Everyone depends on critical utility infrastructure, so these assets can’t afford to fail. Field services are the first line of defence, and better inventory visibility is the key to reducing downtime.
“We can’t fix what we don’t have parts for.”
Ask any field technician what their biggest frustration is, and this is the answer. For utility operations across Australia and New Zealand, a missing $50 part can turn into a $50,000 problem.
When critical assets go down, every minute counts. If a water main breaks in the early hours of the morning, it floods streets and impacts supply; if an electrical substation fails, then vulnerable people could be at risk without power; and a damages gas main leads to service interruptions at best, and fires or environmental contamination at worst.
Infrastructure downtime impacts revenue, compliance, and customer relationships – the difference between a quick fix and an extended outage often comes down to having the right part available when and where the technician needs it.
What’s the real cost of downtime?
Almost all utility managers know downtime is expensive, but many underestimate, or don’t have access to the data on the full financial impact.
According to the Future of Field Service 2024 Research by Honeycomb on behalf of Droppoint, almost half (46 per cent) of utility companies experience challenges related to technicians spending time collecting or waiting at home for parts.
While exact hours of annual downtime weren’t measured, these challenges clearly show the financial and operational impact when inventory visibility is poor.
It’s not just budgets that are impacted, it’s customers too. And when you put it all together, these costs add up fast:
- Financial cost of customer impacts, as well as retention, SLA’s and satisfaction.
- Lost revenue when service is stopped.
- Emergency repair costs for going well above planned maintenance.
- Compliance penalties from regulators.
- Long-term reputation damage in competitive markets.
The research shows that many of these costly outages occur for one reason: technicians just don’t have the right part when they need it to get service back up and running.
The inventory management challenge
Service managers at utility organisations are stuck between a rock and a hard place. They face two competing forces – the financial pressure to reduce inventory and the operational need to get outages fixed fast.
When organisations have too much inventory, they lock up a ton of capital in parts that sit idle, using up valuable warehouse space and incurring ongoing carrying costs. Not having enough inventory means equipment downtime during failures, which impacts service reliability. The problem gets worse when inventory management systems don’t have visibility across locations outside of the depots, so technicians have to travel long distances to get parts they need for repairs.
Some utilities try to solve this problem by overstocking – essentially using inventory as insurance against downtime. While this may reduce some outages, it ultimately creates inefficiencies across the system. The waste adds up in obsolete parts, storage costs and capital that could be used elsewhere in the organisation.
So, what inventory management strategies are there for utilities?
In Droppoint’s experience, sustainable improvement in utility uptime requires a holistic approach to inventory management, including strategic placement, complete visibility, and optimised logistics. Rather than stockpiling excess inventory, technicians focus on three strategies.
- Data-driven inventory optimisation
Leveraging AI and machine learning can help optimise inventory placement.
Predictive algorithms can analyse past equipment failures to position inventory near high-risk areas, while AI models can be used to ensure critical components are strategically located within service territories.
Machine learning can also process seasonal and weather patterns to anticipate equipment failures before they happen.
By harnessing AI-driven insights, utilities ensure technicians have the right parts where and when they need them – without unnecessary stockpiling.
- Complete inventory visibility
Effective inventory management requires visibility across the entire supply chain. This includes:
- Tracking systems for all inventory in central and regional warehouses
- Integration between inventory systems
- Inventory in technician vehicles
- Parts in transit between locations
- Inventory is available through PUDO (pick up, drop off) networks
This visibility reduces the need for technicians to carry personal parts, as they can find what they need through the inventory system.
- Optimised last mile logistics
Even inventory positioned strategically provides limited value if technicians can’t get to it efficiently.
PUDO networks offer 24/7 part availability, but it’s essential to combine this with efficient routing systems to get parts to technicians quickly. Direct to site delivery also eliminates the need for warehouse detours.
A failing asset pays no attention to business hours, and if trouble does arise, then field crews need after hours support from third party logistics.
When standing alone, each of these approaches can massively improve productivity – but having all these logistics in place together completes the connection between inventory availability and rapid resolution.
Making it happen
Fixing outages faster is key, but the financial impact affects many parts of your business.
Better inventory visibility reduces the costs of parts shortages, emergency logistics and long outages. Optimising inventory reduces unnecessary inventory costs, first time fixes, and emergency logistics. Utilities that do inventory well get measurable operational and financial benefits.
Knowing which inventory challenges cause the most downtime will help prioritise your improvement initiatives.
To get specific numbers for your business, an inventory audit will show you where to improve, and the team at Droppoint can guide you through the process and provide actionable insights to optimise your inventory management.
Improving inventory management isn’t just about buying new software. Technology alone won’t solve the problem, and the experts at Droppoint said that the key is to have a practical approach that covers the whole picture.
Their advice is to start by honestly assessing what you do now. Measure your current practices and understand the true cost.
Then, bring in systems that show you where your parts are in real-time – visibility changes everything about how your team works.
Next, use your historical data to put inventory where it makes sense based on actual demand patterns. Connect with logistics partners who can move parts when needed.
And most importantly, keep measuring and refining your approach based on real results.
According to Droppoint, many utilities find they make faster progress by working with specialists who understand field service logistics. Trying to adapt warehouse management systems designed for other purposes just doesn’t work in this environment.
Droppoint has partnered with Australian Field Service Organisations for more than 20 years, developing solutions for the specific inventory challenges faced within the sector.
MOS (Material Orchestration System) was the product of this industry collaboration – it’s a solution that provides end-to-end visibility across your entire parts ecosystem and connects with more than 500 PUDO locations across Australia and New Zealand.
Droppoint takes a field-centric approach to help its customers reduce downtime, increase technician utilisation and improve inventory visibility and velocity. And MOS isn’t a generic inventory platform – it was designed for field service operations to get critical parts to technicians when and where they need them.
Droppoint said its Future of Field Service 2024 study confirms its experience that sustainable improvement in utility uptime requires a holistic approach to inventory management that includes strategic placement, complete visibility and logistics.
By implementing modern inventory management practices, Australian utility providers can build more resilient networks that meet customer and regulatory requirements for service reliability.
For more information, visit www.droppoint.com.au
