simply want to learn more about how it works, let’s talk. Syncron Inventory™delivers the insight, flexibility, and agility OEMs need to succeed in today’s market.
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