When it comes to service parts planning, it can be tempting for original equipment manufacturers (OEMs) to go with a traditional inventory planning solution that seemingly covers all the bases. But, in fact, the opposite is true: finding a growing inventory planning provider that focuses on after-sales service is the best choice for OEMs.
Why Manufacturers Should Choose a Growing Inventory Planning Provider
Finding an inventory planning provider that specializes in after-sales service is actually extremely beneficial for OEMs. Why? Because the demand streams in aftermarket inventory are different than any other inventory planning scenario. Service part inventory planning is different than manufacturing supplies or finished goods inventory – the demand comes from a variety of sources, most of which you can’t identify. It’s intermittent, it’s oftentimes very clunky – with great variability in terms of quantity and duration – and it comes at different points in an OEMs supply chain.
For instance, manufacturing supply inventory management happens in OEM factories and finished goods inventory is managed in retail outlets. But, when it comes to service parts planning, these can be managed by any provider of after-sales service. And while you may have an idea if, say, a vehicle is serviced at the dealer where it was purchased – as soon as it changes hands, that can change. There’s really no way to know where the demand is going to resurface.
That’s why a growing inventory planning provider that is solely focused on understanding the after-sales service world is going to better incorporate the features necessary to manage these complex systems into their inventory planning solution.
How Service Parts Planning Differs from Traditional Inventory Management
In a traditional inventory scenario, OEMs face a much simpler proposition. Again, take finished goods for example; one industrial digger provided by CAT equals one unit, made up of many smaller parts. Because this single unit of parts is limited, an OEM can plan exactly where those items are going to be for delivery when a customer makes an initial purchase.
But, with service parts, however, it’s not such a simple stream. Say one of the tracks on the aforementioned industrial digger breaks. The OEM at this point not only has to replace the broken part, but they’re responsible for all the parts necessary to complete the service, as well. Think: the tools used, the bolts that go on the broken part – even the kit needed to perform an inspection to make sure the adjacent parts haven’t been damaged.
All of these components make up the OEM’s bill of materials – a whole group of parts related to servicing one part – and they have to plan for the bill of materials demand. Because, even if the initial replacement part is in stock, unless everything else that a mechanic needs to perform the repair is ready, the machine will stay down until all parts are available. And, that’s just one reason service parts planning more complicated than traditional inventory management.
Why Traditional Inventory Providers Unfit for Service Parts Planning
There are different ways to look at why traditional inventory providers are unfit for service parts planning, but the main reason is a lack of after-sales service focus. For starters, most traditional inventory providers cover after-sales service parts planning in a smaller, separate business unit. This is designed so that they can try to continue to focus on after-sales service side of OEMs’ businesses, in addition to general inventory management – but it’s a very small business unit within a much larger company.
This puts service parts planning extremely low on the totem pole of resource allocation. The aftermarket subscription load and the annual recurring revenue is used to fund the core businesses, not on product development. And, without a dedicated responsibility for their own research and development, support and training functions, they’re really not operating at a level that a leading OEM needs to get their after-sales service side of the business fully optimized and ready for the future.
Ultimately, to reach a level of optimization that primes OEMs for a shift toward servitization and the selling of products as a service, there is a level of reinvestment that needs to be prioritized. That’s why, when it comes to service parts planning, leading OEMs are looking to companies like Syncron who are solely focused on growing service revenue and improving after-sales service experiences.
Interested in learning more about how to start your journey toward better inventory optimization for your organization? Reach out to us today to speak to an expert about how you can get started with an intelligent inventory management solution that meets the needs of your business today and will evolve with you into the future.