Most industrial equipment, consumer durables, and electronic goods manufacturers have placed heavy emphasis on their after-sale service businesses in recent years. These repair service and parts businesses generally are not subject to the pricing pressures that manufacturers face in their core businesses. They therefore have offered significant opportunities for manufacturers to generate additional revenues at higher margins, and thereby improve both their top and bottom lines.

To take full advantage of those opportunities, many of those companies are finding ways to improve the effectiveness and productivity of their service-parts operations. Take Saturn Corporation, the Spring Hill, Tenn.-based automaker, for example.

Dealers' parts inventories have been a challenge for many automotive companies. On the one hand, out-of-stocks can create customer ill will and the loss of lucrative repair revenues. On the other hand, the investment needed to guarantee availability of a broad product line can drive up already-significant inventory costs.

Saturn has addressed that problem by developing an operating model that provides superior customer service and in-stock availability while achieving inventory turns that are three to seven times better than most of its competitors have achieved. Here's how they do it:

First, Saturn gives its dealers full visibility into all parts inventories. Each dealer can view inventory located at other dealers' facilities or at Saturn's central stocking locations around the country.

Second, the company keeps safety stock at the premises of a "prime dealer" in each major market. This avoids having every dealer in a region carry safety stocks.

Third, skilled inventory management specialists review usage rates, repair schedules, and inventory positions each day. They then recommend an optimal inventory position for each dealership. Individual dealers can overrule those recommendations, but they rarely do.

This distinctive operating model allows Saturn to operate on a different plane than its competitors when it comes to managing service parts. One reason the company has been able to make such significant advances is that its inventory analysts use sophisticated analytical models to plan inventory levels. Such tools, which have advanced considerably in recent years, provide new advantages. There now are several powerful software packages for managing service parts that provide excellent functionality and ease of use. They also allow visibility of all inventories in a company's various channels over the Web.

Although these programs provide significant advantages, it's nonetheless important for logistics managers to rethink their companies' operating models, as Saturn and others have done, in order to achieve superior performance.

Opportunities to implement leading-edge logistics and supply chain strategies are available for many service businesses, whether that business involves managing parts or scheduling service technicians. If you are managing a service business, it might be useful to rethink how you can bring these advanced practices to bear in your own operation.