BibliographyIntroduction Today’s businesses, particularly manufacturers of certain consumer and industrial goods, are being compelled to rethink how they operate their after-sale departments. This retrofitting has led to a new outlook in the forecasting of distributor and end user need. Moreover, these companies that are now driven by implementing better logistics and business information needs, have come to the realization that their after sale departments can effectively be transformed into viable profit making centers. “…Turning service into a growing profit center requires a shift in focus. Everything a company provides after the sale -- spare parts replacement, professional services, help desks, warehousing, product recalls, and field technicians, among others -- needs to be managed as an integrated whole”(Green) "…A company that institutes a first-rate service management capability can increase its service revenues between 10 percent and 20 percent”(Green) "Moreover, by making its service functions more efficient, a company can reduce operating expenses by 15 percent to 30 percent”(Green) Customers (distributors) and end users (consumers), do not relish the thought of extended time delays in the acquisition of parts and service.
In almost all instances, downtime translates into either money or opportunity loss. Additionally, "the cost of nonconformance can be a big issue. With service parts logistics, you often deal with customers who are already angry or upset. " Such customers may have less tolerance for error so "you have to be that much better when you deliver the part to the customer. " "There's a lot of emotional content with service parts”(Harps 2002). Whenever a company fails to accommodate previously agreed upon service commitments it can be costly, "Some companies are assessed penalties if they don't service the equipment fast enough”(Harps 2002) While distributors have a particular set of circumstances which they must adher; the availability of shelf inventory of a particular item may prove critical in the chain of events which enables one to suppress downtime.
“…Subaru New England (SNE), an independent distributor for Subaru automobiles and service parts, struggled with inventory. Several years ago, the company was carrying $14 million in parts, but providing a same-day fill rate of just 70 percent at its parts distribution center”(Harrington 2005).
The business reality is that the distributor operates on an economy of scale, which stipulates that the distributor will make an attempt to only inventory those parts which are in high demand. In other words, inventory carrying cost must be balanced against supply chain cost. In the case of Subaru, their system" couldn't look at the entire country and makeparts demand forecasts, and it couldn't plan distribution to locate parts near the customer”(Harrington 2005). “…Based on demand analysis, Subaru New England was able to cut inventory down to $6 million and, at the same time, improve same-day order fill to its 62 dealer customers to 98 percent”(Harrington 2005). Aims and Objectives This research is based on the premise, that when the proper logistics and information systems are an integral part of the operational paradigm, that downtime for the end user will be minimized.
The research will show that spare