Where are my spares?

Last week the European field service community convened for the first time in large numbers at WBR Field Service in Amsterdam. We had a lot of catching up to do. Apart from topics addressing the next big thing, the down-to-earth conversations had a common theme: where are my spare parts? Covid-19, Ever Given, and geo-political instability are disrupting supply chains. As a result, our service engineers are struggling to keep the world running due to missing parts.

We apologize for the inconvenience

My colleague brought her car for regular service. Due to the unavailability of spares, her car was in repair for five weeks. In the meanwhile, she got a rental. Guess what that costs? Guess what it does to brand and customer experience?

My out-of-warranty high-tech desk lamp showed intermittent behavior ten months ago. Customer support told me that due to a shortage of tools and materials they could not help me other than putting me on hold. After many touch points and mounting emotional pressure, they’ve sent me a new lamp for free. Though relieved I finally have light again, I’m not sure about a repeat purchase.

Last week a heavy truck made an illegal u-turn on an important thoroughfare in our city, overturning multiple traffic lights. Due to supply chain disruptions, repair material is due to arrive in three months. Now the intersection is partially blocked and traffic during rush hour has to be managed by traffic officers. Can you imagine the traffic congestion and productivity hours lost?

Supply disruptions are here to stay

For many years we’ve taken smooth and lean supply chain execution for granted. As a result, most field service initiatives were about optimizing the labor component and deploying smart technology. Recent events trigger a wake-up call. Spares availability is back on the agenda.

For a lot of service organizations, spare parts cost is the second largest cost component after labor cost. With increasing and consistent supply chain disruptions, spare parts availability is becoming distractor number one. This is preventing organizations from keeping their installed base up and running. This is causing organizations to default on SLA and contractual obligations.

Of all the supply chain-related challenges, the two most discussed topics at WBR Amsterdam were:

  • How do we get sufficient parts for our service commitments?
  • And, in case we have a shortage, how do we prioritize parts availability?

Alternative sourcing

Everything that comes out of an asset after a service intervention represents a residual value. That value increases when your normal parts supply gets disrupted.

In my career, I’ve experienced that those reverse materials tend to disappear in a ‘grey circuit’ when not facilitating my technicians with an easy and guided admin for proper reverse routing and handling.

What I formerly saw as a hassle to manage, now becomes a welcome additional source of supply. Apart from solving the sheer availability of parts, the lower cost of refurbished parts allows me to offer differentiated pricing when using parts. I can now choose from new, equal-to-new, certified-spare-part, and used-class. This provides me with both a commercial advantage as well as a cost reduction. I win on multiple axes.

Spread the wealth

Even with an additional source of supply through reverse channels, I still had situations where the demand for parts was larger than the supply. My challenge is how do I spread the wealth of available material over all my demanding customers?

My most extreme situation where supply and demand were out of sync, was when I faced a quality-related recall. Overnight, all existing asset owners would demand a retrofit while my supply chain was restocking on the new revision level. I felt a need to prioritize both internal business objectives and customer entitlements.

Typical supply chain solutions allowed me to deploy first-come-first-serve. Advanced service execution systems enabled me to prioritize based on Account and Service Contract attributes. For example, platinum customers first, or contracts up for renewal in the next 6 months first. Contingent to my business objectives I could spread the wealth and manage the risks of scarcity.

Inconvenience alleviated

Supply chain disruptions and mismatches between supply and demand for spares will continue to cause inconveniences. With modern-day tools, we can alleviate the pain and remove the arbitrariness of scarcity.

It’s a bit like waiting in the queue at a call center. We don’t like waiting, but at least we have visibility on the queue. And if that is too long, we can upgrade our service level to get the benefits of a priority queue.

Learn about ServiceMax’s solutions for spare parts, returns and depot repair management:

Continue reading about spare parts planning and supply chain disruption:

This article is published on Field Service Digital.

Field service works better when supply chain and service execution work together

An effective supply chain for parts is a crucial part of a successful field service operation. How much time does your technician spend on finding and receiving the correct spare parts? What is the impact to your customers when those parts are not available? What should you do with the defective, left-over and unused parts after the job?

These questions are a compound of conversations I have with customers when doing ride-alongs on service call-outs. They may sound pretty operational, but the implications are significant. Think about higher costs, loss of productivity, unnecessary capital tied up in inventory, repeat visits impacting uptime and customer satisfaction, lost residual material value and negative impact on your circularity goals. There is a lot to be gained from effectively managing your parts. To do this, you need to integrate your supply chain and service execution functions.

Not sold yet? Let’s dig further Into why you should integrate these functions and how it can benefit the business.

Why connect service and supply chain?

In many transformation journeys the initial focus is often on optimising labour to increase the productivity of both the technicians in the field as well as the supporting roles in the front and back office.

But optimisation does not end with labour. There are two very good reasons to accelerate supply chain integration into your service execution:

  1. You need a combination of consumables, spare parts and labour to maintain and fix non-digital products-equipment and assets.
  2. Your CFO will tell you that parts are the second largest cost component after labour.
  3. Having the right parts at the right time and place also optimizes labour productivity.

Though consumables and spare parts are intertwined with the labour component, supply chain integration and optimisation are habitually postponed until phase two of a digital transformation. But even if spare parts costs are second to labour, the implications of not having supply chain integrated into your service execution process are substantial for multiple personas and justify inclusion in phase one.

How does this impact technicians?

In many organisations, supply chain is a separate function with Its own business processes and tooling, resulting in a disconnect with service execution. I’ve seen technicians using email, whatsapp and Excel to order parts and to keep track of forward and reverse logistics. I’ve seen duplicate entry, swivel chair processes and multi-disconnected-tooling. In those situations, the technician works for the tool instead of the tool working for the technician.

If it were up to technicians, having an integration between service execution and supply chain would be high on their wish list. It would make their life easier and would help them in becoming the hero on site.

Can service and supply chain resolve conflicting goals?

From a supply chain perspective there is an ambiguity regarding the necessity for holding inventory. Financially, inventory is tied-up capital, and you want to reduce that. On the other hand, you need inventory to meet contractual response times and uptime commitments.

In contrast, service leaders can easily articulate the need for spare parts. But those same leaders find it difficult to determine how much. Supply chain leaders typically have a year-over-year target to reduce inventory. Sounds conflicting? Maybe not with modern and integrated tooling.

Here’s what have we learnt from the ride-along — if supply chain has access to the ‘raw’ requisitioning, consumption and return data from the technicians, supply chain can do better inventory planning as well as optimise the forward and reverse logistics flows.

In the end you’ll have multiple winners when labour and parts work in unison:

  • Customer — higher first time fix and less downtime.
  • Technician — less admin, track & trace visibility of parts, guidance for returns.
  • Service leader — less parts leakage, higher parts accountability, higher CSAT.
  • Supply chain — insight in true consumption, more leadtime visibility (less expediting).
  • CFO — less purchase of non-consumed parts, lower inventory, less scrap, less logistics cost.

Supply chain and service have many different projects and priorities, but it is in the best interest of your engineers, customers and CFO to integrate your supply chain and service function in the first phase of your digital transformation.

For more on the benefits of connecting service and supply chain, check out What Value Does Asset Data Hold for the Supply Chain?

This article is published on Diginomica.

Will there be an uplift in Depot Repair (vs Onsite Repairs)?

If a product requires a physical repair there are two options: a technician goes to the product or the product comes to the technician. Whatever model is used depends on many different parameters. The good news, with modern service execution tools your options grow exponentially while maintaining control.

Covid is adding an additional boost to the uplift of depot repair. If technicians are not welcome on the site of installation, then the assets, or part of it, have to come to a depot. 

A balanced choice

It would be nice if the repair model could be a choice. A choice based on situational characteristics, instead of rock solid process defaults.

Why choice? Because more vocal and demanding customers expect and request choice. Situational, because the conditions can be different each time to both requestor and provider. By giving choice you provide a level of autonomy to the recipient. Choice is double edged as well. The receiver has to process choice and thus you can get valuable information on what is important to that person. Again, what is important, changes over time and is situational.

Multiple service delivery options

To put field service and depot service in a perspective, I want to paint the wider picture of service delivery options.

Diagram

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In this picture the cheapest mode of service delivery is the self healing variant. Though cheap from a service delivery point of view, it may be expensive from a product engineering point perspective.

On the other end of the spectrum we have the dual-visit engineer on site variant. If the failure is hard to diagnose, you need a trained engineer to find the problem and define the mitigating action plan. If the spectrum of potential solutions is wide, it is likely you are not carrying all spare parts and tools resulting in a second visit for the fix.

Note: not depicted in the landscape is the NPS/ CSAT element of all these service delivery options. It is in the entitlement process that you weigh the business objectives and select the best option for that service instance.

Design for Service

The various service delivery options are very much tied to the way your products are designed. We all know the example of the owners manual of a car. The manual defines the maintenance guidelines based on a generic use profile. The setup of the service delivery in car dealerships is based on that manual. In short, the simple things are customer replaceable[1], some repairs can be done in the field, whereas others can only be done in a fully equipped depot.

A similar setup applies to the maintenance manual of capital goods. If the capital good itself is non-moveable, then it becomes even more important to design for service. It is unlikely one will deinstall an MRI to send it to a depot. It is also unlikely the technician will carry an unlimited amount of spare parts, tools and calibration equipment. Thus the manual prescribes which ‘nodes’ in the bill-of-material are fixed on-site and which ones will be swapped and sent to a depot.

The rise of depot repair

If technician capacity is scarce. If technician capacity is expensive. If customers want more uptime and faster repairs. Then it is logical that a service organisation moves from lower level component on-site repair to higher level sub-assembly swap. The effort and complexity of repairing the sub-assembly is moved from on-site to depot. As a result you can do more repairs with the same pool of technicians … and even use lesser skilled technicians.

“I used to pay 5$ for a component and 80$ for 1 hour of technician time, now I pay for a 200$ subassembly and 15 minutes of swap time”

And what is the advantage for the asset owner? It is more than only comparing the material and labour cost. You get a faster fix, alias more uptime. The new sub-assembly is fully tested and comes with warranty, alias you get better quality at lower risk. One more benefit. If the sub-assembly swap requires lesser technology skills from the technician, what if the swap could be performed by yourself? This gives you more freedom and flexibility to source those sub-assemblies.

Whether the depot model is charged as part of a full service contract or time-and-material, the value promise presents itself beyond the individual repair action. More-over, the value appraisal will be dependent on the weighing of cost & benefit factors fro both the service organisation and the asset owner.

Enabling and invoking depot repair

To facilitate a depot-model you need business process support that manages :

  • reverse logistics of the sub-assembly from customer to depot
  • facilitates the actual repair/ refurbishment of the unit in the depot
  • triggers forward logistics to get the sub-assembly back to the customer

Depending on your commercial offering, you may want to add additional features like:

  • provide a loaner while sub-assembly is in depot or
  • offer an advance exchange so only one on-site intervention is required and the refurbished unit ends up in inventory.

And maybe most important of all is getting decision-making support when to and when not to invoke of depot repair. This ties to your entitlement process and how you weigh your business objectives when your vocal customer is calling.

With modern service execution tools it’s all about connecting the dots. Using available information from Customer, Workforce and Asset to present choice to both the asset owner and the service provider.


[1] Some of you may be familiar with acronyms FRU & CRU (Field Repairable Unit and Customer Replaceble Unit). If we had to give an acronym to the depot variant, it would be called DRU.