Contribution by Amber Markim – Operations Assistant at Flash Global
A successful business relies on the correct function and continued achievement of needs from all aspects of the supply chain. This includes the collection of necessary resources, manufacture of the product, assignment of products with corresponding orders, order fulfillment, repair of damaged or malfunctioning products, addressing end-of-life equipment, and ensuring customer satisfaction. Unfortunately, many of these processes rely on the continued presence of easily-accessible service parts throughout the entire manufacture-to-customer-to-anyone-else process. Furthermore, a proverbial “missing screw” within the Service Parts Supply Chain may cripple all of the subsequent processes and deter future customer-business relationships. As a result, more businesses have recognized the importance of optimizing the Service Parts Supply Chain globally through third-party logistics providers (3PLs).
Problems Within Existing Service Parts Supply Chains
The sheer volume of interchangeable parts of modern products, which range from vehicles to hinges and more, creates part of the problem with traditional Service Parts Supply Chain practices. When this conundrum is added to competitor parts’ manufacturers and the growing disbursement of society in possibly-isolated areas, the possibility for inconsistencies in the Service Parts Supply Chain grows rapidly. John Reichert identified three main problems within Service Parts Supply Chains on SupplyChainBrain:
- Dispersion of Inventory.
- System Downtime Issues.
- Possible Problems in Power Grid.
However, Anantha Shankar explains several additional problems within traditional Service Parts Supply Chain practices, which include multiple suppliers, inadequate inventory tracking, inability to make repairs quickly, lack of inventory, and failure to maintain visibility. Unfortunately, all of these problems have the ability to be remedied with the use of a 3PL provider of Service Parts Supply Chain solutions.
What to Expect From a Service Parts Supply Chain 3PL
Order Fulfillment
When your customers place an order, they expect to receive the order in a timely manner and at a reasonable cost. Unfortunately, this equates to possible losses to your company if efficient methods of order fulfillment, which includes shipping of merchandise, are not identified immediately and employed. A 3PL focuses on ensuring optimum efficiency throughout the order fulfillment process and ensures all orders arrive as prescribed, even if extraneous circumstances appear. For example, a delayed flight for in-house shipping services could alienate a customer. However, a 3PL may have additional flight options for ensuring your product reaches your customers as expected.
Reverse Logistics Solutions
As your equipment draws to an end of its usability and functionality, it will need to be retired from operation. Rather than throwing the equipment out with the trash, which may violate local, state, or federal laws for disposal, 3PL provide a Reverse Logistics Solution (RLS). An RLS addresses the recycle, reuse, and resale of existing equipment and products to provide additional gain to your business. The gain may gain may be in the form of selling of old equipment, or ensuring no fines are assessed for irresponsible disposal of items.
Distribution and Parts Forecasts
3PLs impact the Service Parts Supply Chain by maximizing the efficiency of distribution of requested items. This includes ensuring a wide-array of parts is readily available. In the event that the requested parts are not located in your warehouse, a 3PL may have additional distribution centers nearby that can provide such parts. Additionally, agreements between the 3PL and parts’ manufacturers may allow other businesses to provide the parts to you without purchasing the parts from your competition directly. Using a 3PL also gives you access to advanced analytics, which allow for more precise, accurate forecasts of part needs. For example, you may receive a shipment of expected in-demand parts prior to the holiday rush for additional service parts, without ever requesting the service parts in the first place. You will have them available based on the 3PL-predicted market trends.
Repairs and Customer Satisfaction
Repairs of existing equipment may be considered an aspect of an RLS if the customer returns the item to you and requests a refund. However, many larger products, or technological items, may be able to be repaired quickly and efficiently at a fraction of the cost of refunds. 3PLs may perform the repair, depending on the terms of your contract with the 3PL, at little to no charge. Furthermore, this allows your business to take the possibility of performing refurbished items to your customers, which will further grow your business. Ultimately, this aspect of 3PL Service Parts Supply Chain practices focuses on a “service-after-the-sale” methodology to ensuring customer satisfaction.
Supply Chain Modeling
The following figure illustrates an example supply chain for service planning and execution. The solid arrows represent forward material flow of usable spare parts. Dashed arrows represent material flow of repairable defective parts.
Successful Future of Business on a Global Scale
Purchases are no longer conducted in-person, and an inadequate Service Parts Supply Chain will decimate a business’s customer base. Fortunately, 3PLs give businesses a reliable Service Parts Supply Chain, which accounts for the potential problems in the course of the Service Parts Supply Chain. As a result, the business does not suffer from capitalism at the hands of a competitive market. A 3PL optimizes the entire supply chain across all aspects, especially the delicate nature of dealing with service parts.