Service Parts Planning Remains a Challenge

Manufacturers still struggle to meet customer demand for replacing spare parts, survey finds

Manufacturers still struggle to meet customer demand for replacing spare parts, survey finds

Mclean, VA June 18, 2004  Manufacturers still need to do a better job anticipating the number of spare parts needed based on customer demand, according to a new study from systems integrator BearingPoint and inventory control organization APICS.

The study surveyed more than 1,000 executives on practices in spare parts management. The executives represented such sectors as automotive and transportation, chemicals, consumer packaged goods, high tech and life sciences, with the majority of the respondents in the automotive and transportation industries.

To get a handle on spare parts, enterprises must place stronger emphasis on service-level agreements, which can help companies monitor inventory levels more efficiently as well as anticipate demand on spare parts based on data collected from the customer, the survey suggests.

"The survey results indicate that the spare parts planning process has not kept pace with customer demand," said Joe Parente, a managing director with BearingPoint's Manufacturing and Technology Practice. "Companies that have incorporated customer service-level agreements and product performance indicators have improved spare parts planning as well as enhanced their inventory efficiency."

Parente noted that the more focused a company's key performance indicators are to the customer, the better chance to see improvement in performance. "Companies are retaining and expanding their customer base by offering aftermarket services such as maintenance agreements on products purchased, thus creating a more profitable and loyal customer base," Parente said.

"The customer is key in today's competitive global marketplace," said 2004 APICS President Arnold Kennedy, CFPIM, CIRM. "Throughout the supply chain, manufacturers must know what the customer wants, produce the product to customer demand and provide exceptional customer service. As the survey results indicate, forecasting and inventory management are key drivers to meeting customer demand for aftermarket products."

Other key findings from the study included:

  • 43 percent of those surveyed indicated that demand/forecasting planning was an area within service parts that needed improvement;

  • 41 percent of survey participants stated that maintaining service performance levels was a significant challenge;

  • 42 percent of survey respondents indicated that historical usage had the greatest impact on spare parts planning;

  • 43 percent of respondents said the most important spare parts planning system functions are forecasting and inventory management.

According to Parente, the successful companies have fully integrated mechanisms to monitor performance in all customer-facing business processes, such as spare parts planning.

For more information on solutions for the service and support chain, see the articles "In the Field and All Grown Up," the Net Best Thing column in the June/July 2002 issue of iSource Business, and "Time to Prove It," the Net Best Thing column in the April/May 2003 issue of iSource Business.