Go beyond Reverse Logistics
I decided to write this white paper because there are many opinions and articles on the web and elsewhere which talk about 3PL, 4PL, and Reverse Logistics. However, none that I have seen address the Service Supply Chain as a whole.
We all know that optimizing a process within a value stream does not ensure an optimal result for the total value stream. Most of the articles mentioned, in my opinion, look at parts of the service supply chain instead of the entire chain.
Service Supply Chain:
Here is my definition of a Service Supply Chain: Any activity performed after the end-user has taken possession of the product. That is very broad and far reaching. Some examples of what that includes are maintenance support, replacement, spare parts, consumables, warranty options, support calls, field service, remote monitoring, calibration, upgrades, recycling, disposition, repair depots, forward stocking locations and much more.
Service Supply Chain: Any service activity performed after the end-user has taken possession of the product
It is important that we use that definition and start talking about the goals of a service supply chain in today’s changing world. Companies and consumers who are the end-users of the products are increasingly demanding outcome-based experiences instead of product features only. To translate: it is as important that any event after the delivery of the product is a pleasant experience for the end-user. It is very easy to lose a customer due to a bad experience after the sale. Use all those events by turning them into opportunities to enhance brand loyalty as well as to sell additional products, upgrades, consumables, service options and more.
Companies and consumers who are the end-users of the products are increasingly demanding outcome based experiences instead of product features
Outsourcing parts of the Service Supply Chain:
Different departments, business models, and processes are all involved and require expertise that is typically outside of the core competencies of the company. Now Third-Party Logistics (3PL) and Fourth-Party Logistics (4PL or Control Tower) comes into the picture. Their natural skills and infrastructure are in particular areas of the Service Supply Chain. Next outsourcing comes into the picture and all the advantages and disadvantages it brings with it.
3PL’s and 4PL’s are typically excellent at what they do, but not universally spread around the country, region or world. Different areas have different needs and capabilities. You probably need to outsource with multiple providers if you are spanning larger territories. Consider not only large providers because you may need to include some boutique (small) options for individual situations.
Orchestration of the service supply chain is the operation that makes the biggest difference on the efficiency and benefits of outsourcing steps and activities of the overall process because all outsource partners, use different back-end systems which make visibility and order / transactional orchestration complex.
Here is a list of some of the outsourcing options: call centers, field service, forward stocking locations, repair depots, return centers, triage, disposition of assets and central spare parts stocking centers.
The Service Supply Chain encompasses all these activities and determines if the servicing of your customers, clients or end-users is successful in driving brand loyalty and profitability. Setting your service strategy, supporting it with a comprehensive service network and putting in place a closed feedback loop for continuous optimization is what will drive those results.
Different System needs of the Service Supply Chain:
Another topic to include is that the service supply chain is very different from the forward- manufacturing- and sales- supply chain and that means its processes need support from systems designed for service from the ground up. Here is one example to demonstrate that. In service, a product will exist in lots of different conditions and ownerships. It can be defective and owned by the customer when moving through the service supply chain for repair. It can be refurbished and stored in a forward stocking location for the next advantage exchange after a repair and refurbishing having changed its condition multiple times. Remember that for some countries and customers only new products can be used for replacement services. For more details on other underlying parameters, metadata and philosophies look at this PDF.