Written by 6:00 am Feature, Home, Service Strategy

Making sure your technicians have the right part, at the right place, at the right time, every time

Michael Israel, Head of Field Service Evangelism at Zuper, discusses how to make sure that your technicians have the right part, at the right price and the right time.

Just like the ones they repair and maintain, service businesses need to run their operations like a well-oiled machine. A large and important segment of those operations is spare parts (spares) inventory management.

In fact, for many service businesses, spare parts inventory represents their second most costly investment—second only to field engineers’ and technicians’ payroll. 

As turbulent economic conditions are forcing enterprise organizations to pause and reevaluate how to achieve their bottom line goals, it is important for executives managing field service operations to decide how big of an investment they will make in spares inventory management in 2023.

For CEOs and COOs with field operations, inventory management is a critical part of the field service business strategy. In today’s digital environment, it is essential to automate the many facets of spare parts tracking. Complete visibility over your inventory management means being able to answer the following logical questions about your spares:

  • Where are they?
  • How many are there?
  • What’s the reorder point?
  • Is there a replenishment hierarchy (e.g.,  from warehouse first, then stocking locations, vans, etc.)?
  • What’s the cost and selling price?
  • How many are used by type of service activities, such as work orders, jobs, o PMs?   
  • Is there excess and/or obsolete inventory?
  • Are there substitute and supersession parts available?
  • Are the parts a part of a kit or higher-level assembly?
  • What types of equipment or models are the parts used in?
  • Are unused parts being hoarded in the field?
  • Is the actual spares inventory count and value in sync with the financial records?

To bring this information together seamlessly, here are a few things all business with field service teams should consider:

Parsing the Parts

The first step in fully automating the inventory management process is to make every step of the part’s journey—from order to installation—accessible in a single interface. An ideal automated part process has many facets, but when run well, it will look something like this: 

When triaging a customer problem prior to dispatching a technician, the results of that triage would include the identification of the part(s) needed to correct the problem, pinpointing of the location(s) where the part(s) is available, and, if needed, the automatic ordering and shipping of the part(s) to the customer location or to the technician assigned to perform the repair. When a field service engineer is on-site, it must be easy for him or her to locate where a needed part is available—whether it’s in the technician’s van, at the local office, or at the regional distribution center—and to determine how fast the part can be delivered. To accelerate this delivery, one-touch ordering from the technician’s mobile device should automatically route the order to the stocking location that can fulfill the order in the shortest time, or to the stocking location identified in a predefined hierarchy. 

The status of parts orders must be fully trackable, allowing technicians, service management, and parts personnel to manage and track every aspect of the order. Moreover, a fully automated system will automatically provide the appropriate field service engineers, service management, and even customers with details about the order’s progress and the shipping details once the order is fulfilled. The inventory balance and value details will be updated at both the shipping and receiving locations once the part is shipped and received.

Finally, the part’s usage must be recorded in the work order. Ideally, that simple step will have a domino effect on several related actions. In the final phase of this automation process, the following should be completed: updating the part quantity and financial details of the stocking location from which the part was used (e.g., the tech’s van), adding the part cost and price to the work order’s financial data, including the part’s price on the customer invoice if billable, updating the service cost data on the associated service contract, and completing a possible stock replenishment order for the location from which part was pulled when necessary. 

Each step in the process must be tracked as a record of both inventory usage and as data to inform future inventory decisions. 

Depending on your organization’s needs, integrations can enhance and empower this automation process, bringing an added layer of value to the service provider and the customer. The right integrations can link your manufacturing ERP system, create purchase orders, and facilitate communication with third-party vendors to bring total visibility to your inventory management process. 

Support from the Back Office

Beyond what the technician or engineer does in the field, the other half of a great inventory management process happens in the back office. Leveraging part usage data recorded in work orders, the back office can stock the right parts in the right locations, expediting work and increasing technicians’ bandwidth for higher-valued interactions. The best inventory management interface analyzes historical usage data, along with product sales forecasts, to determine how much inventory should be stocked at each stocking location. 

Thorough inventory data tracking and management can bring increased visibility and efficiency to service workflows. When inventory data is thoroughly tracked and analyzed, it can help accurately forecast seasonal demand changes, build workflows that prompt action when minimum stocking levels are reached, identify excessive costs and missed revenue opportunities when part usage is attributed to expired warranties, pinpoint other negative and positive inventory cost and usage trends, and much more.      

Critical Considerations

With all of this data, what do you do with it? As the second most costly element for many field service organizations, the data can be used to support inventory management strategy. For example, every company works to strike the appropriate balance between parts’ availability and parts’ cost. Many organizations strive to achieve a parts availability of 90% or slightly more. In other words, a part is available when needed and does not have to be ordered from elsewhere nine or more times out of ten. 

It’s a balancing act. A high parts availability percentage propels a high inventory investment cost. A lower availability rate reduces inventory investment, but at what cost? A high parts availability level will increase the number of times a technician has the part on hand when he or she needs to complete a repair, thereby improving first-visit fix rates and almost certainly improving customer satisfaction. Conversely, a lower availability rate will cause more repeat visits because a part had to be ordered before the repair could be finalized, very likely provoking a negative impact on customer satisfaction. Service executives must balance those choices and decide what level of customer satisfaction is acceptable in order to minimize inventory costs.

Leveraging historical data will help with that balancing act. Data can highlight anomalies and trends that can be addressed to both boost customer satisfaction and maintain or reduce inventory costs. There are several key insights that data can inform for field service businesses. It helps answer questions like:

  • Is there excess inventory at one or more stocking locations that can be reallocated to other locations, thus improving the other locations’ part availability and first-visit fix rates?
  • Are field engineers or technicians hoarding unused parts in their vans, trucks, or basements that could be returned to an office and put to better use by being available for others when those parts are needed?
  • Is there obsolete inventory stocked in one or more locations that could be returned to the main warehouse, or scrapped and written off, thus making room for investments in more needed inventory?
  • Are some technicians showing extraordinary part usage trends when compared to their colleagues, perhaps indicating a need to train one or more technicians in more effective diagnostic and repair skills?
  • Are one or more models or types of equipment manifesting excessive part replacement history compared to similar equipment, perhaps indicating a need for manufacturing/engineering to investigate the anomaly and release an engineering change or replacement parts?

The reality is that inventory is so costly, and so important to customer satisfaction and loyalty, that neglecting to bring more accuracy to your inventory management through analytics hinders the bottom line. In 2023, all field service businesses must be thinking about how they can fully automate spare parts inventory management processes, including implementing and leveraging fully integrated processes across multiple platforms. 

About the Author

Michael Israel is the Head of Field Service Evangelism at Zuper. With over 30 years of experience in technology in the field service industry, Michael is knowledgeable about how technology can strengthen and optimize field service businesses. Michael is proficient at identifying inefficiencies, developing new processes, and providing best practices, right solutions and recommendations to meet clients’ technical and business objectives. Michael’s major focus area is the concept of completed service work. Inspired by completed staff work, completed service work essentially suggests that field service employees focus heavily on providing the ultimate customer experience by anticipating customers’ needs, questions and wants past what they ask for. Michael also specializes in discussing the topic of customer experience and how field service management businesses can enhance their current processes to best meet customer needs. Finally, he is an expert on the topic of how technology has elevated and revolutionized the role of the field service technician and greatly increased the necessary skill sets to complete the job.