Ed Fraser, Managing Director at Parcel Holders responds to a Field Service News article on spare parts being the "black sheep" of the sector and wonders what role the supply chain will play in parts logistics...
Following on from Kris Oldland's informed piece about parts management labelled the ‘black sheep’ of the service industry, I’d like to reflect on this constantly shifting sector of the service industry, discuss what’s available (and most often used), and offer some solutions.
As MD of a company which was set up to solve problems associated with getting parts to engineers, I can sympathise with the issues faced by parts managers - there are just so many ways to manage parts, and to get them where they need to be. Maybe you’ve just got to grips with one method when your engineers or boss start suggesting something else entirely! We know it can take a while for us mere humans to catch up with today’s constant change in technological innovation.
Let’s face it, technology has made much of the world and how we interact with it, almost unrecognisable to that of 20, even ten years ago. Some of us even remember flicking on a light switch to activate the tungsten element in a spherical bulb! Halogen bulbs, mini fluorescent tubes, long-lasting energy efficient LEDs… now, if we have Alexa, we don’t even need to lift a finger to illuminate a room. The way we socialise, watch TV, drink coffee, light, heat and cool our spaces, and pay for it all, presents us with a vast arena of change and choice.
But is change just due to technological innovation? Well, I would argue it has just as much to do with development in laws surrounding regulation.
Remember those dirty words: CFC gases? Those ozone-depleting nasties? Well, happily of course, they’ve been replaced with more enviro-friendly refrigerant gas. Renewables: wood pellet heaters, solar-electric systems, ground source and air source heat pumps are increasing in popularity. Your client wants the latest ‘green’ thing, it makes them look and feel good. But are your engineers up to installing, maintaining and fixing it? That’s the real challenge, getting the parts to them to do these jobs shouldn’t be.
Now, if your answer to improving service is to increase van stock, then you may have missed the point slightly. Sure, if you’re completely virtually integrated and your engineers are employed to fix one specific brand of machine, then van stock may make a lot of sense. But, for companies looking to win new business where part of the deal is maintaining a portfolio of equipment from a broad and expanding range of manufacturers, then van stock can easily become obsolete. It’s a burden on your service rather than an asset.
It's worth asking whether metrics show if doubling the van stock you can confidently predict doubling first time fix rates. If the answer is no, then this would indicate increasing vanstock is putting your business on a path to Malthus’s l law of diminishing returns. And with continual change in the marketplace, this method of managing parts is only going to get harder and more costly. Nonetheless, common sense will tell us there are certain things that the field tech shouldn’t turn up to a job without. But the more we stock the more we are depending on knowing the future and the further we get from the ‘just in time’ work philosophy which is considered a large factor in the meteoric growth of Japan’s economy.
I would argue that the way forward is better phone diagnosis and a faster supply chain. Sourcing parts and negotiating terms with suppliers can be a profession in itself! But if you want to keep this in-house then perhaps parts managers should spend their time sourcing supplies that can meet your business demand rather than stocking up on ‘general’ components that are increasingly unlikely to be needed.
"I would argue that the way forward is better phone diagnosis and a faster supply chain..."
In light of this, many field service businesses are looking to pass back their stock of inventory to primary suppliers. But what they may not realise is that these suppliers are equally reticent to order smaller and smaller batches of parts they may never ship. As such, suppliers are increasingly drop-shipping parts direct, and in doing so, not just saving themselves the threat of investing in static inventory but also saving on the extra logistics of the part travelling to their warehouses, plus the time it takes to stock the inventory only to subsequently pick and package the part once again for re-shipment.
It looks like this trend inevitably leads to more and more complex supply chains that are increasingly hard to manage. All of which makes the ‘holy grail’ of first time fixes ever more elusive.
In addition, sourcing the right part is a very different ball game to getting it into the hands of the engineer that needs it. Most field service businesses make all their revenue charging for the parts and service their engineers provide to their clients. But I’d argue that product complexity and increases in regulation mean that the scope of equipment an engineer could have at one time ‘tried their hand at’, has become ever more restricted. This, together with the natural desire to win new business means engineers increasingly work over wider territories. If you’re going to have them return to base to collect parts then during that time on the road, their skills (which you’re paying for) are redundant as they assume the work of expensive same day couriers.
OK, so I’ve thrown out stocked vans and driving to base/depots. What now?
If parts managers want engineers generating income, then they don’t want them sitting at home waiting for parts to be delivered. Sending parts direct to clients sites? It works in some sectors, but the bigger the site, the more this tends to be fraught with problems as parts are mislaid and jobs are delayed, as recipients on front desks fail to report parts’ arrivals. (This method is impractical of course in the domestic market with homes empty during working hours.)
Logistics businesses have seized the opportunity to offer premium solutions for the field service sectors with in-night delivery, forward stocking locations and locker boxes. But, far from simplifying the delivery process, they invariably require the part to travel though their delivery network, protracting an ever lengthening supply chain.
So, what if the supply chain could be turned on its head? What if we take inventory management out of the equation altogether? This at least seems to be making life easier for parts managers. Some are now cutting out the parts journey from supplier to van / home / site / locker box. Instead they are sending parts direct from suppliers and their suppliers, straight to engineers using alternative methods like PUDOs (pick up, drop off points) which are ‘open all hours’ and in convenient locations, within a few miles of engineers’ homes.
Field Service business can rest assured, innovations and change isn’t restricted to physical products. It’s equally providing greater insight into the supply chain than ever previously achieved and minimising the path and time taken for engineers to receive the parts they need. But perhaps in the midst of technological advancement and future-gazing, we may just need the human touch more than ever.
Click here for more information about PUDOs.