wcm 2016 breaking the mold - the value of challenging your service supply chain model

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Breaking the Mold – “The Value of Challenging your Service Supply Chain Model”

Michael Schuler

CEO - Veterans Alliance Resourcing

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Introduction to Veterans Alliance ResourcingService Supply Chain Consulting

• Product Returns Management• Depot Repair• Parts Supply Management• Product Remarketing & Value Recovery• Service Delivery Management• Product & Parts Logistics • Warranty Management

No Risk - Fee Structure based on Savings % (qualified accounts)

A Service Disabled Veteran Owned Small Business

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Breaking the Mold – “The Value of Challenging your Service Supply Chain

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The Million Dollar Coffee Cup

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Challenging your Service Supply Chain Model Requires:

Courage: To Change Perspective Knowledge: What is Best-in-Class?

Gain Insights from Mature Industries & Companies

Metrics: Measurements for each Category Balance: Risk vs. Reward

What is Optimal for your Business Fortitude: To Execute Change

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Case Studies Companies that made Changes

1.Major Retailer – Service Parts Supply2.Major OEM – Reverse Logistics & Product Remarketing3.Major TPA – Service Delivery

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Service Parts Management Metrics:•Parts Inventory (SKUs, Quantity & Dollars)•Parts Inventory Turn Rate: a) by Dollar b) by Quantity•Forecasting Fill-Rates: Same-Day, 2nd Day, 5+ Days•Cost Per Part•Warranty Recovery: Parts & Labor Reimbursements•Inventory Accuracy, Variance and Write-Downs•Return of Core/Upcharge Costs & Recovery •Cost and Yield Rate on Core Repairs

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Service Parts Management Metrics:•Parts Inventory Investment (SKUs & Dollars): $19M-100K Parts/10K SKUs in stock, $13M at Service Center plus $6M in Service Vans, $25M Spend per Year•Parts Inventory Turn Rate: Dollar (1.5) Quantity (1.2)•Fill-Rates in Days: 1-(64%), 2-(72%), 5+(16%-6,300 Orders)•Cost Per Part: $288, 100+ Vendors, 550 Parts/Day (400 Bought)•Warranty Recovery: 33K Parts, $1.5M Labor Annually•Inventory Accuracy, Variance and Write-Downs Unknown•Return of Core/Upcharge Costs & Recovery Unknown•Cost and Yield Rate on Core Repairs Unknown•First-Time-Fix Rate/TAT - Wrong Part Ordered/Shipped

Case Study #1 – Service Parts Supply

Major Retailer

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• Staff of 35 handled Parts Purchasing, Depot Repair and Replacements for the Extended Warranty Lifecycle of PCs

• PC Support Operations were Embedded with other Returns and Support: Appliances, Tools, Consumer Electronics and Home & Garden Equipment (Grills and Mowers)

• Retailer brought in Consultants and Put out an RFP

• But a Small Company (not on the original RFP List) was Awarded the Contract


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Key Strengths of Company Awarded Contract•Extensive Experience in Performing Component-Level Repairs on Parts and Sourcing from Secondary Market •Executive that Previously ran Retailer’s RC and Parts Supply Center had Joined Parts Suppler a Year Earlier (He was intimately familiar with both Operations)•Company Proposed to take over Existing Operations for Seamless Transition (Personnel and Inventory) by Embedding at Returns Center


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Major RetailerService Parts Metrics Before 1 Year 3 Years

Same-Day Fil-Rate 64% 88% 94%Next-Day Fill-Rate 72% 92% 97%5 Day Fill-Rate 84% 98% 99.5%Aging Orders (5 Days+) 6300 70 25Avg. Cost Per Part $288 $225 $155 Inventory Accuracy Unknown 98.5% 99.3%Write-Downs $5.5M $1.2M $600KReturn of Core Unknown 60% 96%Yield Rate on Core Repair N/A 78% 91%

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• Challenging your Service Supply Chain Model requires a Change of Perspective• Establish Metrics for each Category• Learn what is Best-in-Class • Decide what is Optimal for your Business

wcm 2016 breaking the mold - the value of challenging your service supply chain model

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