The last mile – linking your business with the end customer through a dealer network – is critical for long-term business success. Many machinery and automotive manufacturers depend on their dealers, and they will have a huge impact on brand loyalty and customer satisfaction.

Reports published during the past decade is pointing out that product availability, in-time and in-full delivery, product quality, ease of return, and after sales service significantly correlate with customer loyalty. The last mile in the fulfillment process may be one of the most important miles to complete.

I’ll focus on after sales service supply chain, and in particular on spare parts, as it generally is regarded as an important source of differentiation, additional revenue and essential for customer satisfaction.

Spare parts management presents greater and unique challenges

Spare parts supply chain management is more complicated than that of finished products. The complexity of the parts business is generated by its own unique attributes. The life cycle of spare parts is longer than that of finished products and the total number of SKUs is very huge. Additionally, the demand for parts is relatively unstable and difficult to forecast. All of the above pose enormous challenges to parts planning, purchasing, ordering, and logistics, among other operations.

Without sufficient technology support it will be increasingly difficult, if not impossible, to manage and optimize the after sales supply chain as customer requirements increase and the service business grows more complex.

Creating trust and confidence

Reaching the end customer and understanding the real demand is difficult without dealer collaboration and information sharing. Lack of collaborative capabilities with dealers results in increased inventories throughout the dealer network. There is also often a lack of trust and confidence in delivery capabilities towards the OEM by the dealers further increasing the need to hedge by storing additional parts inventory.