Supporting The Path To Servitization With Enhanced Parts Planning

The path to servitization is marked by manufacturers shifting their focus from selling finished goods to selling outcomes. Organizations are recognizing the competitive advantage that comes with offering services and solutions to supplement their traditional offerings and are now leveraging their products a platform for delivering service. When managed appropriately, servitization shifts the value statement by enabling companies to establish stronger customer relationships, differentiate from their competitors, and provide additional value beyond the core product.

However, shifting your aftermarket strategy to become service-oriented requires the back end infrastructure to deliver it.  When companies commit to providing uptime or intermediate offerings like service contracts with same day part and technician availability, they are making a promise that requires requires enhanced planning for those parts.  A capable Service Parts Planning tool is one that enables successful service organizations to be agile and scalable.

Rapid-Response Service Level Agreements Require Agility

Rapid-response service level agreements require service organizations to be extraordinarily responsive to the customers they support which often means outsourcing both technician labor and critical inventory logistics. Subcontracting allows providers to enter new markets quickly with minimal overhead costs while third-party logistics providers (3PLs) allows the inventory to be closer to the end customer. The accessible nature of 3PL networks allows service providers to react a changing customer base but the systems also need to follow. When new contracts are sold, 3PLs can easily scale to accommodate the additional inventory requirement but the planning organization must respond in turn by automatically mapping the new contracts to the support site and calculating new target stock levels without the need for human intervention. When additional field stocking locations (FSLs) are required, 3PL space is readily available but planning must also be prepared to reroute the service contracts and supporting inventory as needed.  Customers demand responsiveness when it comes to outages, so service organizations need responsive systems in return.

Flexible Service Offerings Require Flexible Planning

Now that the organizations are designed to be agile, they must also be optimized. Data-driven organizations understand that in order to support uptime, they must first understand the cost of downtime. Customers who recognize the cost of service are now stipulating penalties for downtime or willing to paying a premium for faster response times.  This means  service organizations must adapt to deliver higher service levels without breaking the bank.  Service Part Management tools must be flexible to allow weighting based on factors such as customer importance for key accounts, or material criticality to differentiate parts that will bring a customer environment down versus parts that are simply cosmetic. Planning organizations must be as flexible as the service offerings they offer to accommodate the specific needs of the current installed base.

Scalability Requires Automation

Service organizations can react quickly, tailor to the needs of their customer base, now they must be able to execute in the event of a service call.  Service Parts Planning software automates tedious and complex tasks to set target stock levels, fill those targets, and identify exceptions to ultimately enable employees to focus on more strategic initiatives. A robust planning tool will automate not only the traditional planning tasks required of a service supply chain organization, but it will also simplify the communication between sales and planning to streamline operational processes. Integration of information enables a smoother sales process by providing the transparency and independence required for contract quoting to view available support sites and current spares inventory.

The Benefits of Embracing Servitization

Servitization starts early in the sales cycle as teams strive to solve a customer problem from the very beginning, but needs to be executed successfully downstream with part availability when post-sale support is needed. As organizations move down the continuum on the path to servitization, their ability to better support the customer naturally transforms the customer relationship itself by shifting the relationship from provider to partner. Vendors become embedded in the customer’s business because your machines’ downtime ultimately impacts their revenue. The path to servitization brings a strategic shift that can transform your service organization into a profit center.

Baxter’s Service Parts Planning solution provides optimized target stock levels, automated execution of the inventory plan, and planning analytics to drive continuous improvement. Listen to the panel discussion from Field Service USA 2019 to hear how customers have pursued the path to servitization. 

  • "Leveraging a planning tool has allowed inventory to decrease by a third without missing any service delivery performance...on time and on budget, delivering the results it was supposed to."

    -Global Services Logistics Director
    Networking Technology Provider