An everyday use case in an OEM workshop is identifying the correct part for service or replacement. For newer or popular models, part identification is simple. Many times, the technicians are already aware of the replacement part. The problem comes with older models or parts that don’t require frequent replacement.

Even after manually looking up parts in their digital parts catalogs, technicians can make mistakes and order the wrong parts. This either happens because of poor search options, obsolete part information, part number proliferation, or data mismatch in the catalog. Along with increasing costs, spare parts misordering starts a domino effect across the entire supplier chain. When this happens, all parties involved have to suffer.

In this blog, we have covered the common types of spare parts misordering, shed more light on the key reasons behind them, highlighted the domino effect, and even provided reliable solutions to improve spare parts ordering process.

Types of Spare Parts Misordering

Spare parts misordering happens because of genuine mistakes, which can either be a technician ordering the wrong part number or searching for parts for the wrong model.

1. Incorrect Part Number/SKU: Misordering because of the technician entering the wrong SKUs or part numbers in the system.
2. Look-Alike Part: Many times, technicians order spare parts just by looking at catalog images without verifying part numbers. This leads to misordering because of look-alike parts.
3. Part Number Proliferation: Suppliers often end up creating multiple SKUs with minor variations for similar products. When this happens, even after cross-checking SKUs, ordering mistakes can happen.
4. Wrong fitment: Technicians ordering spare parts for the wrong models or variants is quite common in the industry.
5. Poor Part Supersession Management: When OEMs are not able to manage proper part supersession, catalogs show obsolete information to technicians, and they end up ordering the wrong parts.
6. Quantity Mistakes: Many times, a spare part is required for multiple repairs, or just to meet future demand. Dealers may oversee this and order in the wrong quantity, leading to understocking or overstocking, which come with added logistics and reverse logistics efforts.

Key Reasons Behind Misordering

The aforementioned parts ordering mistakes can happen because of a number of reasons. We identified the majority of them and briefed below:

1. Outdated or Fragmented Catalogs

Poor catalog management leads to dealers having outdated parts catalogs. No matter how carefully they identify parts, wrong orders are bound to happen. Secondly, when dealers receive fragmented catalogs with inconsistent information about product SKUs and information, they wait for inputs from the OEM or do guesswork to place an order.

2. Poor Supersession Governance

To stay relevant in the market or refine their products, OEMs are often introducing new features in their parts. When this happens, superseding obsolete information becomes necessary across the entire dealer network. From the perspective of OEMs, they cannot entirely remove old parts data to ensure serviceability for old models.

3. Human Error

The most frustrating reason for OEMs and dealers is human error. They are difficult to eliminate and lead to unnecessary costs. Human error can occur for various reasons, such as dealers or technicians being distracted during work, failing to reference product SKUs, or working without proper accountability and supervision. 

4. Limited Search Options

In situations where dealers only have limited information about the part, for example, only the VIN, partial or obsolete part number, and no matching images in the catalog, accurate part identification becomes difficult. They lose the flexibility to thoroughly browse the catalogs and end up ordering the wrong parts.

5. Disconnected Systems

When parts data is spread across multiple systems, such as EPC, ERP, PLM, DMS, etc., these systems need to be in sync with each other. In all other cases, visibility gaps may happen. Dealers may order the wrong quantities of the part, remain unaware of actual inventory levels, or even order a part that is not present in the inventory.

6. Inadequate Training

New employees at the dealership may require ad hoc training to identify spare parts or simply use the EPC. They should be informed of the statement of procedure and common parts ordering mistakes. However, because of resource crunch or work overload, dealers are not able to provide adequate training to their technicians. This leads to manual errors and parts misordering. 

The Domino Effect Disrupting the Entire Supply Chain

Operations falter at several levels when parts are misordered. Equipment repairs are delayed, job cards remain open, and OEMs bear reverse logistics costs. Below, we have discussed all such disruptions in more detail. We have also created a chain of reactions at different levels, starting from the dealer. 

1. At Dealer Level

The cascading effect of parts misordering originates at the dealer level, where the mistake actually occurs. The immediate effect of the parts misordering is the sudden stop in operations. For example, technicians cannot proceed with the repair if the required replacement parts are missing. Job cards remain open. Dealers often have to keep technicians idle, which increases labor costs.

In case of overtime, dealers may have to repeat standard procedures, pay overtime to their technicians, and bear added utility costs. This leads to the feeling of poor work satisfaction and dealer-OEM friction.

Even customers feel frustrated at delayed repairs and broken promises. They are quick to form and share a negative perception of the dealer, which damages their overall reputation and discourages future prospects from visiting them.

2. At Logistics Level

The next in the chain is the logistics partner, who directly feels the operational stress. The logistics partner has to rush operations and start a reverse logistics process. Many times, they feel stranded between the dealer and OEM, with no clarity on the process.

For them, the work undergoes a major slump. Their staff has to take on several headaches and redo work that is difficult to automate. This includes manually inspecting the returned part for any damage, repacking and relabelling the part, and updating stock levels in the inventory. The operational costs also surge for the logistic partner, as to ensure faster returns, they have to opt for air freight options instead of road transportation.

While the repeated efforts after reordering help dealers finish job cards and deliver repaired equipment to the customer, they do not generate any value for the logistics partner. They are simply added costs that could have been avoided otherwise.

3. At OEM Level

OEMs do not process singular mistakes as a major issue. Instead, they look at the bigger picture and see the collective parts misordering statistics increase. They are primarily responsible for taking precautionary steps against parts misordering, but because of erratic ordering data and several other responsibilities, taking immediate action becomes difficult.

However, when parts misordering figures increase, and quantities misalign with demand predictions, OEMs may trigger an unplanned production process or create higher inventory buffers. All those costs go from the OEM profit margins, but might end up creating dead stock. Because of swift production, quality control issues can occur, leading to the production of a lower-quality batch.

Also, when wrong orders go unidentified, it can hinder the OEM’s capability to make well-informed decisions. They may call for unforeseen changes in SOPs, launch dealer wide auditing, halt the production of other parts, or issue part call-backs because of false signals, all of which create unnecessary cashflow problems.

Lastly, wrong parts ordering data adds bias to demand forecasting, and it takes multiple cycles for the AI model to correct demand forecasting data in case of drastic inaccuracies.

4. Long-Term Impact

As stated in our other articles as well, ensuring quality after-sales service is imperative for long-term success. Spare parts misordering is a disruptor of that.  When customers lose faith in the OEM, gaining resiliency or even remaining sustainable becomes difficult. Operational costs surge, sales figures drop, and the OEMs feel the financial fatigue.

Let us discuss the long-term impact at 4 levels:

1. Financial Impact: Rebilling parts with correct SKUs is not easy. Financial teams have to spend days auditing financial data, but this still may lead to inaccurate financial reports, causing taxation or credit problems for the OEM.
2. Reputation Damage: Bad perceptions and word of mouth spread quickly. It might get difficult for ORM teams to handle a PR crisis after a constant barrage of bad reviews. Moreover, efforts such as brand repositioning or rebranding consume time and cost millions to OEMs.
3. Sales Drop: Negative word of mouth raises serious issues about the performance of an OEM. Sales start to drop gradually, and even C-suite executives capable of saving the company want to dissociate themselves with the OEM.
4. Outsider Market Invasion: A drop in sales also means a decline in the number of genuine OEM parts in the market. Third-party manufacturers will get an opportunity to introduce their products to the market, and even cheap knock-offs will enter the market. This makes the competition even fiercer. 

How to Fix Spare Parts Misorders

OEMs can fix spare parts misordering with a combination of tech and manual efforts. Let’s take a closer look at them.

1. Use 3D Illustrative Parts Catalogs

With traditional 2D spare parts cataloging systems, dealers struggle to identify parts because of many look-alike parts. These parts may look the same in the catalog, but can vary in application. Instead, OEMs should equip dealers with 3D parts catalog software that technicians can rotate, zoom, and pan for accurate identification. Some solutions, such as Intelli Catalog, allow dealers to drill down into 3D models and perform an in-depth search to find the correct part. Intelli Catalog even has the best-in-industry part highlighting and hot-spotting features.

2. AI-Powered Cataloging System

The other set of features that OEMs should look for in a parts catalog software is AI-enabled part identification. These features can include AI-powered voice search, visual search, etc. In Intelli Catalog, OEMs can find several AI-enabled features to help them fix spare parts misordering problems for all their dealers. These include:

• AI-Voice Search: Allows dealers to interact with the catalog system in their natural language.
• AI-Visual Search: The dealer can find a replacement part by pointing their camera at the equipment.
• Intelli GPT: The option to interact with the catalog and extract important information using chat.
• MagicPic: OEMs can create studio-level catalog images right from their warehouse with AI-image enhancement.

3. Multiple Search Options

Dealers often have limited information about the equipment. This is quite common with old equipment or when dealing with fragmented catalogs, which is why it is important to have multiple part search options along with AI features. These can include VIN/serial number search, part number search, model search, figure search, etc. 

4. Real-Time Parts Visibility

Real-time parts visibility into inventory levels and order tracking can also help OEMs in reducing spare parts misorders. With dealers and OEMs both getting access to spare parts orders, it can become easier to identify if a wrong order is placed. Similarly, with real-time inventory tracking, dealers can also realize which parts are out of inventory and can provide transparent feedback to customers instead of placing the wrong order.

5. Loop in Human Expert

Technology helps automate operations, reduce manual errors, and even save costs. However, to gain 100% assurance in operations, dealers can loop in a human expert as a fail-safe. The human expert will validate the data and inputs being made in the system, and can confirm the order placement with a technician.

Conclusion

Spare parts misordering may seem like a simple mistake, but it can lead to numerous problems for dealers, logistic partners, and OEMs. With the aforementioned measures, OEMs can timely reduce their parts misordering rates and prevent damage. As said above, taking manual efforts plus technology into consideration is the right approach. For any software recommendations, you can book a free demo of our in-house parts catalog software, Intelli Catalog. With AI capabilities, it is one of the industry’s most advanced solutions you can consider.

Frequently Asked Questions (FAQs)

1. Why do spare parts ordering mistakes happen?

Spare parts misorders happen because of a number of reasons. Sometimes, they are because of missing data in the product catalogs or fragmented catalogs. Other times, they are because of human errors when technicians enter wrong SKU numbers or place orders by seeing look-alike parts.

2. How to reduce spare parts misorders?

The best strategy to reduce spare parts misorders is upgrading your parts catalog system to an AI-enabled system like Intelli Catalog, which comes with AI-enabled voice chat, visual search, and other features, along with multiple search options. Likewise, OEMs can loop in a human expert as a fail-safe to verify order details.

3. How can AI be used for identifying spare parts?

With the help of AI-enabled technology, dealers can use voice or chat to interact with their catalogs. They can extract any information they want using their natural language. Likewise, technicians can use AI-enabled visual search to quickly find replacement parts and proceed with parts ordering.

4. How to find the right Electronic Parts Catalog (EPC) software?

The most suitable EPC software depends on your requirements, and can vary from OEM to OEM. However, we recommend verifying the capabilities and user interface of the solution. Investing in an AI-enabled solution also makes sense. To find the right solution, you can book one-on-one demos with their sales experts and get a price quotation. Opt for the one that best fits in your budget and meets the maximum requirements.