Considering the complexity of spare parts considerations, these vendors initially focused on specific vertical markets. For instance, Manugistics and Xelus (now part of Click Commerce [NASDAQ: CKCM]) are regarded as the market leaders in inventory optimization solutions for the demanding needs of the A&D industry. Manugistics has a lengthy experience in the commercial airline sector where carriers like Delta and Continental Airlines have been using its revenue management and optimization applications. The vendor has further strengthened its focus with the acquisition of former Western Data Systems (WDS) in 2002, a depot repair ERP solution provider (see Manugistics Indulges in the Open M&A Season).
Still, both vendors have applied their solutions to other industries that have to deal with expensive, low-volume service parts requirements, like telecommunications, industrial equipment, and high-tech/commercial electronics. Although i2 has Southwest Airlines as its marquee A&D customer, i2 has focused more on industries with somewhat higher-volume and complex supply chains, such as segments of the telecommunications and commercial electronics industry, as well as automotive parts. This similarly holds for other traditional (new parts) SCP providers, which are also beginning to realized the service parts SCM opportunity. Among such companies are Infor Global Solutions (www.infor.com, via its recent acquisition of the demand planning vendor Mercia Software) and Logility (NASDAQ: LGTY), whose client roster includes Komatsu Europe International, a provider of construction and mining equipment, and Delco Remy International, a manufacturer and re-manufacturer of automotive electrical and drive-train/power-train products.
To that end, recent service parts enhancements to the Logility Voyager Solutions SCM suite include more robust forecasting techniques for normal, seasonal, short-life cycle, intermittent demand, end-of-life (EOL) purchases (all time buys), and reverse logistics planning. Streamlining the reverse logistics process is critical for companies that manage high value, service exchange units from return to refurbishment to re-sale. Logility also provides a method to forecast returns and conduct make/buy analysis, which helps companies synchronize their inventory investments with service-level goals, and accelerate the receipt of returned goods into inventory.
Pure-play providers beside Xelux, such as Servigistics, Baxter Planning, and MCA Solutions have focused exclusively on the requirements of service parts inventory management and optimization, and have gained recognition in some market segments for their deep spare parts management expertise and scalable technical solutions. Servigistics has carved niches in medical devices and commercial electronics and MCA in telecommunications and industrial equipment; while Baxter often competes with MCA in telecommunications, and with Servigistics in high-tech/electronics. The enterprise resource planning (ERP) (and possibly SCP too) leader SAP has long been dabbling with delivering a spare parts and MRO solutions, via a longstanding alliance with Caterpillar-Ford Motor, but a solid, commercially available solution is yet to come. International Business Systems (IBS) has capabilities in determining part criticality measures and optimum service levels, as a result of its acquisition of Stratman Software. Yet, today's ERP systems generally do not contain adequate, let alone advanced spare parts planning functionality.
The spare parts planning market thus seems a prosperous area, as seen by Click Commerce's interest through acquiring Xelus. Click Commerce started out as one of several up-and-coming SCM vendors focused on coordinating and optimizing supply chain processes across multiple channels of suppliers, customers, and partners. It features leading-edge technology that is based on open Internet standards and a component-based architecture. Also, over the past few years, the vendor has rapidly corralled its partner relationship management (PRM), and moved beyond product portfolio by acquiring several niche providers, such as
ChannelWave, a former PRM peer's channel management and service automation software assets in 2005,
Optum, a warehouse management vendor, in 2005, which had previously acquired V3 Systems and WorldChain, respective providers of software for supplier management and vendor managed inventory (VMI), in 2004,
bTrade, a specialist in connectivity and Internet-based electronic data interchange (EDI) for trading partner management, in 2004,
Webridge, a provider of secure extranet portal solutions, in 2004, and
Allegis, a data center and hosting PRM provider, in 2003 (see Click Commerce Acquires Allegis).
In addition to Xelus' forays in leveraging radio frequency identification (RFID) in tracking and analyzing service parts, Click Commerce hopes to hereby broaden its footprint with the service parts planning and reverse logistics expertise of Xelus. Xelus should eventually manage the entire gamut of operations, from ordering, moving and fulfillment of parts, including raw materials, via subassemblies and finished goods to aftermarket, spare parts. But, the acquisition also points out that the spare parts market is also challenging one even for pioneers like Xelus or former Slimstock Systems (now offered by Railpart UK Ltd.). Namely, Xelus has been in business for over twenty-five years, and with solid functional products that are, unfortunately, based on older technology. Therefore, it has lately struggled to compete with the likes of MCA Solutions, which provides solutions for service parts management that may not necessarily have all the functional "bells and whistles" or the largest install base, but is based on modern Java 2 Enterprise Edition (J2EE) technology.
Although Click Commerce has good technology, an intriguing product roadmap, and an outstanding list of customers, such as Microsoft, Delphi, Honda, Citibank, FedEx, Carrier, Samsung, Hitachi, and Ryder, one should wait and see how the company, with no prior expertise in planning, will enhance the product. Also, the footprint has now become indisputably large and ambiguous, and one that will involve some notable integration work.
Potential Results and Benefits
Discussing the results of risk-based service part planning solutions deployments with multiple vendors shows a consensus. Those manufacturing enterprises that have not produced effective strategies for managing spare parts (including parts for field service and plant maintenance) will likely leave significant amounts of money on the table in terms of excess inventory carrying costs or missed potential sales opportunities. On average, spare parts planning systems lower inventory levels by up to 35 percent while simultaneously improving customer service levels, decreasing expediting costs and increasing field service technicians productivity, for example, increasing first-time fix rates. Some enterprises implementing these systems have reportedly seen payback times of six to nine months, while some have subsequently found out that as much as 40 percent of their parts inventory is obsolete.
According to Baxter, the result is the right product in the right place at the right time from the right source, while Xelus' inventory optimization customer, Delta Air Lines, reported an eleven percent maintenance cost reductions in 2002, which is a no small chunk of change for a financially embattled company.
MCA's management, related the success of Cisco, whose service business has over 100,000 supported service parts, over 700 stocking locations, and multiple classes of support contracts with 10 million assets to be maintained. Many of Cisco's larger customers have different service contracts for specific sets of products or locations, while other customers are not covered by any service contract, but still require service parts and support. Despite employing a variety of ERP, SCM, and CRM systems, Cisco found that none of the existing software met its requirements for service parts forecasting and inventory positioning. Thus, in 2001, Cisco implemented MCA's Service Planning and Optimization (SPO) software product, and within five months, Cisco had rolled out SPO worldwide, with over 1,000 users. The results included service level increases from 94 percent to 97 percent, while spare parts inventory was reduced by 21 percent.
Servigistics' customer Cray Computer objectives were reducing inventory without compromising parts availability, and Cray has 14,000 service parts and with sites in 30 countries. Cray reported a 27 percent inventory reduction without compromising service part availability or customer service. The like case study list could go on—while these vendors might have nascent install bases, some of them like MCA tout 100 percent customer success and availability for references.
SOURCE:http://www.technologyevaluation.com/research/articles/supply-chain-management-systems-for-service-and-replacement-parts-players-benefits-and-user-recommendations-18090/
Still, both vendors have applied their solutions to other industries that have to deal with expensive, low-volume service parts requirements, like telecommunications, industrial equipment, and high-tech/commercial electronics. Although i2 has Southwest Airlines as its marquee A&D customer, i2 has focused more on industries with somewhat higher-volume and complex supply chains, such as segments of the telecommunications and commercial electronics industry, as well as automotive parts. This similarly holds for other traditional (new parts) SCP providers, which are also beginning to realized the service parts SCM opportunity. Among such companies are Infor Global Solutions (www.infor.com, via its recent acquisition of the demand planning vendor Mercia Software) and Logility (NASDAQ: LGTY), whose client roster includes Komatsu Europe International, a provider of construction and mining equipment, and Delco Remy International, a manufacturer and re-manufacturer of automotive electrical and drive-train/power-train products.
To that end, recent service parts enhancements to the Logility Voyager Solutions SCM suite include more robust forecasting techniques for normal, seasonal, short-life cycle, intermittent demand, end-of-life (EOL) purchases (all time buys), and reverse logistics planning. Streamlining the reverse logistics process is critical for companies that manage high value, service exchange units from return to refurbishment to re-sale. Logility also provides a method to forecast returns and conduct make/buy analysis, which helps companies synchronize their inventory investments with service-level goals, and accelerate the receipt of returned goods into inventory.
Pure-play providers beside Xelux, such as Servigistics, Baxter Planning, and MCA Solutions have focused exclusively on the requirements of service parts inventory management and optimization, and have gained recognition in some market segments for their deep spare parts management expertise and scalable technical solutions. Servigistics has carved niches in medical devices and commercial electronics and MCA in telecommunications and industrial equipment; while Baxter often competes with MCA in telecommunications, and with Servigistics in high-tech/electronics. The enterprise resource planning (ERP) (and possibly SCP too) leader SAP has long been dabbling with delivering a spare parts and MRO solutions, via a longstanding alliance with Caterpillar-Ford Motor, but a solid, commercially available solution is yet to come. International Business Systems (IBS) has capabilities in determining part criticality measures and optimum service levels, as a result of its acquisition of Stratman Software. Yet, today's ERP systems generally do not contain adequate, let alone advanced spare parts planning functionality.
The spare parts planning market thus seems a prosperous area, as seen by Click Commerce's interest through acquiring Xelus. Click Commerce started out as one of several up-and-coming SCM vendors focused on coordinating and optimizing supply chain processes across multiple channels of suppliers, customers, and partners. It features leading-edge technology that is based on open Internet standards and a component-based architecture. Also, over the past few years, the vendor has rapidly corralled its partner relationship management (PRM), and moved beyond product portfolio by acquiring several niche providers, such as
ChannelWave, a former PRM peer's channel management and service automation software assets in 2005,
Optum, a warehouse management vendor, in 2005, which had previously acquired V3 Systems and WorldChain, respective providers of software for supplier management and vendor managed inventory (VMI), in 2004,
bTrade, a specialist in connectivity and Internet-based electronic data interchange (EDI) for trading partner management, in 2004,
Webridge, a provider of secure extranet portal solutions, in 2004, and
Allegis, a data center and hosting PRM provider, in 2003 (see Click Commerce Acquires Allegis).
In addition to Xelus' forays in leveraging radio frequency identification (RFID) in tracking and analyzing service parts, Click Commerce hopes to hereby broaden its footprint with the service parts planning and reverse logistics expertise of Xelus. Xelus should eventually manage the entire gamut of operations, from ordering, moving and fulfillment of parts, including raw materials, via subassemblies and finished goods to aftermarket, spare parts. But, the acquisition also points out that the spare parts market is also challenging one even for pioneers like Xelus or former Slimstock Systems (now offered by Railpart UK Ltd.). Namely, Xelus has been in business for over twenty-five years, and with solid functional products that are, unfortunately, based on older technology. Therefore, it has lately struggled to compete with the likes of MCA Solutions, which provides solutions for service parts management that may not necessarily have all the functional "bells and whistles" or the largest install base, but is based on modern Java 2 Enterprise Edition (J2EE) technology.
Although Click Commerce has good technology, an intriguing product roadmap, and an outstanding list of customers, such as Microsoft, Delphi, Honda, Citibank, FedEx, Carrier, Samsung, Hitachi, and Ryder, one should wait and see how the company, with no prior expertise in planning, will enhance the product. Also, the footprint has now become indisputably large and ambiguous, and one that will involve some notable integration work.
Potential Results and Benefits
Discussing the results of risk-based service part planning solutions deployments with multiple vendors shows a consensus. Those manufacturing enterprises that have not produced effective strategies for managing spare parts (including parts for field service and plant maintenance) will likely leave significant amounts of money on the table in terms of excess inventory carrying costs or missed potential sales opportunities. On average, spare parts planning systems lower inventory levels by up to 35 percent while simultaneously improving customer service levels, decreasing expediting costs and increasing field service technicians productivity, for example, increasing first-time fix rates. Some enterprises implementing these systems have reportedly seen payback times of six to nine months, while some have subsequently found out that as much as 40 percent of their parts inventory is obsolete.
According to Baxter, the result is the right product in the right place at the right time from the right source, while Xelus' inventory optimization customer, Delta Air Lines, reported an eleven percent maintenance cost reductions in 2002, which is a no small chunk of change for a financially embattled company.
MCA's management, related the success of Cisco, whose service business has over 100,000 supported service parts, over 700 stocking locations, and multiple classes of support contracts with 10 million assets to be maintained. Many of Cisco's larger customers have different service contracts for specific sets of products or locations, while other customers are not covered by any service contract, but still require service parts and support. Despite employing a variety of ERP, SCM, and CRM systems, Cisco found that none of the existing software met its requirements for service parts forecasting and inventory positioning. Thus, in 2001, Cisco implemented MCA's Service Planning and Optimization (SPO) software product, and within five months, Cisco had rolled out SPO worldwide, with over 1,000 users. The results included service level increases from 94 percent to 97 percent, while spare parts inventory was reduced by 21 percent.
Servigistics' customer Cray Computer objectives were reducing inventory without compromising parts availability, and Cray has 14,000 service parts and with sites in 30 countries. Cray reported a 27 percent inventory reduction without compromising service part availability or customer service. The like case study list could go on—while these vendors might have nascent install bases, some of them like MCA tout 100 percent customer success and availability for references.
SOURCE:http://www.technologyevaluation.com/research/articles/supply-chain-management-systems-for-service-and-replacement-parts-players-benefits-and-user-recommendations-18090/
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