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Throw away commodities; can the service supply chain embrace intelligent thinking?

The cost and complexity of hardware maintenance has resulted in a fragmented and confused industry with little or no accountability.
The confusion is a culmination of the way the retail maintenance sector has developed into specific silos of service; from diagnostics and scheduling to parts, logistics, field service and repair; each area has its own providers with price and service pressures.

Glyn Dodd, managing director of Centrex Services highlights the gaping chasm this has left in the supply chain and warns that unless intelligent thinking is applied the whole industry is doomed.

Transforming the goods
The major issue I see with the service supply chain model is reliance on multiple suppliers and with multiple suppliers, the fragments in the chain turn into silos. This problem began seven or eight years ago when the wholesale industry turned their purchasing talents away from the commoditised acquisition of core products and began to differentiate themselves on internal cost models.
The first model to be addressed was IT support, and the impact was significant. In a short space of time the industry allowed itself to be commoditised by professional retail buyers who stripped away all perceived value.

The pressure continued to gain momentum as the purchasing manager became focused on shaving cost of each part of the maintenance service, which saw average IT part repair drop drastically.

Who’s fault?
The chasm expanded between the silos of service and today each element of the supply chain service delivery; diagnostics and scheduling, parts, logistics, field service and repair is recognised as a separate cost centre, often with conflicting objectives. The result has left many providers scrabbling to develop value, struggling with the P&L and facing a daily competitive threat of being undercut. In my opinion these service providers cannot survive in the long term.

For those working in the individual cost centres, time is running out before the price pressure causes implosion. They must recognise that real costs can be saved through streamlining the centres into a structured supply chain, utilising the components of each to provide an end-to-end service.
As well as addressing the financial structure of the silos, another rift is the inefficient service delivery. Most supply chains are wasting costs and reducing productivity in simple areas, with levels as high as 30 per cent within retail service delivery.

Most supply chains are wasting costs and reducing productivity in simple areas. The reason being the fragmented supply chain model employed – where the repairer, part provider, field technician, diagnostics and logistics provider are often independent sub-contracted suppliers.

Diagnostics on diagnostics
These fragmented, confused and complex supply chains can be simplified, eliminating waste and improving service as a result.

Providing diagnostics on the diagnostics can radically change the mentality that is applied to the typical supply chain and allows a wholesale business to reach its reach customers in a different way. By identifying the inefficiencies in supply chain silos, each process can be challenged, culminating in a chain that is valuable, capable, available, adequate and flexible.

It’s time to break down the silos and analyse exactly what the end customer needs.

Diagnostics on diagnostics provides the intelligent thinking required by wholesalers to close the chasms across the silos and fundamentally change the way a typical service supply chain is viewed. I believe that this approach – Leansource – can resurrect a potentially fated industry back on to its feet and capture the true value of what we are capable of.

For further information visit: www.centrexservices.co.uk

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