COVID Lessons in Spare Parts Management: How to Build Cost-Effective Resiliency
Supply Chain Disruptions
The COVID-19 pandemic upended global supply chains with stunning swiftness. Unlike “expected” supply chain disruptions like labor disputes and natural disasters, COVID shutdowns, and slowdowns weren’t confined to a single region. The worldwide effects pushed supply chains to the breaking point…and beyond. It’s been a stressful and trying time for everyone, but there is ample reason for optimism when it comes to service logistics.
When something breaks, there’s always an opportunity to learn — it comes down to the ability to see the opportunity and then act on it. Once the dust starts to settle, seize the moment to become better, stronger, and more resilient. For supply chains around the world, that time is now.
A recent webinar hosted by Flash Global discussed the importance of building resiliency and agility into spare parts management in the service supply chain while being mindful of cost. Panelists highlighted how one company, Palo Alto Networks, successfully supported its customers — Palo Alto Network’s overall SLA performance was down just 0.2% during the pandemic. The business intelligence and global execution provided by its supply chain planning and spare parts management partners, Baxter Planning and Flash Global, respectively, helped Palo Alto Networks achieve this remarkable service level.
Here are some specific lessons from the pandemic crisis that can help your organization prepare for the next pandemic or other unforeseen challenges by using spare parts planning and global execution.
1. Communicate Early and Often for the Win
During the pandemic, international supply chains slowed but in most cases never completely stopped. The main challenge was dealing with unprecedented uncertainty:
- Which countries’ policies changed overnight that might impact a shipment?
- Where is the shipment?
- How long will it take to clear customs?
- When will it be delivered?
- What do we tell anxious customers?
Flash prioritized timely communication with its global install base, building a strong, consultative dialogue that addressed our high-tech clients’ needs. As a result, we collaborated with our clients to strategically distribute spares from alternate locations to end-users to mitigate transportation and customs delays. At the start of the crisis, customers received daily updates of all impacted locations throughout our global network of Global Service Centers, distribution centers, and 630+ forward stocking locations.
For Palo Alto Networks, the near-real-time updates from Flash about customs issues and shelter-in-place orders meant that account teams could access reliable inventory level and order tracking data, which they then used to proactively alert end-users about delays. The planning analytics provided by Baxter gave Palo Alto Networks the data they needed for informed decision-making. Clear visibility into their global supply chain system in near real-time empowered them to make proactive strategic changes to uphold their commitment to meeting customer requirements.
Immediate access to reliable data and cross-communication among all stakeholders meant that everyone was working off the same set of facts and aligned expectations. They could communicate reliable information to customers and adjust operations to meet new requirements.
2. Put Parts Closer to Customers
For years, “lean” was king as companies tried to reduce costs by consolidating spare parts inventory in a few large warehouses. However, COVID has shown us that it’s possible to have operations so lean that they can starve customers’ spare part needs during a crisis.
Many of our partners realized that having one depot to service 50 customers doesn’t work, especially during a pandemic. Regional and local restrictions on movement, with shelter-in-place and even quarantine orders, restrict both the flow of goods and the available labor pool.
During the pandemic, Flash was able to assist customers by expanding their 2- and 4-hour delivery reach by placing spares in FSLs closer to end-users.
3. Retire the Spreadsheets — Agile Companies Have Seamless Data Integration
The 2018 Supply Chain Resilience Report published by the Business Continuity Institute found that 46% of supply chain professionals worldwide relied on Microsoft Excel spreadsheets to monitor, measure, and manage supply chain disruptions. Some companies still used spreadsheets to manage their entire supply chain.
When it comes to supply chain management, even in times when a crisis isn’t looming, spreadsheets are an antiquated tool and unreliable. They take valuable time and are vulnerable to input errors that cascade through the system. The pandemic prompted longer lead times, fewer available workers, and an urgent need for real-time visibility around the clock. Spreadsheets and manual processes delay access to critical data and can lead to decisions made by hunches or based on outdated information.
Fortunately, Palo Alto Networks was already set up for success prior to the deep impacts of the pandemic, avoiding the dreaded swivel chair — meaning the same data is updated into multiple systems. The data provided by Flash and Baxter shared via B2B integrations (electronic messaging), allowed Palo Alto Networks to support their customers by prioritizing critical repairs and delaying less-urgent return merchandise authorizations.
The data and communication received via B2B integrations from their supply chain partners helped Palo Alto Networks maintain high service levels. They could easily:
- Monitor daily inventory on hand.
- Identify the overall challenges in both the forward and service supply chains.
- Determine overtime staffing priorities.
- Distribute updated repair priority lists to staff.
- Supply longer-range forecasts as the situation stabilized.
- Focus on exceptions and problems rather than day-to-day operations.
Data integration is a key addition that reduces cost and increases revenue due to greater operational efficiency, better planning and forecasting, and increased customer satisfaction.
4. Plan Now or Pay Later
We all know it’s important to expect the unexpected, but “a global pandemic that temporarily shuts down global economies in a matter of weeks” wasn’t part of many business continuity plans.
Fortunately, Palo Alto Networks took a forward-looking approach when it partnered with Baxter and Flash years ago. The benefits were immediate. Baxter was able to monitor the entire global depot network instead of a dedicated person in every location responsible for spreadsheet management. When Palo Alto Networks integrated its install base data with FlashTrac, the system became even more robust. It is easy to highlight and prioritize problems when they’re visible, instead of paying top dollar for airfreight shipments or losing customers due to poor SLA performance.
Note that Palo Alto Networks had its planning system in place before the crisis. A robust planning tool, like the one from Baxter, and an experienced service logistics partner, like Flash, can be a lifeline during a business disruption.
The Road Ahead: Bringing Order out of Chaos
As you look ahead, gather your team and take a hard look at March–August 2020. Ask yourself these questions and be honest:
- What challenges related to service logistics did you face, and what have you implemented to prevent them from happening again?
- How confident are you in the inventory you have globally? Do you know what’s available to deploy globally?
- As edge computing advancements surge and digital infrastructure go hyper-local, are you ready to support the increased demand?
If the answers are a bit fuzzy, you’re not alone. Regardless of whether you’re curious about post-COVID solutions and want to explore the possibilities or ready to make changes, we’re here when you’re ready. Nearly impossible service logistics operations is what we do almost every day and we are prepared to handle variables outside our collective control. It is possible to thrive — even in chaos — if you have a plan in place and a partner who can help you navigate the crisis.
Talk with our service logistics experts at Flash Global. We specialize in the mission-critical delivery of spare parts across the globe.
Flash is a partner you can trust. Contact us to learn more.