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parts are parts, or are they?


The plain simple truth is most service businesses would not survive without parts.  On one extreme parts can be considered materials for projects; or those parts you sell during a service call. How many service companies do you know that would allow a client to say… "just send somebody and I will provide the parts". Unfortunately, as we all know this happens many times in commercial building environments where management companies may want to procure their own materials. Of course, from a revenue and profitability perspective (because a lot of us apply the hardware model to price parts, the smaller the dollar value the higher the mark-up) parts are important. 



One of the biggest challenges service organizations have, regardless of size, is the ability to compel purchasing behavior. When you take a project that is for the most part being managed by either a procurement manager or a project manager, the purchasing of materials can be fairly straightforward. In the other case when you relinquish your control to the field and allow purchasing to be managed directly by field technicians, the results can vary. Many factors influence the decision criteria around where and which part to purchase. The real key is ensuring that we drive the most value in that purchase. Value includes the price, distance to procure the part, OEM requirement or not, etc..  All of these aspects can be joined together to form the best value based decision.  As hard as the field technicians may try to drive the best value into an organization, they just do not have enough information.  This is where we see procurement or marketplace systems really shine.  Our ability to compel decisions at the point of purchase by using tools that can aggregate, catalog, and compare the value between suppliers.  PO books, P Cards, credit cards, are all certainly effective in the service business, however, you are simply not getting the most value that you can out of your material purchases.  Regardless of your size you should reassess your purchasing process as you are likely leaving money on the table.



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Next post:  improving customer perception

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