Global harmonization of spare parts management raises machine manufacturing to a new level
Elevators and escalators keep us moving, and breakdowns can have severe consequences for business and end-users. That's why Schindler, one of the world's leading manufacturers of elevators and escalators, has optimized the service and spare parts distribution for its installations. Together with Deloitte Germany, Schindler has developed and implemented a completely new Global Spare Parts Management (GSPM) concept that has already improved service level, costs, and sustainability, with much more to come. The recipe for success: an intensive and trustful cooperation.
The situation
Elevators and escalators may seem like a convenient part of everyday life, but their importance goes far beyond comfort. An example from a hospital illustrates this: An accident victim is admitted for immediate surgery. The hospital staff transport the patient from the emergency room to the elevator for delivery to the operating room. If the elevator malfunctions, the consequences could be catastrophic. This scenario highlights how critical such systems can be to our health – and how important their reliable service and maintenance can be. This is what Schindler, headquartered in Ebikon (Switzerland), stands for. Its elevators and escalators transport one and a half billion people worldwide every day.
However, there is another important dimension to the matter for Schindler: Similar to many machine manufacturers, service activities are often very critical to the business. Success can depends heavily on customer satisfaction and level of service, including the timely and accurate delivery of the spare parts which technicians may need on site at the right time. Schindler recognized the need for improvement and identified service optimization as an important area for action.
A new strategic approach to global spare parts management could further support the growth and customer satisfaction. Together with experts from Deloitte, Schindler developed such an approach three years ago: Global Spare Parts Management (GSPM). The goal was to raise the availability, timeliness, and accuracy of spare parts deliveries to a new level. Sustainability aspects also had to be considered. Sustainability in service is often overlooked, even though it is a typically core area of activity for industrial companies seeking to become more sustainable. For them, sustainability is likely no longer an add-on, but a fundamental strategic dimension that is often demanded by society, business, investors, and finally, the customers themselves. Satisfaction is important to Schindler and, as it turns out, often distinguishes Schindler from its competitors and helps to win over customers.
“Ultimately, the service technician in the field must be pleased with the spare parts management - so that the service level is right, the elevators are running and the customer is satisfied with the service.”
Oliver Bendig, Partner and Sector Lead Mechanical Engineering EMEA at Deloitte Germany
What was needed was a fundamentally new strategic approach to global spare parts management. Together with the experts from Deloitte, Schindler developed such an approach three years ago – Global Spare Parts Management (GSPM).
The solve
For GSPM, the focus was not only on the end customers, but also on tens of thousands of service technicians worldwide. After all, they use the spare parts in their daily work and their performance can directly determines the quality of the service.
The technicians themselves are critical to spare parts management. If they have doubts about timely delivery, they often take the safe route and order for next-day delivery, even if it is unnecessary for the task at hand. If they are unsure about receiving the right part or are unable to clearly identify it, they typically order multiple variants as a precaution. This may be understandable but can be problematic for the overall performance and the carbon footprint of the spare parts delivery.
Therefore, one of the key role of an effective GSPM project was to gain the trust of the service technicians. What approach did specialists with Deloitte Germany take? In the first step, they gained comprehensive insights through maturity assessments, market surveys and interviews with service technicians in 15 national units, as well as an algorithm-based network analysis. This helped form the basis of the transformation strategy, which was implemented in the second step.
A challenge as complex as global spare parts management often requires a multidimensional approach. Of particular importance at the network level is the right location of parts distribution centers. Regional units have typically maintained their own inventories, but without a unified system. Smaller local stocks are now generally being consolidated into larger ones, closed, and consolidated into continental distribution centers (in Europe, North America and Asia Pacific) and in China consolidated into RDCs (Regional Distribution Centers). This can reduces redundant stock, fixed capital, and lead times, while at the same time providing expanded parts coverage, improved sustainability, and 24/7 operations. This new system has already been implemented at the European distribution center in Düren (North Rhine-Westphalia/Germany).
Another step in reducing complexity is to help harmonize order processes worldwide. A consistent, user-friendly approach with five service levels can provides clarity, transparency and increases efficiency. Smart service harmonization helps enables global standards for both the tracking and reporting of distribution performance. Innovative last-mile logistics concepts complete the GSPM, such as delivery directly to the trunk of service vehicles – or by completely dispensing with service vehicles altogether, which is currently being piloted in São Paulo (Brazil).
Such delivery concepts may not only help improve the service levels, but also may contribute to the sustainability goals demanded by customers by reducing transportation distances and thereby the carbon footprint. GSPM is also implementing a second aspect of sustainability: the circular spare parts economy (return, repair, reuse, remanufacture, recycle). To this end, dedicated repair centers are currently being set up and a new KPI model is being introduced.
The journey of Schindler and Deloitte also included several challenges. Some local concerns could only be overcome with intensive communication and rigorous proof of performance on site. Then there was the disruption caused by the COVID-19 pandemic. Although the focus was on improving service levels and sustainability, the project was also designed to identify potential savings.
The impact
Overcoming these challenges helped show precisely where the success of the project lay: in the close and trusting cooperation between Schindler and Deloitte.
”I am impressed with the quality of Deloitte's work. Their broad industry, supply chain and analytics knowledge enabled them to understand our challenges quickly. Combined with a "one team" mentality, this has led to impressive results, and we are convinced that Deloitte is the right long-term partner for the transformation of our global spare parts management, which is so important to us”.
Marcin Lowinski, Head Global Repairs & Spare Parts, Schindler
At any rate, the intermediate results of GSPM getting noticed. The German magazine “WirtschaftsWoche” recognized this project in 2022 with the “Best of Consulting” award in the Supply Chain Management category. This success underscores that the Schindler slogan also applies to the joint development of the GSPM with Deloitte: “We elevate…” - - by taking things to the next level.