Common Mistakes and Guidelines for Change in Service Parts Management

Abstract

Throughout this book several characteristics and approaches are presented for dealing with the unique challenges of service parts management. While there are some organizations who apply rigorous and innovative methods, service parts management is an area where practice often lags theory. This chapter presents some of the common misperceptions and failures that often occur in the management of service parts supply chains in the high technology, aviation, automotive and telecom industries.

The good news for managers of service parts supply chains is that opportunities for improvement abound. Readers of this book can evaluate the performance of any parts supply network and compare the methods actually used to each method described in this book. This can be done by asking a few simple questions relative to each technique:

• Does the problem this technique addresses exist in this service environment? Often the answer will be yes!

• How does this organization currently deal with this problem?

• Is the method described in this book appropriate for this environment?

• Are there other methods that would lead to an improvement in this area?

Through an analysis beginning with the simple questions listed above, consultants and managers can discover guidelines for improvement that can serve as the foundation for a short, medium and long term plan for transformation of the service supply chain. Due to the common mistakes fueled by misperception, the opportunity for improvement is often dramatic.

Some common mistakes discussed in this chapter are:

• Failure to recognize the strategic importance of service to the profitability of the company.

• Failure to apply systems thinking in the structure and operation of the parts supply chain.

• Failure to forecast demand at the point of consumption.

• Failure to incorporate causal factors into the forecasting process.

• Failure to apply advanced inventory optimization and automatic replenishment.

• Inability to effectively deal with short supply situations.

For each of the common mistakes listed above, some guidelines for improvement are discussed. The objective is the leave the reader with a model for evaluating current performance and crafting a plan for action from which service organizations will realize significant value.