Importance of the aftermarket and how Spare Parts can help you win the game.
Every major product category is saturated with brands competing to dominate, differentiating through product features, price and most importantly providing great customer service. From the start of the millennial developed markets in the United States, Europe and Japan have stopped pushing products and start delivering value that customers get out of using their products.
The change in strategy was mainly due to the declining in demand, competition intensified and margins thinning. As businesses began offering solutions instead of products, it became evident that selling spare parts and after-sales services—conducting repairs; installing upgrades; reconditioning equipment; carrying out inspections and day-to-day maintenance; offering technical support, consulting, and training; and arranging finances—could be new sources of revenue and profits.
In the Industrial Machinery industry, companies have sold so many units over the years that their aftermarkets have become 4 – 5 times larger than their original equipment businesses. At Tatas Equipment, we strive to provide the most competitive price of genuine Kubota spare parts to our customers through our industry-leading cost-effective operating model. Corporations such as Kubota, Caterpillar, Cummins have won customers’ undying loyalty by providing top after-sales services. In fact, one number that tells a company how loyal its customers are likely to be is how high they rate the firm’s after-sales services.
Despite the great opportunity in the after-sales market, many businesses neglect it as they view it as a needless expense. This is because, after-sales support is extremely difficult to manage, and only companies that provide services efficiently can make money from them. There was little coordination between the company’s spare-parts warehouses and its dealers, with roughly 50% of consumers faced unnecessary delays in getting their equipment repaired because dealers didn’t have the right parts to fix them. Although original equipment manufacturers (OEMs) carry, on average, 10% of annual sales as spares, most don’t get the best out of those assets. People and facilities are often idle, inventory turns of just one to two times annually are common, and a whopping 23% of parts become obsolete every year. Some OEMs are content to let independent service providers cater to customers. Indeed, third-party vendors have become so price competitive that OEMs lose most of the aftermarket the moment the initial warranty period ends. At Tatas Equipment, we optimize for efficient spare parts inventory management, to enable end-users access to the necessary parts whenever they require, thereby minimizing their operational downtime. Check out our article on how effective spare parts management can be achieved.
Tackling aftermarket challenges can be overwhelming and more complex than manufacturing products. When delivering service products, executives have to deploy parts, people, and equipment at more locations than they do to make products. An after-sales network has to support all the goods a company has sold in the past as well as those it currently makes. Each generation has different parts and vendors, so the service network often has to cope with 20 times the number of SKUs that the manufacturing function deals with. Businesses also have to train service personnel, who are dispersed all over the world, in a variety of technical skills. Moreover, after-sales networks operate in an unpredictable and inconsistent marketplace because demands for repairs crop up unexpectedly and sporadically. Our engineers at Tatas Equipment are well trained at Kubota equipment, with more than 30 years of industry experience, to provide the necessary support to all end users. We use customer-focused metrics(e.g. machine up-time) to measure our own performances, as we believe that when customers win, we win.
To manage the after-sales services business effectively, most companies require deep knowledge of how their products create value for customers, which means being on the ground to understand the business operations of end-users. After understanding their customers, companies need to match the supply of spare parts to demand, along with having the right expertise in support staff to troubleshoot and identify the problem areas. Companies can break products down into end products, modules, submodules, and piece parts, all of which they can use interchangeably to deliver after-sales services. However, each bears a different cost and entails its own response time. Replacing a failed product with a standby end product is faster but more expensive than replacing a module. Replacing a module is faster and more expensive than replacing a submodule. Companies should keep this product hierarchy in mind when deciding what spares to stock.
