Proactively Managing Your Heavy Equipment Parts Inventory Can Make or Break Your Profitability  

We’ve been recruiting heavy equipment talent since 1978, so we are no stranger to executing searches across a broad spectrum of jobs. Our clients are OEMs, dealers, independent rental companies, and re-manufacturers with a wide spectrum of product applications. It has been said, “Sales sells the first, and Service sells the rest.” I’d argue that it’s hard to have a high-performing service organization if your parts organization isn’t functioning at a high level. If you have a superior product, exceptional sales team, and talented service crew, but you can’t get the parts needed to support the equipment then your path will likely lead to unhappy customers and eventually customer churn.

There are a couple of facets related to parts operations that I’m referring to. The first is the spare parts operations (sometimes referred to as service parts operations) at the manufacturer. This job is largely a supply chain position with a heavy planning and analytics function. Unlike production parts planning, which supports the production of whole goods, spare parts planning has a level of complexity due to the difficulty in knowing exactly when a part will fail. In addition, OEMs carry parts for equipment models that are no longer in production, further complicating the parts planning/supply chain. That said, there are several data points that can be useful in helping manufacturers set their stock levels and re-order points.

Telematics, warranty, and historical demand are key data points to determining the assumptions needed to effectively stock spare parts to ensure an industry-acceptable fill rate (95%+). While telematics data is helpful in stocking spare parts for preventative maintenance, warranty data is helpful in providing insights into specific parts failures and the underlying root cause. As an example, understanding that a machine’s undercarriage can be impacted by soil conditions/types can help planners adjust the expected life of a part by region. Sandy soils are hard on an undercarriage, so the life expectancy of the related parts may be shorter in specific areas. Warranty data may also prove that product design, part design, or part quality could be the cause of premature failure. In addition to telematics and warranty data, lead times have made inventory planning a moving target (as evidenced since Covid), so frequent tweaking of the inventory planning models is necessary to address these challenges.

Dealer agreements with parts stocking expectations can also be a contributor to ensuring machine up-time (and customer satisfaction). Suffice it to say, a strong spare parts operation at an OEM will leverage all the data points needed to help improve spare parts availability, machine up-time and ensure good dealer and customer satisfaction.

On the other side of the equation is the dealer parts operation. This position does have some planning elements to ensure proper inventory levels but also includes high levels of sales and support given the direct relationship with the customer. That said, if the OEM is struggling to keep parts in stock there will be a likely trickle-down effect. Strong communication between the OEM and the dealers is essential to ensuring the dealer parts operation runs smoothly.

As mentioned earlier, if sales sell the first and service sells the rest, you must be sure that your OEM and Dealer parts operations are working well together and sharing the necessary information to keep the spare parts inventory flowing and fill rates at an acceptable level.

If you are having a heavy equipment parts supply issue and need to evaluate making staffing changes in your parts operation, give us a call. We can leverage our extensive database of contacts and a world-class blend of recruiting technology and experience to find you the talent you need. We are so sure of our performance, we guarantee it!

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