With a contracting durable goods market, it has become critical for manufacturers to find sources of income that aren’t dependent on new sales. In an economy where the shop front of an organisation still receives the majority of attention from executives and shareholders, the less glamourous aftermarket nonetheless holds a significant amount of untouched profit.
According to a study by manufacturing technology giant Barry-Wehmiller International, “profitability from product sales typically varies between 6 and 13 percent across various manufacturing industries,” while “profitability from aftermarket services can typically reach 35 to 60 percent.” For companies with the right skills and technologies, the potential gains are huge.
So what are those skills and technologies that allow manufacturers to make the most of the aftermarket?
Keeping the customer happy: it’s all about information
Today’s customers are accustomed to an on-demand economy and expect a quick and reliable service.
To meet these needs, dealers need know exactly which items of stock are held where, and they must be able to forecast demand with as much accuracy as possible. To do this, they have to move beyond spreadsheets and guesswork.
Data virtualisation and cloud technologies mean that it’s now possible to view and analyse real-time data from multiple sources, both inside and outside a company. This is vital to the optimisation of stock re-distribution and to automated forecasting. Three areas in particular where these cloud-based technologies can improve aftermarket services include:
- Order management: Order management solutions streamline the ordering of service parts, integrating processes across sales, warehouses and suppliers, providing visibility of what’s where and automating manual processes. This allows manufacturers to reduce order handling costs, improve customer service and reduce lead times.
- Inventory management: With inventory management solutions, manufacturers are able to identify precisely the volume of stock held at different locations. This makes it easy to re-distribute it to dealers where demand is forecast to be high, thereby eliminating problem of excess stock, while simultaneously improving part availability.
- Price management: In addition to optimising inventory availability, it’s also key to automate service parts pricing. This allows manufacturers to adapt to changing markets and react to competition. Additionally, it allows companies to minimise labour costs and eliminate compliance concerns.
The aftermarket is where manufacturers have the opportunity to turn a one-time purchaser into a loyal, long-term customer. By eliminating the bulk of the manual processes that create inefficiencies and costs, this can be achieved alongside a healthy set of profit margins. So don’t neglect your dealers; explore the technology options and make sure that you are really getting the best out of your services once the original sale is a thing of the past.
