Common Mistakes and Guidelines for Change in Service Parts Management
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.
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.
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.
KeywordsSupply Chain Service Level Agreement Fill Rate Safety Stock Service Offering
To Robert G. Brown, whose teaching, consulting and text Advanced Service Parts Inventory Management (Brown 1982) when I was a young analyst working with Eastman Kodak’s service parts organization inspired me to apply analytical methods and would one day lead to my assignment there as Service Parts Supply Chain Director. To my friends Peter L. Jackson and John A. Muckstadt of Cornell University whose knowledge and understanding of the elements involved in optimizing supply chains under the uncertain conditions of service environments convinced me that “It’s not rocket science, it’s much harder than that!” Many of the issues I’ve highlighted in this chapter would have been overlooked by me were it not for the mentoring of Professor Muckstadt and working prototypes developed by Professor Jackson.
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