Forward Stocking Locations: Optimized Logistics for Service Parts
Posted by Seraj A. Farooqui on Tue, Jan 17, 2012 @ 04:45 PM
In this economic climate, many companies are evaluating their distribution models to optimize transportation efficiency, while attempting to reduce annual transportation spend. This task, however, can be difficult when the demand for maximized up-time is necessary to stay ahead of competition.
Years ago, only companies with limitless resources could afford to maximize their up-time for critical parts. But those years have now passed.
As transportation costs continue to increase, as described in Transportation Management: Stop Leaving Cash on the Table, forward stocking has identified itself as a strategic solution for optimized transportation efficiency.
Often referred to, but rarely defined, forward stocking locations (FSL) allow companies to mass produce critical parts, and store them in strategically positioned depots that are closer to their customer markets.
In other words, forward stocking helps leverage inventory holding costs and decentralizes distribution - allowing for reduced transit times and the ability to expand into new geographic markets/increase sales. Without increasing fixed costs and investing in additional capital assets, FSLs can dramatically offset transportation costs and provide an integrated solution to meet your Service Level Agreement (SLA) goals at the lowest possible cost.
The diagrams below help illustrate the implementation of an FSL strategy. Note how transit times and transportation costs seemingly reduced. Furthermore, sophisticated IT Technologies enable you to optimize inventory levels, and provide real-time visibility of your service parts inventory across all locations. FSLs can also support additional value-added services, such as kitting, sequencing, and sub-assembly.
So whether shipping spare parts to immediately return an aircraft on ground (AOG) to service, or maximizing equipment up-times for high-urgency sectors - like medical services, aerospace, telecommunications, and precision manufacturing; consider an FSL strategy to optimize transportation efficiency and combat transportation costs.
What are some industries where an FSL strategy could be of value?
