Allying to Offer Inventory Asset Management Solution

Solution providers partner to combine best-of-breed logistics with asset management solutions, global services

Solution providers partner to combine best-of-breed logistics with asset management solutions, global services

New York — January 27, 2004 — System Design Advantage, a provider of parts replenishment and repair solutions, has teamed with Choice Logistics, a provider of service asset supply chain solutions, to offer an integrated logistics and parts/repair solution.

The two companies said the alliance combines SDA's emergency spare parts distribution services, depot repair facility, worldwide presence and partnerships, with Choice's logistics and information technology (IT) infrastructure, which includes same-day availability, real-time control and global visibility, as well as a client support organization.

The combined solution is intended to relieve companies of the operational expense and any future burden of inventory management. SDA will integrate Choice's logistics infrastructure and the Choice parts management platform with existing SDA solutions and deploy it across its global operations in order to provide a global stocking network that enhances its managed inventory assets programs.

In addition, the integrated solution will enable asset management and collaboration for managing service assets throughout the lifecycle with forward and reverse logistics, according to the providers.

"What we're trying to do is created an integrated link between parts and repair services and the logistics," said Jim Sahli, founder and CEO of SDA. "By teaming up [with Choice], we're able to offer our customer base an off-book parts inventory and a logistics-delivery solution."

The move expands SDA's capabilities in the emerging market for virtual-managed inventory asset services, a subset of the $1.7 billion service parts market. Sahli suggested that while various solution providers have been talking about initiatives such as parts pooling over the last two to three years, no one has been able to implement it. "This is the first step in taking inventory off the customer's portfolio, pooling it with multiple customers and putting it through a logistics solution," he said.

Meanwhile, the deal also positions Choice as a top provider of mission-critical third-party logistics services. Stephanie Williams, senior director of marketing and alliances at Choice, said the alliance would allow her company to expand its solutions and services to help Choice's customers take costs off their own books. "Companies have tried this on their own and really not found a solution that works," Williams said. "Now they're going to the next level of outsourcing to include not even having to be responsible for the assets on their books."

The new partners assert that their integrated solution will simplify service asset management, helping to deliver greater cost savings, efficiencies and a competitive advantage to expanding service organizations as they work to ensure that the right part gets to the right place at the right time across the service supply chain. Affected processes include direct and indirect inventory sourcing and procurement, repair, replacement and replenishment, order fulfillment and logistics.

Tim Minahan, vice president of supply chain research at Aberdeen Group, said that the deal plays into the need for high parts availability and speed in the aftermarket service space.

"In some industries service response requirements have shrunk to four hours or less. Inconsistent delivery and frequent stock-outs can put a company out of business," Minahan said. "Together, SDA and Choice offer an inventory pool and delivery network that has the potential to help companies maximize fill rates, reduce inventory risk and, most importantly, maintain asset uptime and customer satisfaction."

Under the alliance the integrated solution will provide an asset management solution that will be marketed to companies, including through the partners collective channels. The solution will be sold by both company's global sales forces, with support from a dedicated team of sales specialists.

The two providers already share joint customers, such as Akibia, a provider of technology support services for mission-critical UNIX and NT environments. SDA is already moving product through Choice facilities, and the partners are going to be live in seven states and Canada.

Sahli said that Choice was the best choice for the alliance because SDA's customers typically require a high degree of customization in their implementations, and Choice was able to offer the necessary degree of customization, combined with a high level of reliability required for same-day service.

Williams added that the timing appeared to be right for this type of alliance. "We both have the infrastructure now to offer this [joint solution], and companies are now ready to take the next step in cutting costs and optimizing," she said.

Williams noted that Choice is also working with Servigistics, a provider of service parts planning solutions, in shaping up the overall offering. "We do recognize that not only is the execution part important in terms of having the right part in the right place at the right time, the planning part is also a major piece of this pie," she said.