Best Practices for Mission-Critical Hardware Support

A two-part approach can help IT comply with SLAs to satisfy end users.

by Gary Weiss

For manufacturers and service providers of high-tech equipment, including enterprise systems and data storage, downtime costs money and damages customer service. As the backbone of business processes, an entire organization can become incapacitated if there is a network failure, and time is of the essence when they occur. There is little, if any, tolerance for inoperability with an ever-present need to support the demand of end users, and strict service-level agreements (SLAs) that mandate repairs in a matter of hours.

This mission-critical equipment can falter at any time, regardless of preventive maintenance. As such, the availability of service parts for engineers and technicians to conduct repairs within as little as two- to four-hours is paramount. The high expense of these service parts further compounds the issue. In an ideal world, a full stock of parts would be available at each install location to support ongoing service and maintenance, but in reality, this is cost prohibitive.

The complexity of service parts management for data centers is enormous with a wide variety of servers, switches, and storage devices, each with a host of parts necessary to maintain functionality. In addition, each part has a different lifecycle that must be carefully tracked while managing adequate levels of both new and legacy parts. In most cases, tens of thousand of parts are required to support an entire enterprise environment.

Some companies try to manage service parts with a patchwork approach of “trunk stocking,” where field engineers carry whatever parts they think they may need in their vehicles at all times. This leaves valuable spares in an unsecure location and precludes the strategic management of inventory. It also doesn’t make good use of a skilled technician’s time and can lead to lapses in service, which compromises SLAs.

Although these approaches are impractical, the need for expedited service parts remains. It is a problem that many high-tech manufacturers and service providers struggle with, and is not easily remedied by conventional distribution models designed for next-day delivery. To meet these hyper-aggressive SLA obligations, there must be a dedicated focus to service parts logistics, specifically geared towards strategic management and distribution of this vital inventory in a matter of hours.

A Mission-Critical, Two-Part Approach

Part 1: Inventory Management

Many high-tech organizations are increasingly adopting mission-critical service parts logistics (SPL) to maximize inventory while maintaining adequate levels for equipment support. This facilitates routine service and has become a necessity in a challenging economy where IT spending has been reduced, and a “repair-over-buy” mentality has become pervasive to prolong equipment life.

Mission-critical SPL relies on a comprehensive global IT platform for inventory management to track service parts in real time, as well as the analysis of transactions and current asset levels. This includes monitoring parts usage, equipment failure rates, demand history, and typical repair cycles. The result is a delicate balance of adequate parts levels without overstocking (to avoid wasted capital) or understocking (which prevents timely service).

The inventory management system also provides key data for parts planning, ensuring that legacy parts are adequately stocked. This is especially critical in today’s financial climate, where companies are trying to keep systems operational longer to stave off end-of-life scenarios. Because enterprise technology evolves so quickly, the ability to plan and manage legacy parts is essential to keeping operating costs low.

A single global technology platform essentially creates a central pool of inventory for a comprehensive view of the status of all parts to draw from. This level of detail is invaluable for companies managing thousands of services parts. Primarily, it allows for strategic decision-making to position inventory exactly where it needs to be, without overcomitting resources.

Part 2: Strategic Scalability

The capacity to deliver mission-critical service parts within hours depends on a network of strategically located stocking facilities globally. A comprehensive inventory management platform and its sophisticated analysis capabilities are only theoretical unless the parts can be distributed to service personnel consistently and efficiently.

For global enterprises to ensure that service parts are delivered when needed, infrastructure is required for both domestic and international operations. There must be primary stocking locations positioned regionally around the world to support a broader network of smaller stocking locations in close proximity to end users. This base of operations allows parts to be distributed at a moment’s notice to field engineers.

Mission-Critical in Action

A well-known provider of global IT services effectively utilizes a mission-critical approach for service parts logistics, resulting in improved end-user relationships. They support storage, data protection, virtualization, security, and data center markets, with operations in the U.S., Latin America, Europe, and the Middle East. The company has extraordinary equipment uptime demands coupled with demanding SLAs.

Their service parts operation is massive, with approximately 30,000 parts and tens of thousands of end users in the medical, manufacturing, financial services, and broadcasting industries. If expedited repairs aren’t conducted within the contracted timeframe, they are subject to major financial penalties -- and dissatisfied customers.

To execute their mission-critical service parts logistics strategy, they spent six weeks analyzing their installed base to determine the best locations to ensure parts availability for multiple end users in a matter of hours. After this thorough due diligence, they leveraged a global inventory management system to provide a big-picture perspective of all their inventory assets so each location could be adequately stocked.

This also allowed parts to be accurately counted, providing a baseline of exactly how many parts they have and where they are located. Now, they can easily move excess parts inventory from one location to another where levels are low. This process allows them to avoid unnecessary capital expenditures, thereby increasing cash flow.

To execute the actual fulfillment, the service provider utilizes a network of approximately 250 forward-stocking locations. These locations are automatically replenished with parts from regional distribution centers based on usage data provided by their inventory management system. This global reach allows the company to penetrate new markets, which significantly enhances profitability.

The global IT network, coupled with a widespread international footprint has yielded significant benefits, facilitating the movement of more than 3,100 parts per month. Inventory integrity, which translates to having parts stocked when and where they are needed to support expedited delivery, is at a near-perfect 99.8 percent.

Within stocking locations, pick, pack, and ship accuracy is also 99.8 percent. As a result, on-time delivery of parts to end users has reached 99 percent. In addition, the strategic positioning of parts near the installed base has significantly reduced travel time, cutting transportation expense.

When factoring in cost containment and reduction from improved inventory control with lower transportation expenditures, they have reduced the overall costs of service parts management by 15 percent. As an additional benefit, they have dramatically strengthened relationships with their customers, which has lead to expanded business opportunities.

Fulfilling SLA Commitments

Complying with SLAs to satisfy end users is a basic business requirement and is non-negotiable. If equipment is not repaired efficiently, relationships can meet an untimely demise. A mission-critical service parts logistics strategy can effectively meet these demands, but requires an organizational commitment from manufacturers and service providers to meet the expectations of end users. Success boils down to a steady, reliable supply of service parts that are strategically located and managed with advanced technology to control inventory spend.

Gary Weiss is executive vice president of global operations for Choice Logistics, an outsourced service parts logistics provider for mission-critical, high-tech global service organizations (www.choicelogistics.com).