HIGH-TECH LOGISTICS

Mission-critical logistics continues to be an important area of focus in the service parts industry, where expedited delivery of high-tech service parts within two- to four-hours is often the standard. This is especially true with today’s “repair over replace” mentality that is pervasive in the midst of worldwide economic challenges, and particularly applicable to expensive high-tech equipment.

According to a recent Gartner survey, global IT spending is expected to be “essentially flat” in 2009. One third of respondents stated no change in budget from the previous year, while just under half projected only a slight increase. Most significantly, 21 percent said there would be cuts.

This survey, coupled with the economic reality that the world faces, places the burden squarely on manufacturers and service providers to have reliable and consistent service parts supply chains in place to ensure that they can meet the evolving needs of end-users.

This translates to guaranteeing the right part, in the right place, at the right time, to facilitate timely service and repair to fulfill new and existing service level agreement (SLA) obligations worldwide in a matter of hours. Without the ability to deliver, business is at risk.

To avoid jeopardizing contracts, high-tech manufacturers and service providers must respond to these supply chain challenges with a strategic and nimble approach. Companies that already have internal bandwidth and expertise for this additional demand are far from typical.

More likely, an outside partner, such as a third party logistics (3PL) provider, should be considered to accelerate the establishment of a flexible supply chain that can react to these requirements with a variable cost model.

In essence, and as detailed in the rest of this article, an effective mission-critical service parts supply chain is based upon a reliable technology infrastructure that can support a global parts base; granular visibility to manage assets; and the flexibility to quickly react to evolving enduser demands.

GLOBAL IT PLATFORM

Understanding inventory levels and location from a global perspective is crucial for effectively managing hightech, high-value service parts. Many companies struggle with the enormous investment and resources required to install and maintain a worldwide IT infrastructure. This leads organizations to focus regionally; however, only a global understanding of where service parts are available, and in what quantities, enables strategic sourcing.

Operating in silos is not advisable. First, this approach does not allow for a single point of entry to review and upload critical data for oversight and planning. Secondly, it’s impossible to truly understand inventory levels from a micro level, which is detrimental to the overall decisionmaking process.

By way of example, a global high-tech manufacturer may mistakenly purchase parts for its south Asia operation that were in abundance at a north Asia site. This can lead to a significant waste of resources and unwarranted spending increases.

Further, multiple databases cannot provide a complete view of all available inventory globally, further impeding accurate audits and measurements. Higher costs are incurred from overhead needed to support the specialized personnel necessary to manage these systems.

Different platforms duplicate overall efforts by region and create unnecessary expense. Instead, a global technology platform offers a macro view, providing all data in one location, and eliminating the need to gather disparate information that is not cohesive and uniform. This also streamlines the use and access of accurate data.

A single global IT platform has many advantages, most importantly, consistency of processes and uniform exchange of information. A reliable system should include:

Seamless Integration

A global platform for service parts logistics must integrate with existing databases to provide access to critical data. This circumvents the need to duplicate efforts caused when working with multiple databases. Manually transferred data is inefficient and unreliable, potentially wasting countless hours, which can be better spent focusing on the end-user.

Dependable Uptime

A global IT platform must have reliable uptime and availability with consistent, 24/7 access. If a system is down for even a brief amount of time, critical updates can be missed, hindering the system, and ultimately network-wide processes. This can be detrimental if an end-user has an immediate mission-critical demand.

Internet Accessibility

Easy access is required for a system to be truly effective. A web-based platform provides the availability to login regardless of location, off ering instant insight into the entire inventory base. This can dramatically improve the flow of timely data that can be used to streamline the service parts supply network.

Historical Knowledge

Archived data for historical trend analysis is essential. Demand history is as meaningful as data from three minutes ago, providing actionable insight that that can improve efficiencies. Reacting to short-term anomalies and altering standard processes is not recommended without this information. In addition, historical data can be crucial for anticipating potential strains on the system.

Detailed Reporting

A global IT platform lets users consolidate and summarize data through reports to reduce replication and improve accuracy. For instance, reports can be used to assess the frequency of service parts usage. If it is known that some parts are utilized less frequently than others, adjustments can be made to trim overall inventory, and thereby expense. Reports generated regionally are not able to offer this level of insight.

Real-time Planning

Access to centralized data for real-time inventory analytics is key. When data is entered in one location, it should be instantly accessible throughout the entire supply chain network to provide the flexibility necessary to adjust processes as end-user needs fluctuate.

GRANULAR VISIBILITY

Maintaining a full stock of service parts for each equipment install is not feasible, even under normal conditions.

Accurate visibility can help determine exactly how many parts must be available to maintain sufficient service. This avoids squandering inventory resources, while still fulfilling SLA obligations. For additional efficiencies and cost reduction, a single IT platform facilitates planning, avoiding duplication of efforts with multiple staff conducting the same work regionally. This significantly reduces overhead, and a 3PL can help interpret the data to assemble it into an intelligible format that can make an immediate impact.

Baseline visibility provides inventory quantity and location, however, this is inadequate for strategic analysis, especially in terms of aggressive SLAs. Manufacturers and service providers need accurate information to see precisely how parts are being used. This understanding can expose a myriad of efficiencies to help optimize inventory levels, leading to reduced capital expenditures and improved supply chain operations.

Strategic visibility delivered through a comprehensive IT platform can provide crucial information including:

• Inventory management optimization

• Archived data for detailed analysis

• On-time performance measurement

• Amount and frequency of transactions

• Global part movement and storage duration

• Current inventory levels

Hence, global visibility is crucial as it provides context to evaluate performance and determine if processes are being executed according to organizational standards. Furthermore, reliable granular data allows for trends to be revealed that can eliminate excess and wasted inventory.

FLEXIBLE SCALABILITY

Scalability in a mission-critical service parts network is needed to meet evolving client and market demands. It is where the global IT platform and its fine-tuned visibility become a reality. The data is inconsequential unless the part can be available where it is required in a matter of hours. To ensure that service parts are where they need to be in an expedited time frame, an expansive worldwide infrastructure is required.

Regardless of whether clients are domestic or international, it is crucial for service providers and manufacturers to have the ability to strategically stock service parts to meet current and future needs. Current economic conditions have further heightened the need for flexibility.

Service parts supply chains that meet today’s requirements could instantly shift based on market fluctuations, dictating a swift response that requires a flexible infrastructure and the ability to quickly expand or contract. Costly overhead often prevents companies from having a global physical presence, thus creating a significant obstacle to meet end-user demand.

Typically, only large established organizations that have invested decades and many millions of dollars have this capability in place. Therefore, the resources of a strategic outsourced relationship with a dependable global 3PL should be considered to provide these resources.

A well-matched 3PL partner can scale to meet client needs, circumventing typical timeframes and capital investment to be operational. A sound 3PL provider should also have the technology capability and physical framework to be active in a new market within a matter of weeks.

The ability to expand operations is extremely valuable. Equally important is a 3PL’s ability to pull back operations just as efficiently. If a client leaves a region or consolidates operations elsewhere, the 3PL offers an effective means to disengage without the residual fixed costs of an unneeded facility.