According to Gartner, the typical company provides support services and parts for an average of seven years after an initial product sale, making service parts planning vital. It’s no wonder aftermarket parts and service areas have profit margins as much as 10 times those for initial product sales. Post-sale service is key to securing customer loyalty, fostering the company brand, and maintaining competitive differentiation. All told, aftermarket service and parts account for 20% to 30% of revenues and about 40% of total profits for most manufacturers.
There are multiple components to effective aftermarket service parts planning, including call centers, returns management operations, and promotions and marketing. However, the key driver of effective post-sale support is service parts management. Service parts management is the process of planning and alignment of service parts inventories, resources, and processes to ensure optimal customer service and response with minimal risks and costs.
Common goals for service parts planning include increasing forecast accuracy for service parts; reducing excess spare parts inventory; reducing obsolete spare parts inventory; enhancing scrapping programs; and increasing service levels by increasing fill rates, increasing product availability or up time.
While there are many challenges in achieving the goals stated above, there is one area that stands above the others. How can we do a better job of planning for products that have intermittent demand?
This white paper describes how Service Parts Planning and Optimization (SPP) is the linchpin of any effective service operation, and explains how to plan and align service parts inventories, resources and processes to ensure optimal customer service and response with minimal risk and cost.