The Post COVID-19 World Will Bring New Challenges for the Service Supply Chain Sector

The concept of going back to normality is, in this context, a misnomer. Looking ahead, the great majority of firms will have to fundamentally rethink their supply chain models—and some of them are already leading the way in digitization.

A paradigm shift, like the digitization of the supply chain, is a challenge in itself. But as firms are increasingly opting for digital inventories to improve service delivery and confront supply shortages or transportation constraints, experts optimistically illustrate that the international supply chain industry will slowly return to its profitable pre-pandemic state.

Industry players should nonetheless remain guarded in their pursuit of service supply chain excellence in a post COVID-19 environment. The full impact caused by the pandemic may in all probability last for a prolonged period—and while the industry appears to have curbed part of the disruption caused by the pandemic, concerns still exist over the short-term initiatives that led professionals through the peak of the crisis.

In a post COVID-19 world, firms are likely to incessantly anticipate and plan for possible setbacks—not just merely respond to them. It’s important for organizations to get into the habit of routinely transforming their operating model to gain better visibility into their supply chain system and offer higher levels of service by rapidly predicting—instead of reacting to!—spare part failures. Just as vital is being aware of the challenges that are now coming into focus—challenges that, if not properly addressed, may pose an immediate threat to the supply chain industry at large.

Industries Appear Vulnerable to Continuous Technology Investments, But the Demand for Digital Tools Is Expected to Surge

The resolution of the pandemic is nowhere in visible sight—and digital investments are now made even riskier by the striking levels of uncertainty facing the global economy.

But digitization is a risk worth taking; a digitized system offers indispensable visibility into the supply chain network—from demand to inventory and capacity—and will ultimately enhance service stability and reliability.

As organizations confronted with a fast-changing environment, it has been made clear that a highly efficient supply chain ecosystem doesn’t rely on harrowing and error-prone spreadsheets or legacy tools; it primarily counts on digital technologies that allow for real-time monitoring and analysis of spare parts, and access to reliable data. Research echoes this view, as it finds that:

“In order to ensure the availability of spare parts and maintenance personnel while operating at reasonable costs, the coordination and planning of spare parts supply chains based on machine condition monitoring information provided by intelligent maintenance systems have become more important.”

The post-pandemic digital supply network will depend on intelligent technologies that grant professionals the opportunity to steadily increase domestic production; and 3D printing is, in this regard, a worthy mention. This technology is not only expected to minimize a firm’s dependency on international supply chains, but also solve some of the key spare parts management challenges, including high inventory costs and asset downtime. As Deloitte expertly points out:

“Printing some of your spare parts rather than holding them in stock can decrease costs, increase spare parts functionality, increase service, and reduce risk.”

Better yet, the use of 3D printed spare parts helps organizations maintain production continuity even in the direst of circumstances. Additive technology allows for quick spare part replacements, given that it enables firms to prioritize urgent repairs and easily manufacture a long-life component internally.

Organizations Will Have to Adapt to Shifting Demands—Again (and Perhaps Much Quicker!)

There is nothing new about the inconsistency of customer behavior; it currently mirrors the level of unpredictability imprinted by the pandemic, and organizations need to keep pace with this dynamic. At a minimum, they should set out to maintain service levels, even more so in times of sharp financial uncertainty.

The typical customers in a post COVID-19 environment will be rather mindful of their purchasing habits; they will presumably expect lower prices and value-added spare parts. Yet in some cases, their intent to spend may remain particularly low.

It is difficult to accurately forecast the demand for spare parts in the near future since, more often than not, such requests have a sporadic nature. What organizations can do, however, is to estimate the realistic final-customer demand. According to the trusted advisors at McKinsey & Company, firms are able to determine the necessary supply by “[questioning] whether demand signals they are receiving from their immediate customers, both short and medium-term, are realistic and reflect underlying uncertainties in the forecast.” As the pandemic starts to lose steam, organizations ought to deploy a well-structured approach to assess demand and consolidate spare parts inventory. Taking such precautionary measures is also an excellent way to better control costs and manage ad hoc repair-schedule changes.

Equally important for post-pandemic firms is to acknowledge that clients will continue being increasingly vigilant about service responsiveness. Now that experts cleverly predict a highly determined shift to regional sourcing, organizations should be able to avoid shipping delays and effortlessly confirm the prompt delivery of replacement parts.

Developing round-the-clock dialogues with the audience has a salient effect on the client’s attitude. In all probability, customers will value organizations that keep them informed about the status of their spare part repair or replacement. When a firm is quick to meet their needs, clients also tend to become loyal purchasers. For example, receiving a well-timed update about the availability of a spare part in a nearby location could make all the difference to the survival of the client’s firm—which will rarely go unnoticed.

The Key to Building Resilience Beyond COVID-19 Is to Start Planning Today

Experts are guardedly optimistic about the future of the service supply chain sector in the post COVID-19 era.

The course of different organizations will be inevitably blighted by different kinds of challenges. But a lot of opportunities exist, too—and they are sitting squarely in the pocket of the customer.

Achieving higher levels of service through digitization is just the first step towards crisis-proofing the supply chain network. It is also recommended for organizations to frequently run supply chain simulations or risk analyses in order to predict future scenarios and adjust parameters accordingly.

Do you offer service/parts supply chain solutions?  Check out our brochure for the upcoming Spare Parts US Summit.