Inventory Management in Service Organisations and for After-Sales Services

Inventory management in service organisations like repair shops, depots, etc., offers unique challenges such as monitoring and managing inventory in after-sales service, receipts and consumption, returns, repair functions, adjustments, transfers, etc. Efficient inventory management in service organisations enhances inventory controls, maintains inventory accuracy and improves visibility.

What is Inventory Management in Service Organisations?

Unlike manufacturing organisations, the inventory held by service organisations is majorly intangible. It refers to all the process steps fulfilled before the arrival of any customer. The efficiency level of inventory management determines the success of any service organisation. Inventory management is especially essential for service organisations holding perishable inventory. 

For instance, the inventory of a food service provider. Ordering the right amount of inventory can seem like a continuous struggle as ordering too much or too little can lead to spoilage and customer dissatisfaction. Having the correct inventory quantity allows service organisations to provide enhanced quality, faster response time and competitive pricing.

Viewing Services as Processes and Attributes

It is essential to perceive service inventory regarding competition among businesses and value addition for customers. All service organisations display four significant features- quality, customisation, price and speed. These features are generated using a set of processes. 

The success of a service organisation lies in its ability to better these features and attract customers amid competition from other organisations. Service organisations must focus on process design choices to efficiently enhance these features. A good process design depends upon three driving forces – the positioning of push-pull boundary and the composition and level of access policies and resources. 

The push-pull boundary decides the amount of work completed and stored in inventory before the arrival of customers. People and equipment are resources required to deliver the service with access policies governing the consumption of service inventory and resources. The three driving forces are interrelated and crucial in determining an organisation’s success.

Key Service Features for Enhancing Competitive Capabilities

Quality

Numerous aspects of service quality are expected by customers, with the credibility and accuracy of a defined service (transactional conformance) being one of the most important ones. Transactional conformance can be achieved by locating the push-pull boundary towards the market and increasing service inventory.

For example, Companies using call centre agents to direct customers to the online “Frequently Asked Questions” page depend on service inventory to improve transactional conformance and customer experience.

Service organisations can also use service inventory to enhance service recovery.

Customisation

Efficiently designed service inventory can offer customers varied options and customisations quickly and cost-effectively. Service inventory enhances customisation by enabling the ability to deliver specific results or provide customers with improved control and information. 

For example, JW Marriott Hotels and Resorts’ “At Your Service” programme tracks and notes guest complaints and preferences in the database and improves its service inventory for offering enhanced services.

Speed

Service inventory can speed up the service turnaround process by lessening the amount of work to be done upon the arrival of customers. Completing the majority of work before the entrance of customers also reduces the skill level required for frontline workers. This enables firms to hire more capacity as low-skill level workers usually cost less.

For example, some laundry services consolidate orders in advance to reduce waiting times and enhance customer experience.

Price

Locating the push-pull boundary toward the customers enables cost efficiency and greater pricing flexibility. Organisations can save costs by using less expensive equipment, implementing self-service options and effectively utilising staff potential.

For example, running a support help desk would require less cost if user problems are dealt with fast and accurately the first time.