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FEATURE SUPPLY CHAIN SOLUTIONS


TIME FOR THE SERVICE SUPPLY CHAIN TO JOIN THE REVOLUTION


ordering of stock.


HAVING THE RIGHT PARTS IN STOCK Most failed product repairs – upwards of 50 per cent – are attributed to poor part availability. Having the right parts in the right place at the right time is critical to a company’s ability to maximise the uptime of the product they sell. If equipment is down on a regular basis due to poor part availability, the customer will go off brand when they make their next purchase, killing the manufacturer’s high service margins. Over ordering is just as problematic as


by Gill Devine, vice president, EMEA, Syncron T


he sharing economy now upon us is redefining product sales as we know


them today, with a focus on access as opposed to ownership. Driven by increasing customer expectations, market conditions and new technology, manufacturers are now building and selling outcomes and services instead of strictly selling products – a trend now referred to as servitisation. With pressure from customers to have continuous access to the product, the focus is clearly on the service supply chain to deliver, both a challenge and a great opportunity.


SHARE ECONOMY – CUSTOMER DEMAND Online companies like Netflix and Uber are stalwarts of the sharing economy that have helped to cultivate an on- demand mindset. The sharing economy is both enabled and driven by technology – mobile internet allows round the clock access, with apps to enable consumers to interact with their retail, finance and entertainment providers. This can pose a challenge to businesses as customers have come to expect 24/7 service and will switch from suppliers that cannot fulfil this.


MARKET CONDITIONS UK manufacturers are also facing a host of market challenges with Brexit uncertainty, exchange rate volatility, and pricing pressures across energy and raw materials. Traditional product offerings have to


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change if manufacturers are to remain profitable, competitive and relevant. Servitisation offers manufacturers the opportunity to diversify and broaden their product offering as well as respond to customer demands by providing a value- added service component in tandem with their traditional product.


CAPITALISING ON INDUSTRY 4.0 With the fourth industrial revolution well under way, technologies including artificial intelligence (AI), the Internet of Things (IoT), machine learning and sensors are changing the way factories operate and products are built. One of the many benefits these technologies bring is predictive maintenance, allowing manufacturers and customers to move from the old break-fix model of service where they reactively repair or replace parts after they have already failed. For businesses using revenue generating assets such as planes, trains, heavy medical equipment, construction equipment and so on, this is a game changer: keeping these products up and running with minimal repair time means continuous revenue and satisfied customers. Manufacturers have been front line in adopting automation, it is not pervasive across all areas of business. For example, Excel spreadsheets and legacy ERP systems are still frequently being used to manage spare parts. This can result in poor part availability and over


DECEMBER/JANUARY 2019 | MATERIALS HANDLING & LOGISTICS


Manufacturers must ensure their service supply chains remain efficient and optimised and that does mean some investment in technology


not having a part in stock: high levels of unusable or obsolete stock that can cost a company thousands in warehousing expenses. Informatics product marketing manager Paul Trujillo estimates that the carrying costs for $300,000 worth of inventory are over $60,000 per year. These charges can add up quickly, and over time they will impact a company’s bottom line. Funds are tied up in parts that can't be sold, and there is less shelf space for more relevant stock. Customers want higher quality service


from the after-sales team, faster resolution and value at the right cost. The key to this is understanding demand and managing the supply chain timeline to get inventory levels right. An intelligent, cloud-based service parts management solution can effectively automate service parts management, predict service needs and guarantee availability of required parts, reducing and even eliminating downtime. Manufacturers must ensure their


service supply chains remain efficient and optimised and that does mean some investment in technology. A single service parts management solution lays the foundation for a coordinated global service supply chain across multiple systems. To succeed in a servitisation- focused world, manufacturers must reinvent their after-sales service organisations, adopting sophisticated solutions and new business processes to optimise service parts inventory levels while maximising product uptime. These changes will not only lead to improvements in revenue, gross profits and operational efficiency, but also the overall customer experience.


Syncron www.syncron.com T: +44 (0) 1173 256 565


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