Spare Parts Management Software State of the ArtFeb 03, 2022
This article originally appeared in Field Service News and was reposted with their permission.
Spare parts represent the single largest investment and second-largest expense when running a product service business. This is true regardless of whether Aftermarket Service operates as a cost center, revenue center, or profit center. Additionally, several industry trends, including Servitization, the Circular Economy, and a tsunami of technological innovations, have placed even greater pressure on Service Leaders and Supply Chain Managers to be as effective as possible when forecasting, managing, and ordering spare parts.
Spare Parts Management (SPM) is the process that companies use to ensure that the right spare parts are available at the right place and at the right time. When running a service function, spare parts represent the single largest investment and the second-largest expense. That is why Service Leaders and Supply Chain Managers must effectively forecast, manage, and order spare parts since there is a lot at stake.
However, operating a successful SPM function creates a few challenges. As mentioned above, the goal is to have the parts available at the right place at the right time. But carrying too much inventory will harm the income statement’s balance sheet, return on assets, and return on invested inventory. The next challenge is that service parts are not the same as any other inventory like finished goods. They can be repaired and reused, thereby being a great revenue source and solution for any service issues.
To sum up, SPM has unique characteristics that make it complex. Therefore, there is a need for industry-specific software to meet such complexities.
SPM State of the Art
Blumberg Advisory Group published a report that aims to educate Service Supply Chain Executives on the strategic value of SPM to their company’s financial and operational performance. It also contains independent benchmark evaluation and profiling of selected SPM vendors and their key capabilities.
The objectives of the Blumberg Advisory Group report:
- To educate Service Supply Chain Executives on the strategic value of SPM to their company’s financial and operational performance.
- To provide an independent benchmark evaluation and profiling of vendors based on the following criteria – feature functionality, vertical market focus, core competencies, use cases, current and planned innovations.
The report relied on Blumberg’s knowledge of the SPM market and many data sources when profiling vendors. This includes whitepapers, publicly available information and literature, structured discussions, data collection processes with said vendors, interviews with industry leaders, consultants, and end-users.
Impact of Key Trends
Three major trends have a significant impact on SPM. These are:
- The Servitization of products. This trend places greater attention on generating additional revenue through the sale of spare parts. It is the main driver for companies to become proficient in planning, forecasting, and managing spare parts.
- The emergence of the Circular Economy. Here, companies create value by repurposing, reusing, and recycling products. This allowed supply chain managers to replenish their spare parts inventory by simply repairing and refurbishing defective parts.
- The tsunami of new technologies in recent years. The rise of modern technology in improving customer satisfaction and experience has shaped SPM into a more accurate and effective technological solution.
Core Features within SPM solutions
Below are the core features to look out for when investing in Spare Parts Management (SPM) solutions:
- User Interface
- Parts Management and Grouping
- Inventory Planning and Optimization
- Supply Planning (Order Plan)
- Reporting and Analytics
Here are other aspects to consider in your choice of SPM solution:
- First, make sure that the solution is specifically designed for managing the Aftermarket Service Supply Chain.
- Second, research on vendor’s experience and expertise within your vertical market.
- Third, check if any independent organizations validated the math behind the inventory planning and which organizations. This adds credibility to the vendor’s ability to meet organizational requirements regarding SPM.
- Fourth, determine what planning objectives are met or optimized through their SPM system and what their application is trying to accomplish.
- Finally, investigate the SPM solution’s ability to keep with the new technological development and incorporate them into various optimization and planning scenarios.
Baxter Planning Systems
Baxter Planning (Baxter) is a privately held vendor of advanced planning software for Service Parts Management founded in 1993 by Greg Baxter in Austin, TX. While most of its customers are of enterprise size with $1B+ revenue, Baxter also caters to mid-size companies within Information Technology and Telecommunications verticals.
When choosing Baxter, one of its highlights that many users value is the TCO approach because it is aligned with business objectives that all stakeholders in the organization can understand.
Oracle is a $39 Billion company. Its Supply Chain practice accounts for approximately 3.8% of total corporate revenue. Its Oracle Spares Management (SM) is a complete solution covering key processes and functionality required to manage serviced parts within a service supply chain.
Although it presents many features, it is recommended that manufacturers only consider Oracle Service Parts Planning (SPP) - an Oracle SM component, when they are already a part of the Oracle Platform.
PTC’s Servigistics software is a purpose-built Service Parts Management (SPM) solution that incorporates the broadest and deepest features in the marketplace. Servigistics represents approximately 10% of PTC’s business, making it by far the largest Spare Parts Management (SPM) solution provider.
Servigistics is the best fit for companies that manage large, complex supply chains or service level agreements or connected assets are significant considerations. It is still a viable option for mid and small-market service organizations since it offers various packaging and pricing options.
SAP, a leading ERP software vendor, delivers Service Parts Management capabilities through its Extended Service Parts Planning (eSPP) and Integrated Business Planning (IBP). These applications work together to deliver the full breadth of capabilities found within a typical SPM solution.
Like with Oracle, it is recommended for SPM users to be already on the SAP Platform, and there are no third-party solutions available to them through their IT department. Also, SAP is only suggested for SPM, where parts returns or repairs do not play a big role.
Syncron is a privately held company founded in 1999 and headquartered in Stockholm, Sweden. Syncron has developed numerous SPM solutions over the years, including Syncron Inventory, Syncron Retail, Syncron Price, and Syncron Uptime. Syncron supports a broad array of vertical markets, including but not limited to agriculture equipment, automotive, energy, and more.
If looking to generate a larger percentage of total corporate revenue from the sale of aftermarket spare parts, manufacturers should consider Syncron. It is also a great option when products are IoT-enabled and critical to PaaS agreements.
To meet the need for SPM solutions in the market, various vendors have emerged, offering their own features and capabilities. In fact, the Blumberg Report has successfully profiled each vendor according to certain functionalities, including Reporting and Analytics, Parts Management, Supply Planning, Forecasting, and Inventory Optimization. However, it is important to note that choosing an SPM solution depends on your company’s objectives and goals. Through this set of goals, you can determine what features you need and which vendor offers the best solution according to those requirements.
Download Blumberg’s report to gain new perspectives and insights on the SPM State of the Art.
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