Strategy

Buy Core Spare Parts

Service Parts Management is the main component of a complete strategic service management process that companies use to ensure that right spare part and resources are at the right place (where the broken part is) at the right time.

Strategic Service Management, SSM, is a new customer commitment-centric business strategy that optimizes a company’s service business processes through a single, integrated view of post-sale service operations, by taking into consideration the planning and forecasting of service parts and resources, and the strategy and management of customer commitments, service partners, and service pricing.

Economic Considerations

Spare parts are sometimes considered uneconomical since:

• the parts might never be used
• the parts might not be stored properly
• the cost of inventory for spare parts on hand
• the ability to obtain the parts when needed from a remote source, such as a vendor, supplier, parts department, etc.

But without the spare part on hand, a company's customer satisfaction levels could drop if a customer has to wait too long for their item to be fixed. Therefore company's need to plan and align their service parts inventory and workforce resources to achieve optimal customer satisfaction levels with minimal costs.

User Considerations

The user of the mechanical item, which might require the parts, may overlook the economic considerations because:

• the expense is not the user’s, but the employer’s
• of a known high rate of failure of certain equipment
• of delays in getting the part from a vendor or a supply room, resulting in machine outage
• to have the parts on hand requires less “paperwork” when the parts are suddenly needed
• of the mental comfort it provides to the user in knowing the parts are on-hand when needed

Cost-Effect Compromise

In many cases, where the mechanical item, is not stationary, a compromise is reached between cost and statistical probability. Some examples:

• an automobile carries a “donut” tire as a spare part instead of an actual tire.
• a member of a household buys extra light bulbs since it is probable that one of the lights in the house will eventually burn out and require replacement.
• a computer user will purchase a ream of computer paper instead of a sheet at a time.
• a race car team will bring with them to the race track another engine, “just in case.”

Reason for Strategic Service Management

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• Products have become commodities and product-based profit margins have decreased over time therefore companies are looking for new sources of revenue
• Companies are looking to differentiate themselves from the competition and a best in class service organization can definitely lead to customer loyalty
• Customers are expecting faster resolution time when they place a service call
• Asset management responsibility and accountability are shifting from the enduser

enterprise to OEMs and their service provider partners

• Cost cuts require higher worker productivity

• a ship carries “spare parts” for its engine in case of breakdown at sea.

Purchase Small Stopgap Upgrades

Common hardware upgrades are installing additional memory (RAM), adding larger hard disks, replacing microprocessor cards or graphics cards, and installing new versions of software, although many other upgrades are often possible as well.

Common software upgrades include changing the version of an operating system, office suite, anti-virus program, or various other tools.

Common firmware upgrades include the updating of the iPod control menus, the XBox 360 dashboard, or the non-volatile flash memory that contains the embedded operating system for consumer electronics.

Software and firmware upgrades are often downloaded from the Internet. Often the download is a patch—it does not contain the new version of the software in its entirety, just the changes that need to be made. Software patches usually aim to improve functionality or solve problems with security. Rushed patches have been known to cause more harm then good and are therefore sometimes regarded with skepticism for a short time after release. Patches are generally free.

A software or firmware upgrade can be major or minor and the release version is increased accordingly. A major upgrade will change the version number, whereas the minor will usually follow with a ".01", ".02", ".03", etc. For example, version 10.03 means that that is the third minor upgrade of version 10. The minor upgrades (or updates) are generally free, but the major versions must be purchased. See also: sidegrade.

An "upgrade" is when you replace a product with a newer version of that same product. When you make an upgrade of the same product from one company to the other, you are making a "competitive upgrade".

Project control systems

Project control is that element of a project that keeps it on-track, on-time, and within budget. Project control begins early in the project with planning and ends late in the project with post-implementation review, having a thorough involvement of each step in the process. Each project should be assessed for the appropriate level of control needed: too much control is too time consuming, too little control is too costly. If control is not implemented correctly, the cost to the business should be clarified in terms of errors, fixes, and additional audit fees. The practices of project control are part of the field of cost engineering.

Control systems are needed for cost, risk, quality, communication, time, change, procurement, and human resources. In addition, auditors should consider how important the projects are to the financial statements, how reliant the stakeholders are on controls, and how many controls exist. Auditors should review the development process and procedures for how they are implemented. The process of development and the quality of the final product may also be assessed if needed or requested. A business may want the auditing firm to be involved throughout the process to catch problems earlier on so that they can be fixed more easily. An auditor can serve as a controls consultant as part of the development team or as an independent auditor as part of an audit.

Businesses sometimes use formal systems development processes. These help assure that systems are developed successfully. A formal process is more effective in creating strong controls, and auditors should review this process to confirm that it is well designed and is followed in practice. A good formal systems development plan outlines:

• A strategy to align development with the organization’s broader objectives
• Standards for new systems
• Project management policies for timing and budgeting
• Procedures describing the process