Just-in-time strategy helps OEMs mine profits from discontinued products

Sales of spare parts have long been an important revenue stream for manufacturers, but now some OEMs are taking it a step further and finding new profits by selling out-of-warranty products.

To make this strategy work, savvy companies are maintaining bare-bones inventories of sunsetted parts using a clever variation of just-in-time delivery strategies. It’s based on a simple idea: “All the spare parts you need for end-of-life services are out there in your installed base of customers,” says Lee Matthew Sacco, senior director, Oracle applications development.

So rather than stockpiling old parts, these manufacturers extend upgrade offers to encourage customers to trade in old products whenever interested buyers materialize. “From an inventorying standpoint, that’s an ideal solution,” Sacco says. But manufacturers need a clear picture of each item’s availability and demand potential. “Otherwise, you’re just rolling the dice,” he says.

That’s why OEMs and third-party reverse logistics companies are retiring their spreadsheets and turning to new, more sophisticated inventory management tools to determine the best bets for post-warranty sales. New versions of the two top products for mining this information, Oracle Service Parts Planning and Oracle Depot Repair, were released in recent months.

Oracle Service Parts Planning helps manufacturers analyze long-term demand and sourcing prospects for individual items. Companies can use the new software to source spares from customer trade-ins as well as from remaining stockpiles in their warehouses. Get more information about Oracle Service Parts Planning.

Working in conjunction with those reverse logistics activities, Oracle Depot Repair identifies parts that can be refurbished for resale or those that are salvageable from larger components. Get more details on Oracle Depot Repair.