SpoNSoREd Feature
US export control parts back to US due to
the trade compliance requirement even the
dysfunctional parts has not commercial value
at all.
Solving Your Issues
When controlling spare parts, managers
face complex problems: spare parts are ex-
pensive, demand is erratic and hence hard to
predict and delivery times are long and errat-
ic. Customers often demand their spare parts
quickly, but companies are stuck facing diffi-
cult local government customs, trade, foreign
exchange markets and tax boundaries. Con-
sequently, these unique characteristics have
forced companies to fine ways to proper
strong and weak, and what they could do to to meet your business requirements?
manage parts inventories and improve parts
strengthen the business. PwC assessed their If you answer “yes” to any of the ques-
logistics cost efficiency and delivery perfor-
customer service and cost of delivery. The tions above, you will have real opportunity to
mance.
result of threat analysis revealed opportuni- deliver benefits to your business by improv-
We have helped our clients address their
ties for them to be more competitive. ing your spare parts management. An oppor-
spare parts management issues. We observed
We developed a self-survey questionnaire tunity assessment could then be launched to
that our clients often suffer from some typi-
and normally recommend out client to as- confirm opportunities and benefits, define
cal parts management issues and actively
sess their spare parts operations at the initial direction and investment roadmap.
looking for assistance
phase. Some basic ques-
to address them. Some
tions are: Summary
of these typical issues
1. Is customer service China is taking some steps towards be-
include: low availabil-
dropping while inven- coming the “repair centre of the world”.
ity and limited network
tory investment is grow- Bonded MRO operations are gradually tak-
visibility due to local
ing? ing shape. As of now, bonded repair is more
control barriers, parts
2. Does obsolete in- advanced for self-made goods rather than
obsolescence, risks of
ventory account for 5% non self-made goods. In most instances,
violations of govern-
or more of gross inven- repair of goods of non-Chinese origin is
mental policy control,
tory? still prohibited. Establishment of a bonded
customs and trade com-
3. Does the business repair centre in a Customs supervised zone
pliance level challenges and repair and manu-
struggle with answering questions such as, and operating under the auspices of a ”pilot
facturing operation integration difficulty.
“what should my service levels be?”, “how program” is a potential way forward. Parallel
much inventory do I need to support that repair and manufacturing operations outside
How to get started to improve your spare
service?”, “where should parts be stocked in of a bonded zone may be possible, but these
parts management?
the network?” and “what should we value the bring their own unique challenges.
Effective spare parts management could
recovered parts” Overall, whilst international repair centres
bring significant positive impact on capi-
4. Has the business adopted a mindset are complex from a supervision and control
tal utilization and cash flow for the overall
that parts forecasting is too difficult to ac- perspective, there is possibility to establish an
business, reduce cost and improve customer
complish, and therefore has given up on a MRO that is cost and supply-chain efficient.
services. The first step is to assess your cur-
demand planning ca-
rent service parts strategy and operations
pability?
to identify opportunities. For instance, one
5. Does the busi-
Michael Jiang is a Director at PriceWaterhouseCoopers Worldtrade
Management Service. Based in Shanghai, he consults on customs,
of our clients, an electronic manufacturer,
ness lack of confi-
trade, and supply chain issues.
wants to improve its customer service. They
dence to ensure the
George Sun is a Senior Manager at PriceWaterhouseCoopers Advisory.
performed a service parts benchmarking
local regulatory envi-
Based in Shanghai, he consults on supply chain transformation and
study to show them where their business was
ronment and changes
performance improvement.
www.chainaonline.com JANUARY/FEBRUARY 2010 53
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