Challenges in spare parts management

For equipment dealers, it is of crucial importance to get spare parts in the right place at the right time. And to do so in the most cost-effective way. When your spare parts management is optimally organized, you have a great opportunity to distinguish yourself from the competition when it comes to providing ​​customer service. But you will need to overcome a number of challenges.

How do you organize your parts ordering?

There is a continuous demand for parts throughout the entire organization. Spare parts might be ordered by customers, required to keep the inventory at the right level or they can be needed (sometimes urgently) to provide service and maintenance. Do you choose for central spare parts ordering? This makes the order process clear and manageable. Or do you opt for decentralized ordering? That makes the order process more flexible. And where are the parts shipped to? The central warehouse? Multiple locations? Or even to the technicians’ home addresses, so they have it in their service van the next day? Think about these questions carefully and base your decisions on the trade-off between flexibility and speed on the one hand and manageability and costs on the other.

How do you keep track of the inventory?

Do you only keep track of the inventory in your warehouse(s) or also the inventory in the service vans of the service technicians? Whatever you decide, your business processes will have to be set up accordingly and it must be supported by the software you use. Does it make sense to invest in automated storage and order picking systems? Can you work with barcode scanning in the warehouse? Are service technicians provided with a mobile application to register their parts usage? Correctly keeping track of the inventory requires an analysis of the processes and possibly an investment in software.

How do you gain insight into the parts usage?

Measurement brings knowledge. With the help of good software you can perfectly keep track of spare parts usage. Important is what you then do with that information. You want to keep your inventory levels low, but you don’t want to backorder. In the analysis of your optimal inventory levels you will also need to take the performance of suppliers into account; how quickly can they deliver and at what cost? For some parts it is a must to have them on the shelf at all-time, other parts you do not want to keep on stock, because they are rarely needed or can be delivered very fast. In the spare parts usage analysis it is also interesting to look out for trends; it enables you to predict and anticipate the future parts usage. Thorough ERP software and the right Business Intelligence tools help you with this.

How do you value your inventory?

The way you value your spare parts has a major influence on the financial figures. There are countless examples of companies that do not have the slightest idea of ​​the value of the parts inventory or that completely misjudge the value due to years of poor inventory management. Do you use the purchase price? Or the actual value? Or do you work with a fixed price? Every method has advantages and disadvantages and it is good to list these and decide for your organization what the best choice is.

Peter Gerhardt is Senior Lead Consultant Logistics at Dysel and helps customers achieve maximum results with business software.