5 Steps to Develop a Customer-Centric Service Supply Chain



Increasing customer expectations around the speed and efficiency of service calls places additional stress on businesses that are already facing pressure to produce more revenue with fewer resources.

Customers demand services that exceed contractual obligations. Meeting these demands compels field service teams to resolve issues faster and more efficiently. Supporting greater speed and effectiveness starts with integrating customer centricity into your service supply chain. Here are five steps you must take to achieve this goal:

1. Focus on equipment uptime, not first time fix rate.

The first step toward establishing a customer-centric service supply chain is to adjust your organization’s collective mindset. Don’t stock parts in lieu of failures. Organize your inventory to ensure customers can utilize your products with little-to-no disruption. This concept is similar to readiness-based sparing, a strategy which enables defense agencies to ensure their assets are mission-capable at all times. 

Devise a strategy for ensuring you have the right part, at the right place, and at the right time. This minimizes the amount of downtime customers experience when failures occur.

2. Use technology that facilitates stronger forecasting

The Internet of Things (IoT) can bring much clarity to what are often best guesstimates. Advanced forecast models are powerful, but historical data can only provide these algorithms with so much. Specifically, the IoT delivers three key inputs:

  • Installed base: Exactly how many assets are in the field, and where are they?
  • Activity profile: What is the utilization rate for each asset? (i.e. how many hours of use).
  • Projected activity profile: Based on an asset's historical utilization rate within a given time, what will the asset's future utilization rate be over an equal time period?

My colleague, Vinod Arekar, conducted a modeling exercise of how applying predictive analytics to IoT data would impact a service parts inventory. He found this method would enable a medical device manufacturer with dozens of stocking locations to reduce its overall inventory by 20%.

3. Ensure your technology is scalable

Your service parts management approach has to be able to grow and scale with your business. Are you planning on launching new products, more parts, additional services, or adding regional and global service centers or service parts depots? Whatever technology you use to run your spare parts supply chain should be able to fold all these new instances in seamlessly.

4. Validate the technology’s forecasting capabilities

One of the challenges with service parts forecasting is that a forecast relies very heavily on historical data, which is not forward looking and can’t adapt to changes in supply and demand, business fluctuations, and changes in what your customers require in the future.

A ledger-based system like an ERP can’t accurately forecast spare parts demand because it can't consider all of the variables that affect that demand. If a commercial airline based in Europe launches a new service to South Africa, an ERP won’t be able to calculate how that new service should affect the distribution of spare parts across the airlines existing supply chain.

5. Guarantee the tool’s compatibility with existing systems

Your service parts management strategy doesn’t exist in a vacuum. The consumption of your service parts depends on multiple factors, including pricing, sales, field technician activity, and more. Look for a solution that can integrate with the software (including ERP systems) you use to manage these other aspects of your business.

Each of these requirements focuses on the outcome of revenue growth and better service delivery for your customers. Read how Metso Minerals used its service supply chain to reduce costs while increasing its part availability here:

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