Benefits of OEM-Authorized Spare Parts Inventory Management

Last modified: November 10, 2016

In Part I of this series, we discussed the risks inherent in purchasing counterfeit parts in the supply chain and how it can lead to higher costs and problems with spare parts inventory management. While that information can be somewhat worrisome, the other side of the coin, the benefits of working with an OEM-authorized seller, hold promise for the future of your operations. Let’s take a closer look at these benefits and what types of processes may be part of obtaining that coveted title of “OEM-Authorized Partner.”

The benefits of working with an OEM-authorized spare parts inventory management supplier are fundamental benefits people want in the course of business. People want to make sure their investment is secure, and they expect to get a working, compatible product that will suit their needs. Some of these benefits include the following:

  • Value – When you think about it, you are a customer to the spare parts inventory management supplier. You want to make sure your spare parts have value, incluspare parts inventory managementding the use of appropriate raw materials in their manufacture, compatibility with the systems you will be using them with and reliability that the products will arrive as promised.
  • Longevity – Some believe longevity is the symbiont of value, but it is actually a testament to different quality of craftsmanship. Ultimately, even counterfeit parts may have some value, but they may lack longevity. As a result, you can make sure the parts you purchase have the longevity that is common to the OEM manufacturer.
  • Warranty – This benefit is obvious. If a part breaks down before its longevity expires, consumers want to know it will be replaced at little or no charge. Since counterfeit parts are traditionally much cheaper than OEM parts, they tend to lack warranties.
  • Accountability – Sometimes, manufacturers get things wrong, and recalls may be issued. This is a perk of working with OEM-authorized partners. They have a vested interest in protecting the assets of their manufacturers, and therefore, they will be more likely to adhere to recall notices or changes in how products are made.
  • Less downtime – Downtime stinks. There is just no other way to put it. When the wheels of manufacturing are not turning, they are losing, if not hemorrhaging, money. Working with an OEM-authorized partner helps to ensure your company will not suffer unnecessary delays due to a lack of parts. Ultimately, you gain better access to more parts if something should go wrong.
  • Customer service and trust – Customer service and trust are everything in manufacturing and business. They can build a business up or tear it down in seconds via outrage on social media. OEM-authorized partners have endured the stringent process for obtaining authorization, so it less likely customers will face disappointment from spare parts. In other words, OEM-authorization helps to hold customer service and trust to a higher level. Brand protection is another significant consideration. Is it worth damaging your brand by buying a counterfeit part that could cause your company problems that impact your image and reputation? Using an OEM-authorized partner provides peace of mind that your brand is protected.

What Does It Take to Become OEM-Authorized?

The process for becoming OEM-authorized varies heavily between different companies, but the criteria for authorization are rarely as simple as sending in a fee to the OEM. In fact, the process can be drawn out into weeks and intricate details of due diligence, says Chris Schrader, IT Parts Specialist for Flash Global. For example, an OEM-authorization process breaks down into these six general steps:

  1. A company applies for OEM-authorization. The initial application begins the research process on the company applying for OEM-authorization. It may include detailed accounts of purchase history, time since its inception, and rationale for petitioning OEM-authorization.
  2. Company demonstrates a reasonable need for OEM-authorized spare parts inventory management. The company must demonstrate a reasonable need for OEM-authorization in order for the application to be processed. For example, a computer company would not likely petition OEM-authorization for parts used in the automotive industry. If this same company needs computer parts to be used in on-board automation systems for new vehicles, the authorization would be reasonable.
  3. The company may need to meet with a representative to complete the application process. A representative of the OEM may want to meet with a company seeking OEM-authorization. This is critical to ensuring OEM-distinction stays out of catfishing internet scams looking to expand the grey market.
  4. Due diligence is performed on the company’s history. Due diligence is the truly in-depth portion of an OEM’s research into why a company needs OEM-authorization. The details required during due diligence may include any and all relevant information, excluding sensitive, confidential customer data, that relates to the reasonable need for OEM-authorization.
  5. Additional training and sales requirements for the company may be included in the OEM-authorization. Since the OEM is “on the hook” for OEM-authorized companies’ actions, they may conduct additional training to ensure the manufacturing and overall spare parts inventory management of a company seeking OEM-authorization aligns with the core values and principles of the OEM.
  6. Re-evaluation of contractual obligations and sales may be part of maintaining OEM-authorization. An OEM may require authorized sellers of spare parts to meet certain sales requirements and pass a percentage of sales to the OEM. These requirements are part of the contractual obligation made when an OEM-authorization is completed, and failure to maintain these requirements can result in the revocation of the OEM authorization.

Using an OEM-Authorized Partner to Optimize Spare Parts Inventory Management

OEM authorization is the best solution to avoiding the pitfalls found in purchasing products from random people on the Internet or other forums. In fact, working with an OEM-authorized, spare parts inventory management partner can have significant cost savings and benefits for a company, and it can help build a better, more cohesive supply chain. While the process for obtaining OEM-authorization may be extensive, it demonstrates the true value found in working with OEM-authorized partners. Before you lose an even greater investment, you need to stop taking the risks associated with non-OEM partners.

Flash Global designs, implements and executes service parts logistics solutions for companies with a global presence, and has multiple OEM-authorized partnerships in place to help you with spare parts inventory management. Contact Flash today to learn more.

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