Companies Should Aim for A Minimum of Four Stock Turns Per Year and Hold an Inventory of 10 Percent of Total Revenue or Less
Top-level parts profitability should be measured in the field rather than the warehouse. On average, companies should be aiming for a minimum of four stock turns per year and holding an inventory of ten percent of total revenue or less.
Yet more often than not, when faced with a spare part problem, service engineers typically order more than they need and keep a few spares to hand. This creates unnecessary cost to the business, impeding cash management, and resulting in idle capital.
According to Dave Hart, Senior Vice President of Customer Success at ServiceMax: “Stock on the shelf is spent money. Decreasing inventory while increasing first time fix rates is the Holy Grail in service. Thanks to automated field service management, it’s not just possible, it’s now becoming commonplace.”
It used to be the case that inventory management was tracked and measured in the warehouse and expensed on distribution. The traditional way was great for the accountants but not good for seeing how, where and when parts are consumed, or gaining P&L insight by customer or contract.
But thanks to intelligent automated field service management software, behaviors and requirements can now be measured in the field, rather than just the warehouse. Granular insight into stock costs hidden in different budgets, visibility and accountability at the individual technician level, higher first time fix rates, lower provisions, fewer emergency shipments, increases first time pick rates, greater efficiency which increases customer satisfaction, and lower freight costs are just some of the reasons fuelling demand for field service automation globally.