Customer response time is key.

Remember the Maytag repairman commercials? He lives in a perfect field service world. Your Maytag repairman has nothing to do because the product never breaks. He hangs out, is bored, and hopes the phone will ring so he can fix something.

In this perfect imaginary field service world, inventory turns are zero. Inventory sits on the shelf and gathers dust. But in the real world, equipment breaks, and customers don’t want to wait days or weeks to get service. Consider your last experience at the auto dealer/repair shop.   If you had your car repaired the same day, chances are the dealer stocked the parts needed or they were delivered from a nearby depot. .

Field service software uses mathematical models of inventory parts and service levels, based on variables such as the following:

  • Goals for parts response time (from request to delivery)
  • Product installed base locations
  • Product installed base configurations
  • Part usage history, by product and by location
  • Part lead times for procurement and repair
  • Warranty delivery goals
  • Meantime between failure of parts histories
  • Repair volumes

On the other hand, no amount of modeling and investing strategies will make your customers loyal fans of your business. If you are looking for great customer loyalty, what you must do is focus on inventory to support your customer’s requirements for response times, not inventory turns.

So there is an important trade-off between inventory levels and locations vs. customer service and response times. Which is more important to your company?

Excerpted exclusively for SmartVan from the new book, 42 Rules for Superior Field Service, by Rosemary Coates and Jim Reily.