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To stay ahead of the digital transformation in its marketplace, Eastman Kodak Company knew that it had to go through a transformation of its own in its service parts supply chain. The guiding principles in this endeavor would be velocity, value, and visibility. This is a story of that transformation-the motivation, the methods, and the results.
The traditional imaging business is being replaced rapidly by a growing digital business that is more demanding, changes faster, and is increasingly global. This development has affected every company in the photographic business. The impact at Eastman Kodak Company, in particular, has been profound, affecting the whole service parts value chain.
Kodak makes a diverse range ol products-from userfriendly Picture Maker photo kiosks found in retail stores to the sophisticated computer radiography equipment so critical in trauma centers and hospitals. Compared with traditional photographic products, digital products have shorter life cycles and more expensive after-market parts. Examples of digital parts in this market include circuit boards, print head controllers, CPUs, optical drives, and monitors.
At the current pace of technological innovation, digital parts become obsolete very quickly, creating conflicting pressures in the organization. On the one hand, our service parts supply chain managers are under tremendous pressure from the product group managers to lower inventories. On the other hand, the service team-our field force-expects a very high stock level of parts. That dilemma soon raised a basic question: what should be the value proposition of our service parts logistic chain and network? We had to develop a value proposition that optimized parts inventory over the entire product life cycle while enabling better management of inventor)' costs.
We identified three key value propositions for our parts logistics network that could be used to deliver smarter asset control as the product works through its life cycle. Velocity was the first value proposition. Velocity helps in the launch phase so that only a few parts (often scarce) are needed to support a product launch when machine placements are uncertain and parts themselves are subject to revisions and version-level changes. The second proposition is value (in terms of efficiency and distribution costs); value applies to the cost savings achieved in the maturity phase, and helps us monitor that phase for transaction costs...