A large inventory of parts tied up in the field can result in tying up millions of dollars in cash flow. A Fortune 500 manufacturer of medical and diagnostic equipment wanted to improve cash flow by reducing the unnecessary parts ordered by field engineers by 30 percent.
The company has 6,500 field engineers and it knew that more than half of the parts being ordered were unnecessary—an inefficiency that was tying up nearly $30 million in cash per year.
To help identify and address the root cause of the problem, the company decided to leverage the Maana Knowledge Platform™. By working with the subject-matter experts, pertinent information was identified from various data sources, which provided historical information including data from XELUS (the company’s service inventory management and demand planning software) and SAP Enterprise Resource Planning. The analysis from the platform revealed that a subset of field engineers—less than 3 percent—located in Asia Pacific had a 95 percent return rate on parts ordered for maintenance and repairs.
With the new analysis, the company used the Maana Knowledge Platform to optimize the parts ordering process. The platform crawled multiple data silos and analyzed past service issues to identify the parts historically used to address a specific problem. These insights were used to develop a model that makes on-going recommendations to field engineers regarding what parts to order for new service tickets. Now, field technicians use the Maana Knowledge Platform to order the correct parts for each job (including recommended, related parts), enabling them to resolve customer issues on the first visit using the correct parts.
As shown in the figure below, these insights and recommendations have reduced returned parts by 67%, increasing cash flow by over $20 million. The company has also realized savings through minimizing customer service trips and reducing inventory and shipping costs.