From Brexit to the impacts of the Coronavirus disease (COVID-19), manufacturers around the globe are facing an almost unprecedented degree of uncertainty and change. Add in the evolving expectations of customers, and this is one of the most disruptive periods manufacturers have ever faced.
As a result, manufacturers are taking a close look at where they can boost their efficiency and expand their revenue in these times of uncertainty. One key area of optimization is after-sales service, more specifically service parts management.
Given how margin-rich after-sales service can be, service parts management itself is one of the most sub-optimized areas of a manufacturer’s revenue stream and is often overlooked when it comes to optimization. However, if optimized properly, a well-oiled service parts management infrastructure and strategy can not only significantly raise revenue, but can also improve competitive differentiation and the customer experience.
With that in mind, here are three areas of opportunity where service parts inventory optimization can drive revenue and business growth.
Forecasting
Too often in manufacturing today, inventory needs are left to guess work or rudimentary data analysis. Manufacturers need to be able to not only track current inventory levels but also must be able to accurately forecast future needs. Modern service parts management solutions can equip manufacturers with the resources they need to do just that.
Service parts management solutions equip manufacturers with the advanced technical capabilities they need so that they can make the most accurate forecasts possible, bringing a new level of efficiency and cost savings to their service organizations.
Inventory planning
Determining the optimal quantity and stocking locations of service parts is often a pain-staking process for manufacturers. As a result, dealers and planners have traditionally overstocked parts to avoid low first-time fill rates. But, this is wasteful and can lead to cumbersome carrying costs. By optimizing the inventory planning process, however, not only can manufacturers gain a clearer view into the entire inventory planning process, but also cut down on safety stock and internal transportation costs—ultimately resulting in margin improvements.
Procurement planning
When it comes to optimizing service parts management, it isn’t just about where parts are needed or how many are at a specific location, but also how much it costs to make or acquire them in the first place.
Every cent is important when it comes to driving revenue and meeting KPIs, so not managing procurement effectively can have devastating impacts on a company’s bottom line performance. Luckily, modern service parts management solutions can help by allowing for greater clarity into both existing inventory management but also new inventory procurement. That way manufacturers can always be clued into any issues that may arise and adjust as needed.
Manufacturers need to take every potential opportunity for growth seriously. And, by investing in service parts management optimization now, manufacturers can easily turn one of their most underutilized assets into one of their biggest strengths.
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