Baxter Offers Guarantee on Service Parts Management Gains

Parts planning solution provider combines software, services; offers gain-sharing model pegged to projected ROI

Parts planning solution provider combines software, services; offers gain-sharing model pegged to projected ROI

Austin, TX — January 31, 2005 — Aftermarket parts planning specialist Baxter Planning Systems is offering a guarantee that its customers will achieve quarter-to-quarter results and incremental and ongoing lower operating costs through a gain-sharing model for its solutions.

The company's technology platform combines software applications and parts planning services designed to help turn an enterprise's service parts organization into a profit center. Baxter's flagship application is dubbed Prophet by Baxter, and the provider's solutions are in use at such companies as Agilent Technologies, Enterasys Networks and Philips Medical Systems.

Baxter has elected to differentiate itself in the marketplace for service parts management by taking a "pay for performance" approach to its customer engagements, according to company CEO Greg Baxter.

"We'll do an inventory analysis for a customer to get a ballpark number for the potential inventory reduction and service level gains, and we'll build a business case for the customer based on that analysis," Baxter explained. "Then we can set up pay for performance, so that if we don't meet the target inventory reduction and service levels, then their monthly charge drops."

On the other hand, if Baxter meets or exceeds its targets, the customer pays the provider based on its performance above the expected goals, sharing the additional gains. Typically the analysis will show a potential inventory reduction of more than 50 percent, and a potential reduction in the number of missed service calls due to unavailable parts by more than 70 percent, according to Baxter.

CEO Baxter asserted that the combination of software and services that his company offers is the wave of the future in the service parts planning space. "The days of simply providing client-hosted software solutions are dead and gone," he said.

This type of software and service solution could be particularly attractive for organizations that are looking to outsource their service parts management — fully or in part — to a company like Baxter. For instance, an enterprise might opt to outsource the management of its field operations to a service provider while keeping its distribution center (DC) operations in house.

Other companies might elect to outsource the whole service parts operation, according to Baxter. "Some companies really don't have a planning organization, and the technicians will be driving decisions, which is not a good idea because they will want to have every part they could possibly need," Baxter said. "A company in this situation that wants to centralize planning wouldn't have build a planning organization" by bringing in a company like Baxter to manage its service parts operation.

Baxter notes that his company has been around for 12 years and has been profitable since its founding. The company is privately held and self-funded. Greg Baxter himself spent 10 years with Texas Instruments, starting out as a service parts planner and eventually assuming responsibility for worldwide systems and planning, allowing him to build his company's solution with the end user in mind from the start.

Craig Fix, global supply chain manager for automated test at Baxter customer Agilent Technologies, said that the experience of the Baxter team and the breadth of the provider's solution offering were key differentiators causing Agilent to standardize on the Prophet platform. "When the time came to make a decision on an outsourced service parts planning solution, Baxter's comprehensive solution met all our near-term and long-term requirements," Fix said.

Mark Vigoroso, vice president of post-sales service research at technology consultancy AberdeenGroup, noted that in industries where service is a critical differentiator, companies are optimizing and automating service parts management to deliver value to service delivery capabilities. "As leading service organizations are beginning to realize, optimized service delivery will dramatically impact overall company profitability and performance," Vigoroso said.

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 (now Supply & Demand Chain Executive), and "Time to Prove It," the Net Best Thing column in the April/May 2003 issue of the magazine.

For best practices in service parts management, see the article "Three Keys to Successful Service Parts Management."

More articles about Baxter Planning Systems.