Where is they money for service parts software? Companies will end up spending one way or another, either on solutions that can help the rather weak state of service parts management improve, or by continuing to incur high obsolescence and other costs.

The Current State of Investment

It is well known by those that work and follow the service parts industry that it is tremendously underinvestment in. Most companies, with the finished goods focus place their resources in the latest and newest thing. This is illogical, as service parts are a very good business and most often one of the most profitable parts of any product oriented business. A typical quote in the industry is the following:
That’s bound to change as the success stories multiply. At corporate phone network operator Avaya Inc. (AV ), Servigistics software has helped slash the number of raging e-mails the company’s CEO would get when big clients such as General Electric Co. (GE ) had trouble with their Avaya phone systems. With 2,000 stocking locations worldwide processing 8,000 phone and network parts, Avaya’s service department managed a huge logistics spiderweb. Until three years ago, however, parts were tracked on a simple Excel spreadsheet — which meant that Avaya technicians had the right ones in stock just 39% of the time. “It was an absolute disaster,” says Jeffrey S. Gardner, Avaya’s director of global service operations.”(August 01, 2005 BusinessWeek Magazine – Yes, Ma’am, That Part Is In Stock)

However, we are not so sure. This is why we are proposing that service parts software vendors lower the cost of software by offering an integrated service platform which is described in the article below.

http://spplan.org/2009/06/10/service-parts-are-a-perfect-market-for-4pl/

A Robust Strategy

The opportunities in service parts are clearly tremendous. However, if customers are less willing to spend in this area (irrationally or not) vendors should develop a solution that charges incrementally in order to meet the need. Our view is once companies try these solutions, they will be less reticent to invest in them.