Managing Service Inventory in the Supply Chain

Abstract

Services have become an increasingly important part of the U.S. economy. This move has forced many companies to shift their focus from simply improving product manufacturing and product delivery to improving product service and customer satisfaction. The effective and efficient repair of a failed system or product is one important way of improving service and satisfying customers. To provide the necessary repair, managers must ensure the availability of the right service parts at the right points within the supply chain. Thus, the management of service parts is becoming increasingly important and has already grown into a nearly $700 billion a year business, representing approximately 8% of the gross domestic product of the United States. This dissertation research effort incorporates three distinct yet related research efforts, each exploring a different aspect of the evolving role of service parts inventory management in today’s supply chain environment. The first effort utilizes a field-based comparison of a system approach to service parts inventory management and a traditional item-based approach to service parts inventory management. Results suggest that a system-based approach to service parts management is more effective in reducing the number, duration, and magnitude of service part related disruptions than the more traditional item-based approach. The second effort relies on a Delphi panel of service parts experts to highlight the most critical challenges of service parts management. Consensus was achieved amongst the panel members regarding the ten most critical challenges and opportunities for future research were proposed. The final effort relied on a grounded approach to identify the challenges and objectives of service parts management and resulted in the development of two descriptive models. Each model presents a broad perspective and provides a basis upon which future research can build.