Although SCM (supply-chain management) and collaboration for finished goods has received much attention of late, management of service parts and content needed for maintenance and repair of goods already out in the market is moving to the forefront. With more enterprises delaying capital expenditures until the economy recovers, making use of existing resources is growing more important than ever.
This emerging technology category targets the "support chain," or aftermarket and post-sales commerce, to support existing customer relationships. For example, these collaborative solutions can forecast when a particular part of industrial equipment may need to be repaired, match that data with customer service contract requirements, and ensure that the correct part is in the field.
"Because of the economic times we are facing, most companies are looking to better use what they have already," says Larry Hawes, senior advisor at Delphi Group Inc., a market research company in Boston. "[Enterprises are asking], 'How do we maintain our expensive capital equipment better so it has more uptime?'"
The spare parts market represents US$700 billion and 8 per cent of the U.S. gross domestic product, according to U.S. Bancorp. And many manufacturers find that margins for services can top 40 per cent, whereas margins for finished goods top out at around 13 per cent, according to industry estimates.
Companies such as Atlanta-based Servigistics are manoeuvring to ease some of the support-chain woes by offering collaborative, Web-based service parts planning and forecasting solutions to aid in forecasting demand, setting optimal stock levels, and identifying excess inventory and critical shortages.
The Servigistics PartsPlan product recommends which parts should be ordered, repaired, and replenished to increase customer satisfaction, reduce inventory management, and improve profitability, company officials say. Its distributed access is designed to allow service organizations to collaborate with all players in the support chain. Users can then optimize service parts inventory down to the field level where the majority of inventory and customer service levels reside.
Servigistics and United Parcel Service have deployed Servigistics software to help a major computer manufacturer plan inventory for 200 field service distribution points, says Servigistics President and Chief Executive Officer Mike Landry. The manufacturer is required to deliver two-hour to four-hour response times to their high-end server customers.
"Servigistics works with systems that maintain the customer contract information to determine demand forecasting and inventory and also works with UPS, who responds to recommended inventory limits," Landry explains. "UPS responds automatically to the levels and the optimal plans that our system determines."
IKON Office Solutions in Malvern, Penn., will be deploying Servigistics software early next year to ensure that its 7,000 inventory locations - the cars of all of its service technicians - are loaded with the spare parts for the photocopiers and printers they service, says Simon Knight, IKON's vice-president of enterprise systems.
"We need to understand…the reliability of those machines and be able to forecast what parts are likely to fail," Knight adds. "We need to be able to replace the commonly failing parts…the first time. We also need to minimize our inventory."
Xelus is also honing in on the support-chain market with its ESM (Enterprise Service Management) solutions, designed to provide Web-based collaborative decision support and planning and to optimize the core business processes of service companies. These core processes include service parts and workforce management, service delivery, and asset management and recovery.
While Rochester, N.Y.-based Xelus clients now mainly use ESM technology to predict equipment failures and match parts with those service needs, streamlining the support chain in the future will require increased collaboration between competitors, says Stan Beal, vice-president of marketing.
For example, Boeing may know how many of a certain part are being used on 727 aircraft around the world, but it does not know how a specific airline has deployed its planes, such as how many fly across salt water and how that affects parts, Beal says. If the airlines collaborated, sharing that information with one another and the manufacturer, failure-rate information could be incorporated into parts designing, he adds.
"The ultimate value proposition…is really to get the design information so that nothing ever breaks," Beal says.
Enigma, in Burlington, Mass., is angling to bridge that data content gap between manufacturers and operators with its content-driven e-commerce platforms for the support chain. Typical Enigma technology applications include e-commerce sites, online and illustrated parts catalogues, interactive electronic technical manuals, Web annotation capabilities, and Web-based self-service product support.
Yaniv Bejerano, Enigma's director of product marketing, says the system is designed to deliver this complex content to the shop floor to ensure a technician installs the correct parts. The system is also designed to allow equipment operators to add their own best practices to manufacturers' repair data.
"They can basically capture the experience that the 60-year-old mechanics have in their head…and embed it as best practices into the original OEM content," Bejerano says. "A technician can spend 20 (per cent) to 40 per cent of his time looking for the appropriate information to maintain the platform. We dramatically reduce this amount of time."