There's critical delivery and then there's critical delivery. Granted, getting a replacement part to a retailer whose point-of-sale terminal went down is not on a par with rushing a life-saving device to a hospital. Nevertheless, functioning hardware at checkout is the lifeblood of any business, and receiving needed parts timely is vitally important.
Fujitsu Transaction Solutions markets such POS products as self-checkout and self-ordering terminals, transaction hardware and software, automated teller machines, and wireless handheld devices to manage inventory. Its clients include major retailers like Staples, Nordstrom and Payless ShoeSource. It also counts Chevron and Regal Cinemas among its customer base. And, of course, it has replacement parts for this equipment when problems inevitably arise.
Such businesses rely heavily on POS hardware and the software that powers them, and when they malfunction or shut down, business is jeopardized or lost. Fujitsu Transaction Solutions (FTS), a subsidiary of Fujitsu Ltd., is contractually committed to get the right parts installed within specific times.
The terms of service level agreements vary from customer to customer, but generally the parts are deemed so critical for business that deliveries must take place within 2-, 4- or 8-hour windows, says Dick Zarski, vice president of supply chain and logistics for FTS. Its partner, Choice Logistics, warehouses the parts and ensures that they are delivered either to the FTS engineer that will do the work or to the site itself.
"These are fairly critical, fairly crucial pieces of hardware to our customers," Zarski says. "The last thing a person wants in a Staples store, for instance, is not being able to buy what they need, pay for it and get out of the store quickly. So any downtime in any of these customer locations is critical. Sure, if a server goes down, the customer doesn't go out of business, but if a point-of-sale terminal goes down in a retail store and they can't check somebody out, they've got a problem, and they can't very well pull out a cigar box with cash to fix it."
Parts are kept in 35-plus strategic stocking locations maintained by Choice around the country. When a part is consumed, the inventory management system automatically triggers replenishment. Another 3PL, which manges Fujitsu's main stocking center, sends replacements to the Choice centers.
"What we engage Choice and the SSL model on is to have material and parts available for our field engineers to have quick access to, so we can support contracts with customers to get stores up and running as quickly as possible in the best manner," Zarski says.
FTS determines what parts to keep in a given SSL and in what quantities, Zarski says, and it's not an easy thing to calculate. Decisions are based on matching the installed base of hardware that FTS engineers support with the known failure rates of that equipment. Of course, the service contract with the customer dictates delivery. "If they called for next-day repair, we wouldn't need to keep any parts in the SSLs. We'd just overnight the part out of our main warehouse to arrive the next day along with the engineer. But because we have 2-, 4- and 8-hour response times, that requires us to be more clever in our inventory response model."
Those customers are spread throughout the country, and not always in big cities, so FTS had to carefully choose which SSLs to utilize when putting together its service parts network.
A typical transaction works like this: Customers - whether retailers, theaters or gas stations - notify the FTS of the problem. If it's a software issue, operators may try to get the affected system up and running remotely. If that fails, an engineer is dispatched. An elaborate tracking system keeps tabs on engineers 24/7, says Zarski.
The engineer either retrieves the part from the SSL or meets up with it at the customer's store. In the event that a part is not available at the SSL, Choice and Fujitsu discuss whether it should be shipped from another stocking location by special courier or next flight out.
Choice was not the first 3PL to handle the Fujitsu Transaction Solutions account. Paul Malamet, executive vice president of client services for Choice, thinks his company got the contract because it brings a dynamic support to the partnership that was lacking.
"There's a lot more to a relationship than simply picking, packing and shipping within a 2-hour or 4-hour environment," he says. "There are many, many reports and data feeds that we've brought to the relationship. In addition, we've been able to exact cost savings, meaning we've repositioned inventory. We've even been able to bring down the number of some of the locations they utilize.
"You might say, 'Gee, that hurts your revenue', but at the end of the day, an optimized network creates a healthy relationship between Choice and its client."
The initial call from a client begins what Malamet calls a closed-loop system of notification. Once it's determined that remote diagnostics won't solve the issue and that a field tech is necessary, the Choice inventory management system confirms that the SSL received the order for a part. That order shows the item to be picked, its serial number and bin location in the facility. During transit time, constant contact is kept so Choice is aware of any traffic or weather issues. Finally, proof of delivery is called back to the SSL, and then an acknowledgment is sent back to the client via EDI showing the transaction is closed out, Malamet says.
Choice keeps FTS apprised of its inventory picture because it's crucial to keeping carrying costs down, he says. Service parts management is more than a just-in-time business, Malamet says. "It's just-in-case. The logistician in this world needs to be able to place product just in case the system is down or they need to do maintenance. But you don't want too much product there. These parts are pretty high-value, so you don't want too many lying idle."
Zarski says the switch in providers was beneficial. "Choice has been a really good partner for us because in looking at our business they are continually seeing how we can drive further improvements. They haven't just responded to our needs but helped us identify other solutions, better ways, better options.
"They helped us tweak our model. That was a big factor when we made the decision to switch."
Choice Logistics, www.choicelogistics.com
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