Executive Briefings

DC Velocity: Forward Thinking about the Aftermarket. May 2008

Service-parts logistics can be a cash cow for the increasing number of companies that offer this service to their clients. Achieving flawless execution-often on just two hours' notice-is a challenge for both shipper and provider.

In a world where companies bend over backward to give customers what they want, when they want it, perhaps nobody bends farther or faster than those who manage service logistics, the operations that support after-sales service.

That's because customers, be they consumer, retail, or industrial, expect support after they buy a product. Guarantees of good after-sales service, in fact, may even be required to make the initial sale.

Buyers expect to get excellent support quickly-in some industries, within two to four hours of a customer's call. Making that happen, and satisfying customers, requires nearly seamless and flawless execution.

That often means that the seller must set up stocking locations near its customers, something that is a particular challenge for global companies. It also requires good visibility into stocks that are dispersed among both company-owned and third-party distribution centers. And where stocking and delivery are outsourced-as they often are-it requires reliable partners.

Yet for all that, the benefits of providing after-sales service outweigh the challenges. Chief among them: It can be enormously profitable-more profitable, perhaps, than the margin on the product itself. The automotive and high-tech industries have known that for some time. But now, big industrial companies around the globe have begun to pay more attention to what's often referred to as "service-parts logistics."

...

As you might imagine, performing flawlessly on two hours' notice day in and day out requires every company that provides this type of service to thoroughly master every aspect of logistics operations, no matter how small. In service-parts logistics, Hagi says, transportation is the easy part, whether for a local delivery or one across the country. "The plane is vanilla," he explains. "What is most challenging is what happens on the front end and what happens on the back and the communication that ties it all together."

To read the full article, visit:  http://www.dcvelocity.com/articles/20080501enroute/

Service-parts logistics can be a cash cow for the increasing number of companies that offer this service to their clients. Achieving flawless execution-often on just two hours' notice-is a challenge for both shipper and provider.

In a world where companies bend over backward to give customers what they want, when they want it, perhaps nobody bends farther or faster than those who manage service logistics, the operations that support after-sales service.

That's because customers, be they consumer, retail, or industrial, expect support after they buy a product. Guarantees of good after-sales service, in fact, may even be required to make the initial sale.

Buyers expect to get excellent support quickly-in some industries, within two to four hours of a customer's call. Making that happen, and satisfying customers, requires nearly seamless and flawless execution.

That often means that the seller must set up stocking locations near its customers, something that is a particular challenge for global companies. It also requires good visibility into stocks that are dispersed among both company-owned and third-party distribution centers. And where stocking and delivery are outsourced-as they often are-it requires reliable partners.

Yet for all that, the benefits of providing after-sales service outweigh the challenges. Chief among them: It can be enormously profitable-more profitable, perhaps, than the margin on the product itself. The automotive and high-tech industries have known that for some time. But now, big industrial companies around the globe have begun to pay more attention to what's often referred to as "service-parts logistics."

...

As you might imagine, performing flawlessly on two hours' notice day in and day out requires every company that provides this type of service to thoroughly master every aspect of logistics operations, no matter how small. In service-parts logistics, Hagi says, transportation is the easy part, whether for a local delivery or one across the country. "The plane is vanilla," he explains. "What is most challenging is what happens on the front end and what happens on the back and the communication that ties it all together."

To read the full article, visit:  http://www.dcvelocity.com/articles/20080501enroute/