Service is a key differentiator in a global economy where your competitors are just a click away. When almost everything is a commodity, great service helps you build brand loyalty. But managing reverse logistics in a global supply chain isn’t easy. Spare parts managers are under pressure to seemingly do the impossible: provide great service while keeping costs to a minimum. It can be done, however, if you have the right tools.
1. Managing Inventory & Controlling Costs
Spare parts inventory can be everywhere. They’re in your warehouses, repair centers, at OEM locations, at retailers, and at forward stocking facilities. They come from different service supply chain partners scattered all over the world, and you have to keep track of the location and quantities of spares inventory at all times. Cost control is all about estimating and managing demand.
- What products do you need to keep in inventory?
- Where are they needed?
- How many do you need?
- Is your inventory count accurate?
Unlike production parts, which are planned weeks or months in advance, spare parts demand is much less predictable. You’re at the mercy of events:
- A natural disaster wipes out hundreds of point-of-sale terminals in multiple customer locations and you need to replace them ASAP.
- A quality problem sends thousands of consumer units back for repair.
- You have to make a sizable end-of-life buy when an expensive component is discontinued, because you have to support field units that require it.
Controlling costs involves juggling multiple priorities, so flexibility is important. It’s imperative that spare parts managers have a reliable distribution network that ensures timely delivery of replacement parts and a demand modeling system that enables you to reliably estimate inventory requirements and repair schedules.
2. Component and Repair Process Traceability
With traceability comes predictability. With predictability, companies can create models that help a spare parts manager forecast demand and respond to unexpected situations. Complete service supply chain visibility and traceability provides key metrics about product quality and repair processes, including:
- NTF/NFF – Determine why customers are returning non-defective units.
- MTTF – Mean time to failure data can help you improve the user experience and reduce field failures.
- Failure trend analysis – Are failures increasing or decreasing? Why?
Increasingly, traceability is also a regulatory requirement, particularly in the medical components industry. All medical device manufacturers are required by the FDA to develop written procedures to track certain medical devices throughout the entire product lifecycle.
Yes, that’s a huge amount of data to manage, but it must be done. Look for a robust service supply chain management system that provides end-to-end visibility into the entire service and repair process. The best systems have dynamic visibility that makes tracking the status of each individual repair as simple as tracking a package.
3. Trade Compliance in a Time of Trade Tensions
A few years ago, this one wouldn’t have been in the top three, but it seems like every news cycle brings worries about increased tariffs, protectionist trade policies, and more trade regulations. You can’t afford to have a crucial shipment stuck in customs or regularly pay more than expected in tariffs and expect to support customers and control total cost of ownership (TCO).
The service supply chain is more complicated than “just” stocking the right parts in the right place and offering 24/7 customer support. Spare parts management also entails:
- Paperwork: Bills of lading, packing slips, the commercial invoice and additional customs documentation.
- Component classification: Product classification codes (HS & HTS codes) can vary depending on whether the product is for retail sale, repair, or product assembly. In some countries, tariff and duty charges depend on the code attached to the import.
Mistakes cost time and money. In extreme cases, trade violations can result in jail time.
Trade regulations also can affect component costs and availability, and those variables become more uncertain each time a country or international organization, like China or the United States, imposes tariffs or restrictions.
For example, a spare parts manager who needs to export components to India or import Indian goods now has to contend with the US/India trade tensions that flared during the first part of 2019. India’s loss of GSP status could raise the cost of imports from that country. Retaliatory measures could affect US exports to India.
As a spare parts manager, you have enough to worry about with your primary job duties: getting the right component to the right place at the right time while controlling transportation costs. If your company doesn’t have an expert trade compliance team that is able to monitor day-to-day developments, consider finding a service supply chain partner who can keep track of the quickly changing international trade landscape and manage your compliance program.
Let Flash Global Help Spare Parts Managers Succeed
Flash Global can help a spare parts manager with all these challenges— and more. We work with you to build a resilient service supply chain that controls costs, minimizes customer downtime, and delights your customers. We provide rapid support in more than 130 countries with in-region technical and field services that get products back into operation quickly.
Our proprietary FlashTrac software, along with our warehouse and distribution model, helps our partners achieve an average of 98%+ KPIs in critical categories such as receiving accuracy, inventory accuracy, and dock-to-stock on-time performance. FlashTrac, which we built for the service supply chain, can:
- Provide end-to-end visibility into your global spare parts inventory.
- Reduce inventory costs.
- Facilitate the completion, delivery, and storage of accurate trade compliance documentation.
- Control transportation costs by empowering you to place orders based on availability by location.
Contact us to discuss a custom, end-to-end service parts logistics solution built specific to your needs.