Definition

service supply chain

Contributor(s): David Essex

The service supply chain is the part of the supply chain dedicated to providing service on products. It addresses the supply of parts, materials, personnel and services needed to provide timely and effective product service, such as repair and maintenance.

The service supply chain also involves the logistics required to return a product for repair, servicing, replacement or recycling, a process called reverse logistics. Many manufacturers often turn to third-party logistics providers (3PLs) to manage this part of the service supply chain.

Service supply chain vs. manufacturing supply chain

The term supply chain originally referred to the supply of raw materials, parts and other goods needed in the manufacturing process. Supply chain management (SCM) is now a broad range of activities for planning, controlling and executing not just the flow of materials for producing a product, but the product's distribution to wholesalers, retailers and end customers. In contrast, the purpose of the service supply chain is after-sales service and support for a product, such as scheduled maintenance and repairs made under warranty.

SCM is a major component of most enterprise resource planning (ERP) software suites. While it historically focused on the manufacturing supply chain, it has broadened to include the supply chains of service industries, retailing and others. Few ERP and SCM vendors offer software expressly for service supply chain management, instead handling it in their standard offerings.  Certain service processes, such as field service management, have dedicated software that accesses the service supply chain through integration with SCM and ERP systems. In addition, service lifecycle management (SLM)  processes and software handle many of the product-service steps, including reverse logistics and parts management.

The phrase service supply chain is also sometimes used to denote a category of supply chains for service industries, such as finance, healthcare, hospitality and professional services. It can also mean a network of service providers and supporting elements, such as the management of information, processes, competencies and money. Some reference sources divide the category into product service supply chains and service-only supply chains.

Service chain management explained

There are also similar-sounding terms that mean something different. For example, service chain management has significant overlap with the service supply chain, especially in regard to the parts and materials needed to provide efficient service.

However, service chain management focuses more on the "chain" of services themselves and the people who provide those services, in addition to the physical side. It is analogous to SCM, but instead of finished goods, it involves the flow of services to the customer.

This was last updated in December 2018

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