Van Stock – Necessary evil or competitive advantage?
Common in many SLA’s (service level agreements) are requirements for van stock management – where certain items are expected to be on the truck. Usually these are lists of required items normally provided by OEM’s, facilities management companies, end users, contractors, or other experts deemed worthy of knowing which parts will be required to meet first-time fix commitments and ensure asset up-time.
This method of determining which parts belong on service vehicles has been largely unchanged over the years. But does it make sense?
Van stock management is the process of managing parts inventory intended for anticipated onsite repairs, regularly stocked on service vehicles. Logically, there would be an expectation that this would include items that are commonly used or critical components necessary for equipment operation. One would also expect that items very rarely or never used would not be on a service vehicle.
Yet, for many service providers this would not represent their van stock. Service companies attempting to meet increasingly aggressive customer SLA’s find themselves reacting to these requirements by placing large volumes of inventory in their vans.
In some cases this approach may still result in poor first-time fix rates, as they’ve still missed the “right” inventory. However, on occasion this approach will achieve the desired service levels, and the potential over-investment in inventory is justified as a “cost of doing business” or “we need to do it for the customer”.
Although there is some merit to this, there is another perspective that is equally customer friendly – but more effective. What if van stock management focused on carrying more of the items in demand, and little to none of the items with no demand? This may seem idealistic, but leading service providers have figured it out.
How to Manage Van Stock
Service leaders have realized the answer to van stock management is not found on lists produced by others. Standard parts lists are typically created by those who don’t actually perform service, distribute parts, or analyze usage patterns.
Service leaders have discovered upwards of 50% of parts on service vehicles do not perform. Removal of these items has had no measurable impact on service levels, and the removal of clutter from the van has many positive benefits. They have also discovered items that were not on these “lists” that were actually under significant demand and they were slow to react to the rise in usage. Or there are items where greater quantity needs to be carried to meet customer demand (carry 6 of an item instead of 1 or 2).
Inventory optimization software looks at historical item usage and forecasts future demand accordingly. If a service provider records inventory transactions in their ERP/Accounting system, then inventory optimization software such as REACS can automate the daunting, complex, time-consuming, and never-ending task of trying to figure out the right inventory to carry in individual vans, warehouses, depots, or anywhere inventory is located.
Standard one-size-fits-all van stock lists vs. optimized inventory. Which method will your technicians see the highest value in? Which method will your CFO see the highest value in? And which method will your customers see the highest value in?