There are a few axioms of a tech services business with which everyone is familiar. One of the most critical being: If you make a promise to a customer, you need to meet it. If you don’t make promises, you may not have customers. A measurement that is commonly used here is OTIF. OTIF stands for On Time, In Full. How often do you service your customers on time and in full? If you must make multiple trips over the course of days or weeks, it drives down this measurement.
Principals like these lend themselves well to the customer driven strategy practiced across industries. A customer driven approach works well, but there’s more to business success than making customers happy. Tech service organizations need to maximize profits and growth. Improving inventory management can yield impressive results. Unfortunately, traditional Enterprise Resource Planning (ERP) systems and Field Service Management (FSM) fall short.
Adopters of advanced allocation find increased profits, decreased labor costs, and increased customer satisfaction. Using advanced allocation can fill the gaps between your ERP and work order management system to yield improved fulfillment when its most needed.
Like the axiom mentioned above of a customer focused strategy, some principles ring true across the board for advanced allocation. We’re here to walk through the best practices and specifics on how inventory management solutions make it possible.
Few things are more important in keeping customer promises than flexibility. Being able to pivot, realign, learn, and adapt are keys to the most successful tech services practices, but the key is being flexible at speed. In a customer focused model, there’s little room for decision made at a daily rate. Industries with enough variables find a lack of instant flexibility in decision making in their strategy becomes a problem. This instant flexibility is obtained by:
In periods of low vs. high demand, it is hard to forecast the needs of hundreds of parts, much less the distribution of your parts to techs and ultimately the customers. With advanced allocation, an organization gains the confidence that needed parts will be ready when the work order starts in the future. If parts are needed that are not allocated, the inventory system can still support using common stock. When a request for use of a part occurs, the system will first prioritize use of allocated parts to a specific group or work order. If there is not enough inventory, the system will seamlessly move to common stock without the operator needing to know about it.
When common stock is used, this data can be used to predict the future needs of distribution, manufacturing, or field service branches of the company, so come next quarter, there are accurate pictures of steps to be taken.
Advanced allocation also allows you to prioritize specific customers in ways you simply could not before.
Decreasing Lead Times for Key Customers
Across industries, there are dozens of cases of businesses prioritizing faster delivery of parts over price or even product selection, unfortunately even then, parts go out of stock. When that happens, the business must prioritize who gets limited supply. There are many strategies to handle lack of parts. Allocate based on first come, first serve, or allocate based on the importance of the customer. As unpopular it can seem to shift availability to larger more profitable customers, it sometimes is the most logical approach.
One customer allocates parts into three groups:
Using advanced allocation when parts are needed for work orders in key or active work order groups, and there is insufficient inventory, common stock is used. To learn more, read the Case Study.
If you’re curious about taking the next step towards advanced allocation and want to see how effective it can be, what ROI you can expect, and what system applications would benefit your field service operations, reach out to us.