Global harmonisation of spare parts management raises machine manufacturing to a new level
Lifts 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 lifts and escalators, has optimised the service and spare parts distribution for its installations. Together with Deloitte, 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 co-operation.
The situation
Lifts 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 lift for delivery to the operating room. If the lift malfunctions, the consequences could be catastrophic. This scenario highlights how critical such systems are to our health – and how important their reliable service and maintenance are. This is what Schindler, headquartered in Ebikon (Switzerland), stands for. Its lifts 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 very critical to the business. Success depends heavily on customer satisfaction and level of service, including the timely and accurate delivery of the spare parts which technicians need on site at the right time. Schindler recognised the need for improvement and identified service optimisation 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 core area of activity for industrial companies seeking to become more sustainable. For them, sustainability is no longer an add-on, but a fundamental strategic dimension that is now demanded by society, business, investors and finally, the customers themselves. Their satisfaction means everything to Schindler and, as it turns out, 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 lifts are running and the customer is satisfied with the service.”
Oliver Bendig, Partner and Sector Lead Mechanical Engineering EMEA at Deloitte
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 service technicians worldwide. After all, they use the spare parts in their daily work and their performance directly determines the quality of the service.
The technicians themselves are critical to spare parts management. If they have doubts about timely delivery, they 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 order multiple variants as a precaution. This is understandable, but problematic for the overall performance and the carbon footprint of the spare parts delivery.
Therefore, the key role of an effective GSPM project had to be to gain the trust of the service technicians. What was the Deloitte experts’ approach? 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 formed the basis of the transformation strategy, which was implemented in the second step.
An issue as complex as global spare parts management requires a multidimensional approach. Of particular importance at the network level is the right location of parts distribution centres. Regional units have always maintained their own stocks, but without a unified system. Smaller local stocks are now being consolidated into larger ones, closed and consolidated into continental distribution centres (in Europe, North America and Asia Pacific) and in China consolidated into RDCs (Regional Distribution Centers). This 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 centre in Düren (NRW/Germany).
Another step in reducing complexity is to harmonise order processes worldwide. A consistent, user-friendly approach with five service levels provides clarity, transparency and increases efficiency. Smart service harmonisation 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 not only improve the service levels, but also 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 centres are currently being set up and a new KPI model is being introduced.
The joint 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 showed precisely where the success of the project lay: in the close and trusting co-operation between Schindler and Deloitte.
”I am impressed with the quality of Deloitte's work. Their broad industry, supply chain and analytics expertise 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 are more than impressive. Therefore, the German magazine “WirtschaftsWoche” recognised 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.