Profiles in Supply Chain Enablement: Inventory asset management helps assure the right part is in the right place at the right time
Company: SARCOM (Lewis Center, OH)
Company Size: Small
Company Sector: Technology Services
Area(s) of Enablement: Sourcing, Procurement, Fulfillment/Logistics, Supply Chain Integration & Infrastructure
Enabler: System Design Advantage, LLC (Bloomington, MN)
Case Study: Inventory asset management (IAM), formerly known as parts pooling, can have a dramatic impact on the service supply chain with its variable inventory cost model and worldwide logistics capability, according to industry observers.
One of the key aspects of IAM is the removal, or purchasing, of inventory from the manufacturer or service provider by an IAM service provider. The benefit is an immediate impact to the bottom line of the manufacturer or service provider, who no longer has to recognize these parts as owned inventory. The level of benefit, or cost savings, is dependent on the quantity of inventory "removed from the books."
Some other key aspects of IAM include direct and indirect inventory sourcing and procurement, repair, replacement and replenishment, order fulfillment and logistics.
One of several companies successfully enjoying the benefits of an IAM program is Ohio-based Sarcom, a provider of procurement resources to technology companies. Sarcom taps the expertise of Minneapolis-based System Design Advantage.
John Strauss, vice president of service for Sarcom, says: "By seamlessly providing direct and indirect inventory sourcing and procurement, repair, replacement and replenishment, order fulfillment and logistics solutions to our clients for the past year, they have consistently enjoyed the assurance that the right part will be in the right place and the right time 99.9 percent of the time across the entire service supply chain."
The Challenges
Customer expansion of program has two aspects. The first is applying this model to new service maintenance contract customers going forward. The second is applying this model to existing contracts under traditional support programs. The coverage is expanding from the major OEM brands to specialty product types.
For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.
Company: SARCOM (Lewis Center, OH)
Company Size: Small
Company Sector: Technology Services
Area(s) of Enablement: Sourcing, Procurement, Fulfillment/Logistics, Supply Chain Integration & Infrastructure
Enabler: System Design Advantage, LLC (Bloomington, MN)
Case Study: Inventory asset management (IAM), formerly known as parts pooling, can have a dramatic impact on the service supply chain with its variable inventory cost model and worldwide logistics capability, according to industry observers.One of the key aspects of IAM is the removal, or purchasing, of inventory from the manufacturer or service provider by an IAM service provider. The benefit is an immediate impact to the bottom line of the manufacturer or service provider, who no longer has to recognize these parts as owned inventory. The level of benefit, or cost savings, is dependent on the quantity of inventory "removed from the books."
Some other key aspects of IAM include direct and indirect inventory sourcing and procurement, repair, replacement and replenishment, order fulfillment and logistics.
One of several companies successfully enjoying the benefits of an IAM program is Ohio-based Sarcom, a provider of procurement resources to technology companies. Sarcom taps the expertise of Minneapolis-based System Design Advantage.
John Strauss, vice president of service for Sarcom, says: "By seamlessly providing direct and indirect inventory sourcing and procurement, repair, replacement and replenishment, order fulfillment and logistics solutions to our clients for the past year, they have consistently enjoyed the assurance that the right part will be in the right place and the right time 99.9 percent of the time across the entire service supply chain."
The Challenges
- Reduce service parts inventory.
- Increase service parts availability in multiple remote locations.
- Remove the need for customer-owned parts and service company-owned parts.
- Take away the risk of service parts obsolescence.
- Inventory asset management being administered by a parts service company.
- Combining a parts pooling business model with an international distribution-logistics service company allows collaboration of the service parts industry along with the logistics service industry.
- The technology available today provides the platform for communication via electronic data interchange (EDI) ordering, 24x7 customer support and "ExtraNet" service parts ordering.
- Immediate, no-cost entry on maintenance contracts and full parts deployment with a positive ROI projected in the first month.
- Changing fixed inventory cost model to a variable per use parts cost model allows contracts to return positive ROI on day one of new business.
- A 10 percent to 80 percent inventory cost savings over the life of the contract.
- Additional remote inventory handling and inventory carrying costs savings of 22 percent compared to market logistics providers.
Customer expansion of program has two aspects. The first is applying this model to new service maintenance contract customers going forward. The second is applying this model to existing contracts under traditional support programs. The coverage is expanding from the major OEM brands to specialty product types.
For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.
