How OEMs Can Navigate the Growing Challenges of Part Availability
For aftersales and service directors in the maritime and energy industries, part availability is critical for meeting customer expectations and maintaining service levels. However, traditional redundancy part strategies—stockpiling excess inventory—come with increasing financial and operational burdens. To stay competitive, OEMs must rethink their approach to parts availability.
The Rising Cost and Complexity of Spare Part Redundancy
OEMs are facing mounting pressures that make traditional redundancy strategies unsustainable. Slow-moving or excess inventory has long been a challenge for OEMs, with many parts sitting unused for years and eventually becoming difficult to maintain. Legacy parts, while remaining technically and commercially available, present ongoing challenges in ensuring their availability. Adding to this complexity are tailor-made parts designed for specific customers. These parts often have a low volume of demand and a high degree of variation, making it impractical and costly to hold them as stock.
Balancing the need to support these bespoke requirements while avoiding unnecessary inventory costs is increasingly difficult. The costs associated with warehousing large volumes of unused spare parts are significant, tying up capital, increasing overhead, and reducing profitability. Additionally, OEMs risk losing future revenue to grey-market suppliers when they cannot ensure the availability of their parts. These suppliers offer so-called "genuine OEM part alternatives," which can erode OEMs' aftermarket business opportunities.
Why Traditional Redundancy Models Are Under Pressure
Traditional redundancy part models no longer offer the security they once did. Poor part availability reduces service levels, diminishing customer trust, impacting new equipment, and eliminating aftermarket business opportunities. OEMs need a sustainable approach to ensure long-term competitiveness.
For years, OEMs have relied on two primary approaches to spare parts availability: stockpiling spare parts and leveraging distributor networks. Maintaining excess inventory to avoid shortages requires significant working capital investment and incurs ongoing operational costs, such as warehousing, logistics, and handling. Distributor partnerships expand reach but require additional resources, including investing in partner training, marketing materials, and offering rebates to maintain service levels. However, this approach also means losing direct access to end users. While these methods have historically provided reliability, today’s unpredictable market conditions make them costly, rigid, and inefficient.
What’s Changed?
Several factors have contributed to the pressure on traditional redundancy models. Global supply chains are more fragile than ever, with geopolitical instability and shipping bottlenecks affecting part demands and making stockpiling and sourcing unreliable. OEMs are under increasing financial scrutiny, making excess inventory harder to justify as profit margins shrink. Technology is accelerating product lifecycles and a part designed today may become obsolete in a few years, rendering excess stock ineffective. With sustainability and waste reduction initiatives gaining traction, stockpiling can lead to compliance risks due to the inefficient usage of resources and the amount of waste generated.
Given these challenges, OEMs must rethink how they balance customer service levels with cost to serve. A more dynamic strategy is required—one that ensures availability without excessive financial and operational risk.
The Cost of Inaction: The True Impact of Poor Part Management
Part availability isn’t just an operational issue—it’s a direct revenue risk. Poor availability leads to poor service and this results in declining aftermarket revenue. When OEMs cannot provide spare parts promptly, end users are forced to seek alternatives. This often leads them to the grey market, where unverified third-party suppliers offer potentially lower-quality parts at low prices. Once an end user turns to the grey market, the OEM loses more than just a single sale—long-term customer trust erodes, and the service revenue pipeline dries up.
What’s at Stake?
Aftermarket revenue loss occurs when customers shift to other OEMs or grey-market suppliers. This results in reputational damage when customers perceive the OEM as unreliable. Higher customer churn rates result in frustrated customers looking for more flexible alternatives.
The Next Six Months: What Happens If Nothing Changes?
If nothing changes over the next six months, more customers will turn to other OEMs or grey market solutions, making it harder for OEMs to win them back. Aftermarket revenue will continue shrinking as competitors offer faster, more accessible alternatives. Service contracts will become less valuable, leading to further erosion of customer relationships. OEMs will struggle to maintain control over their own parts supply, losing their revenue streams. The longer OEMs delay in addressing these vulnerabilities, the more difficult it becomes to recover lost opportunities. Poor part availability is not just a minor inconvenience—it is a slow erosion of business that, left unchecked, will only accelerate.
Exploring New Approaches: Digital Inventory and On-Demand Manufacturing
Forward-thinking OEMs are moving beyond stockpiling and distributor networks by adopting more agile models.
If you'd like to hear more about how we're supporting maritime and offshore OEMs with smarter redundancy - tap through to request a call back with our team.
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