Aftermarket Services: Growth Opportunities for Businesses

Aftermarket Services are crucial for any OEM. According to a research conducted by Aberdeen in 2013, service parts management activities have profit margins up to ten times than those of initial product sales. Syncron, the global leader 100% focused in cloud-based aftermarket service optimization, tells us more, with Manitowoc Crane Care highlighting the importance through practical experience. 

Headquartered in Stockholm, Sweden, with a worldwide presence in 20 countries, Syncron has recently announced the opening of an office in France, where the company organizes information sessions. During one of them, Antonio Mascolo, Solutions Director for Inventory Management in Southern Europe, emphasized the importance of aftermarket services in today’s economic climate; Guillaume Burtin, Master Scheduler at Manitowoc Crane Care, also came to testify about the use of Syncron’s solutions and the underlying benefits. 

The solutions offered by Syncron are cloud-based, and are 100% dedicated to service parts management. They “allow organizations to reduce their inventory, while keeping service levels high, and improving parts availability across the entire OEM’s network,” said Antonio Mascolo. Syncron has formed partnerships with companies such as SAP, Oracle, IBM and Deloitte, and its customers include global leading manufacturing organizations such as Messier Bugatti Dowty, JCB, Manitou, Volvo Construction Equipment, Harley Davidson, Scania and Hitachi. 

Aftermarket: What? How? Why? 

In addition to the margins they can generate, aftermarket services account for 40% of profits for most manufacturers and up to 30% of revenue. Furthermore, we are witnessing “a contraction of the global durable goods market, with a decline of 3.5% in 2015 for orders of durable goods, long-lasting products,” said Antonio Mascolo. An example of this situation is Boeing, which expects to deliver fewer commercial jets this year, Caterpillar which forecasts a decline in demand causing revenue to fall by about 10% in 2016, and ABB which announced 12% down of order intakes in 2015. It is because of this that manufacturers have now turned their focus to aftermarket service for growth and improved profitability. Aftermarket service is increasingly viewed as a growth driver, source of rapid bottom line impact and important enabler to deliver superior customer experience. 

The Importance of Customer Experience 

Antonio Mascolo insisted on customer experience as a necessity, with figures in hand. According to Zendesk, 40% of customers begin purchasing from a competitor because of their reputation for great customer service and 50% use a company more frequently after a positive customer experience (NewVoice). Deloitte also stated that 62% of customer service organizations view customer experience as a competitive differentiator, and according to Temkin, 63% of companies expect to spend more on customer experience.  

And Syncron is able to answer to those challenges without doubts, with an increase of service levels from 5% to 50% according to customer case studies, lower emergency orders and lead times, reduced cost of inventory (15% to 40% improvements), reduction of excess stock and obsolete parts, optimized business processes, reduced manual efforts and streamlined operations. 

Solution Highlights

Oftentimes manufacturers may wonder about the value of using an additional software because most ERPs can handle inventory management. Syncron’s solution, Inventory Management, is primarily devoted to large organizations, with a complex supply chain and many stock locations. In such complex multi-echelon environments, with thousands of spare parts to manage, the task can be daunting. 

Syncron’s solution leans on sophisticated algorithms, based on parts’ demand specificity (erratic, lumpy, sporadic, slow, etc.), and takes into account seasonal fluctuations to establish a more accurate overall forecast. Inventory Management allows the users to set up targets and strategies according to each part or part segment, define the critical stock, simulate trade-offs between customer service level and inventory investment and run ‘what-if’ scenarios before implementing policy changes. The virtual inventory planning feature helps OEMs determine where to place stock so that the parts can reach the customer quickly and efficiently. All of this leads to cost savings and improved service, for maximum customer satisfaction with minimum stock levels. Finally, built-in analytic capabilities allow organizations to create and tailor reporting, and keep track of their successes. 

The SaaS solution is fully integrated with existing ERP solutions, using standard adapters to lower integration costs, achieve higher performance and make businesses more agile. 

Manitowoc Crane Care Case Study 

“Manitowoc Cranes is a company created a hundred years ago (founded in 1902) in Manitowoc, WI, in the United States,” said Guillaume Burtin, Master Scheduler at Manitowoc Crane Care. The company has 92 manufacturing and service facilities across 25 countries, and employs 6,000 people, including 1,000 in France. Manitowoc is committed to providing the most innovative, advanced and comprehensive range of lifting solutions with products that have long set the standard for excellence worldwide: Grove mobile telescoping cranes, Manitowoc lattice boom crawler cranes, Potain tower cranes, National Crane boom trucks and Shuttlelift industrial cranes, in addition to outstanding product lines. 

Manitowoc’s business unit, Manitowoc Crane Care, is dedicated to offering outstanding support services to end customers. Parts are sold and serviced at locations covering five continents, with the main parts centers located in the U.S., and in France to cover the EMEA region, with 500 employees. Based near Lyon in France, Manitowoc Crane Care is divided into five key disciplines: Parts, service and technical support, technical publications, training and a rebuild, repair, remanufacture and exchange program. The service facility in France manages around 40,000 parts and receives 200,000 order lines a year. 

Five years ago, Manitowoc carried out an evaluation of its current state of service, and found out that its multiple brands factor was leading to various demand types, according to the products sold. Furthermore, the company was using multiples ERPs with no real analytics tool to understand its performance. All the systems used were somewhat inflexible and reached their limits in terms of managing supply chain processes. With the goal of improving customer satisfaction in mind, Manitowoc Crane Care tried to implement different stock strategies, which varied according to each brand, product family and lifecycles. The objective was to place the right part, in the right location, at the right time, and gain complete visibility on the stock and forecast. 

The company decided to adopt a best-of-breed inventory management solution, one that would be able to solve the company’s challenges, and integrate with multiple ERP systems. Overall, the project took six months to complete, and in July 2012, Manitowoc was able to use its ERP systems to handle orders, and Syncron’s Inventory Management solution to manage the analytics, strategy and to set tasks. Demand planning and forecasting are now fully controlled and run by Syncron, with organizational changes also taking place within the company, in particular with the creation of a new “Master Scheduler” job position, and the implementation of new working methods: “We went from a curative approach to a proactive approach,” said Guillaume Burtin. 

Today, around ten demand planners use Syncron’s solution in France, with significant results, compared to the situation five years previously. The fill rate went from 89% to 92%, which was Manitowoc’s primary goal, and service time was reduced from 5.8 to 3.2 days. The stock value has slightly increased, a deliberate choice for the company, and the stock composition has been optimized.

This post was originally posted at erp-infos.com in French. To see the post in its entirety, click here