Upto 75% of Profit comes from Aftermarket for 1/3rd of Industrial Machine Manufacturers

Recent UPS research, conducted by IDC Manufacturing Insights, has reported that one-third of midsize industrial machinery manufacturers are getting up to 75% of their profitability from parts, service and consumables. 78 percent of manufacturers said that their customers’ expectations for after-sales services are rising, but just 12 percent manufacturers say replacement parts and service are top differentiators for their business.

Graphs

In the remaining 88% of manufacturers, 45% of manufacturers believe machine (product) performance and 43% believe machine quality is their top most business differentiator. It is a known fact that, machine/product performance also greatly depends on Aftermarket services.

The research indicates that while manufacturers focus on developing and deploying new machinery, the buyers of industrial machines are increasingly seeking after-sales support to maintain the complex machinery for optimal productivity.

UPS Survey

“Industrial machinery manufacturers are in a challenging situation. Their pipeline depends on developing new products, yet over one-third says that 50 to 75 percent of their profitability comes from after-sales service. For many, enhancing service after the sale could be a way to differentiate from the competition and offer potential for revenue growth”, says Brian Littlefield, UPS director of industrial manufacturing and distribution.

This survey also reaffirms the fact that, sales is a transaction and Aftermarket/After Sales is a relationship. 61% of the manufacturers have said that, their machines average lifetime is 10 to 19 years. If they approach After Sales rightly, they can get perennial revenue throughout the lifecycle of the product.

Offering an enhanced level of aftersales support is not easy as majority of manufaMapcturers surveyed sell broadly across multiple industry segments (64%); from multiple facilities(68% sell from 2 – 9 locations);to locations around the world (48% sales from outside North America).

Survey also throws light on typical response time taken by manufacturers to respond to a new parts or machine repair requests from their customers. Majority of manufacturers (60%) admitted that, on an average they take 2-3 days of response time for service requests. Given the potential for significant lost productivity and revenue, that 72 hour window is likely unacceptable. Downtime creates lasting memories and anything less than immediate service can dim the prospects for loyalty and repeat sale.

The results are based on a March 2015 survey of U.S.-based industrial machinery providers with a global customer base and between $10 million and $50 million in annual revenue. All survey participants said more than half of their business was in North America, with the remaining divided evenly between South America, Europe and Asia. A small percentage of business was located in the Middle East and Africa.

Contact us to know more:

Email: sales@questinformatics.com   Web: www.questinformatics.com

Quest Informatics is an Aftermarket IT product and services specialist company having more than two decades of experience in supporting Fortune Global 500 Companies. Quest Informatics was awarded as the Aftermarket Brand of the Year-2014, by Silicon India.

How Generator companies generate extra profit?

Big generator

India is the 3rd largest electricity producing country in the World, with installed power generation capacity of 249,488.31 MW. But daily generation is only to the tune of 135,000 MW and India’s per capita power sector consumption is around 940 kWh, which is among the lowest in the World ( global average 3000 kWh).

On the other hand, power demand is steadily on the rise in India, as it is getting more urbanized and industrialized.  To tide over huge gap in supply and demand, industrial and commercial establishments continue to depend on generators and captive power plants for their power needs.

‘The big deterrence for industries in India is lack of optimal basic infrastructure. For example, we’ve our own captive power plant in our Bengaluru facility’, said Ms. Kiran Mazumdar Shaw, MD Biocon, in a recent interview.

Power shortages cost India’s GDP to about USD 68 billion. Industries investment on power backup arrangements will continue to rise and they will choose power backup products which are more reliable than just being economical.

Power backup generator manufacturers can establish their reliability in the market,

  1. By delivering high quality generators which are durable
  2. By guaranteeing that generators face less downtime through preventive maintenance
  3. By ensuring generators are up & running in shortest time in case of break downs

Out of the three factors above, the last two belongs to the Aftermarket space.

Most of the manufacturers produce the same quality generators and commit the same performance from them. But, their differentiation is by the quality of their Aftermarket services. Manufacturers having an upright Aftermarket services are the clear winners.

Preventive maintenance for engine generators plays a critical role in maximizing reliability, minimizing repairs and reducing long term costs. Preventive maintenance in generators consists of the following operations:

  • General inspection
  • Lubrication service
  • Cooling system service
  • Fuel system service
  • Servicing and testing starting batteries
  • Regular engine exercise

IT systems are available which can keep track on all the operations and alert the customers or manufacturers when they are due. It is generally a good idea to establish and adhere to a schedule of maintenance and service based on the specific power application and the severity of the environment. For example, if the generator set will be used frequently or subjected to extreme operating conditions, the recommended service intervals should be reduced in systems accordingly.

Shorter TATs can be ensured only when customers are able to register the complaint with the manufacturer quickly and then by manufacturer sending the nearest right technician with right tools to address complaints. Manufacturers need to have simpler systems in place for customers to register complaints quickly and a complaint registration acknowledgement should be sent to customers swiftly, even before customer hangs up their phone. Manufacturers should also have systems to capture service history and operational hours of generators, using which it will be easier to predict type of complaint and then send nearest right technician with right tools.

Delivering good Aftermarket services will enhance customer satisfaction and support in establishing credibility, along with perennial profit by parts sale and service throughout the life cycle of generators. IT Systems can also help in preventing warranty leakages and a sustained goodwill in the market will lead to more repurchases from the customers.

Contact us to know more:

Email: sales@questinformatics.com   Web: www.questinformatics.com

Quest Informatics is an Aftermarket IT product and services specialist company having more than two decades of experience in supporting Fortune Global 500 Companies. Quest Informatics was awarded as the Aftermarket Brand of the Year-2014, by Silicon India.

How Quest Informatics enhanced a leading Automaker’s support desk performance to 90%?

Support Desk

India’s leading automaker now boasts of 24×7 parts help line, with 24 hours resolution call closure at 90%. But not long before, it was a different story.

  • Call closure stood at 42%.
  • Parts Help Line (PHL) was mired with challenges like, manual process resulting in call backlogs, unanswered calls, difficulty in getting right information and lack of coordination between departments
  • PHL staff were accessing many applications and sources to find the answers
  • Manually sending acknowledgement of calls and not sharing call progress with customers, resulted in many follow-ups from customers
  • Absence of processes for escalation and inter departmental coordination
  • Lack of categorization and prioritization of calls
  • Complex operations across domestic and international markets

When they turned to Quest Informatics for help, they knew they were in professional hands with over twenty plus years’ experience in aftermarket consulting and solutions. Quest Informatics conducted an ‘as is analysis’ and came out with ‘to be’ solution recommendations. Quest helped roll out

  • A Single of Pont of Contact (SPOC) and restructuring of PHL (included members from the Automaker, as well from Quest Informatics)
  • An escalation matrix and process of interaction between departments
  • A process to populate historical data of PHL and use the same for forecasting
  • Customize Quest Support Desk Application for PHL Activity

Accomplishments:

Our right diagnostics followed by right solution implementation, delivered results beyond expectations:

  • For the first time ever, the automaker’s PHL internal business calls pending were in single digits
  • For the first time ever, PHL domestic business’ pending calls were bought to its lowest, with all calls pending with other department, meaning work-in-progress (WIP) calls were ZERO!
  • For the first time ever, PHL’s 24 hours resolution call closure reached 90%!
  • PHL’s capability increased, as it was able to handle more calls
  • Automaker’s customers are getting acknowledgement and closure information
  • With respect to catalogue, PHL team was able to do Root Cause Analysis (RCA) and also correcting issues by themselves
  • Appreciation of PHL team by the Automaker

Quest Informatics is an Aftermarket IT product and services specialist company. Quest has more than two decades of experience in supporting Fortune Global 500 Companies. It was awarded as the Aftermarket Brand of the Year-2014.

Contact us to know more.

Mail: sales@questinformatics.com   Web: www.questinformatics.com

PRODUCT PERFORMANCE, NOT PRODUCT POSSESSION THAT MATTERS!

According to Dun & Bradstreet, equipments at Fortune 500 companies experience a downtime of about 1.6 hours per week. The economic loss of the downtime is estimated to be around $46 million per year. When there are millions to be saved by increasing uptime, buyers are looking at manufacturers who can deliver them equipments with greater uptime. Buyers are demanding performance (uptime) commitments than just taking pride for owning products. Let’s understand how few manufacturers are trying to ensure higher uptimes by going an extra mile.

Quest Informatics Uptime

At “UPTIME”, a biennial event conducted by Volvo Trucks, its North American president Gӧran Nyberg said “Even a single day of downtime can affect a trucking company’s reputation and relationship with its customer, so we strive to continue to develop new products and services to keep customers’ trucks on the road.” Volvo uses its global network of 2,200 dealers and workshops in more than 120 countries to ensure higher uptime of its trucks. Since 2010, Volvo’s dealers have invested $435 million in facilities and personnel, resulting in a 37% increase in bay capacity and 89% more technicians.

Volvo Construction Equipment (VCE) division guarantees that machines experiencing unexpected downtime will be up and running within 72 hours, or the customer will be provided with a comparable loaner for up to 2 weeks. Its competitor, Hyundai Construction Equipment is promising an uptime of 98% for its Wheel Loaders, if proper preventive maintenance procedures are followed.

Leading Indian carmaker Maruti Suzuki, which is widely recognised as having great after-sales service, has 3,060 service stations (inclusive of dealer workshops and Maruti Authorised Service Stations) in 1,454 towns and cities throughout India, which is more than double of its nearest competitor. Not be complacent, Maruti has come out with a programme to skill up 2,100 youth annually on car service, repairs and maintenance. This programme will supply a good number of skilled automobile technicians to the market, who across the country will come handy when Maruti’s customers face challenges.

Underscoring the importance of Aftermarket support, Maruti Suzuki’s service division Executive Director Mr. Pankaj Narula said ”Our experience suggests that a key determinant in the car buying decision is the after-sales network, its accessibility, service costs and the availability of spare parts. Our big goal has been to run a robust service network that also supports sales.” One of Maruti’s competitor Tata Motors has plans to double its dealership network to 1000 by 2020 in India, so that it can serve its customers better.

It’s evident that, equipment uptime can only be met with a robust Aftermarket support network, which is not just about comprehensive technology but also about skilled personnel.

Focus on uptime is not just restricted to Heavy equipment & automobile, but also in sectors like, Industrial refrigeration, Wind Turbines, Industrial Print Machines, Medical Devices, Farm Equipments and Water Treatment Equipments, etc. Leading companies from these sectors have employed following practices that are enabling them to deliver higher uptime.

  1. Effective Communication: Ways & means of registering a downtime should be very short & simple. For example, allowing customer to register a complaint through an SMS is a great facility to have & acknowledging the same will give customers the first level of respite. Service technicians should be able to access details like service history, parts replaced, etc on the go. Also, field technicians should be able to update the job status in real-time may be through SMS or Mobile app.
  2. Preventive maintenance: Major downtime issues can be prevented by regularly checking on areas like hydraulic fuel levels, Oil levels, Air & Oil filters, etc. Manufacturers are persuading customers to undergo preventive maintenance activities through awareness campaigns & also by sending reminders.
  3. Proactively identifying issues: Systems use knowledge base to identify the vulnerable areas of equipments. For example, based on HMR reading, system will predict the replacement of oil filters.
  4. Deploying ‘Rapid Service Action’ teams strategically: Even after best efforts, emergencies will continue to come. Preparation is the best way to respond to any emergency. Service technicians are placed close to customers by analysing the equipment density, their working hours, etc.
  5. Leveraging the strength of Dealer Network: Regular training dealer’s personnel on servicing, using electronic tools is an economical & efficient way to increase uptime. Also, share updated electronic catalogues (parts, service etc) across the dealer network swiftly.

Apart from generating more revenue, higher uptimes help your customer in meeting their commitments, which in turn elicits loyalty and repurchase of your equipments. So, time is up to focus on Uptime!

Quest Informatics is an Aftermarket IT product and services specialist company. Quest has more than two decades of experience in supporting Fortune Global 500 Companies. It was awarded as the Aftermarket Brand of the Year-2014. Quest Aftermarket ERP is a comprehensive, robust, flexible, intelligent product which addresses all the challenges of Aftermarket and will be up and running within 3 months. Many have boosted their Aftermarket revenue up to 35% post implementation of it.

Contact us to know more.

Focus on Aftermarket to improve Customer & Dealer satisfaction: Study

auto-industry-satisfaction-at-all-time-Quest Informatics

J.D. Power Asia Pacific 2015 India’s Dealer Satisfaction with Automotive Manufacturers Index (DSWAMI) Study released on 28 May 2015 emphasises the fact that manufacturers have to improve their Aftermarket services to improve their dealer satisfaction.

According to the study, overall dealer satisfaction is determined by examining nine factors, out of which 5 factors belong to Aftermarket.

  1. Marketing and sales activities (15%)
  2. Product (12%)
  3. Vehicle ordering and delivery (13%)
  4. Sales team (16%)
  5. Parts (6%)……………………………………………………..
  6. Warranty claims (7%)……………………………………..
  7. After-sales team (7%) …………………………………….Aftermarket (45%)
  8. Training (10%)…………………………………………………
  9. Support from the manufacturer (15%)………………

J D Power Study 2

45% of factors contributing to dealer satisfaction with automotive manufacturers fall in Aftermarket.

India Tractor Customer Service Index (CSI) Study 2015

Another study released by J.D. Power Asia Pacific, titled “India Tractor Customer Service Index (CSI) Study 2015”,release on 18 February 2015, shows a considerable gap in the Aftermarket support offered by Tractor manufacturers to their customers.

The study found that only 8 percent of owners are contacted by their authorised dealer when their tractor requires routine maintenance. Among owners who take their tractor in for maintenance, the average wait time for service is 2.5 hours, with 19 percent of owners waiting more than one day for their tractor to be serviced.

“Dealers should be more proactive in reaching out to farmers to ensure their tractors are correctly maintained. Encouraging customers to conduct regular maintenance on their tractors not only makes financial sense for the dealer, but it also reduces the number of tractor breakdowns and helps improve the overall uptime during busy periods.” said Dr. Gordon Shields, director, J.D. Power Asia Pacific.

Overall customer service satisfaction is based on a combined score of the service satisfaction index and parts operation index. The service satisfaction index examines satisfaction in four key measures (listed in order of importance): service quality; service initiation; service engineer; and service handover. The parts operation index examines satisfaction across five attributes, including availability of parts, speed of parts delivery and parts value for money, amongst others. As it is clear, these attributes and measures fall in Aftermarket.

The take away from these two studies is that manufacturers have to improve their Aftermarket services to improve their customer satisfaction.

Source:

http://india.jdpower.com/press-releases/2015-india-dealer-satisfaction-automotive-manufacturers-index-dswami-study

http://india.jdpower.com/press-releases/2015-india-tractor-product-performance-index-ppi-customer-service-index-csi-studies

Aftermarket Health of Indian Medical Device Industry

India is one of the top destinations for medical tourism, as medical treatment costs only 10% compared to US or Europe.  Moreover, India has a large pool of skilled doctors and specialists. Indian medical industry has adopted IT and newer technologies extensively and has created unique business models for large scale cardiac and other treatments.

Medical Equipment

Indian medical industry device requirement is met by both imports and domestic manufacturing. Today the Indian medical industry stands at $ 2.5 billion, but the industry faces several challenges due to vagaries of lead time of imports, limited availability of service related manpower and high turnaround time. On an average a device has a life of 7 years, during which its Service Life Cycle has to be managed effectively.

Service Life cycle of Medical Equipment

Device manufacturers can deliver solution to challenges of medical device industry by focusing on following 3 major areas,

  1. Service Network
  • Manufacturers should consider opening up new domestic centres to provide customers with Aftermarket services, thereby adding to a safety factor in the minds of the customers for its devices
  • Maintenance and Repair: Ensuring compliance with quality and safety standards, Preventive maintenance at planned intervals and rapid high-quality turnaround during device breakdown (normally device shouldn’t be down beyond 3% of working hours in a year).
  • Regulatory Compliance: Comprehensive safety and performance testing of the device, including updation of equipment software.
  • Calibration and certification at planned intervals
  • Warranty and after warranty maintenance contracts handling
  • Inventory updation as per planned intervals
  • Swift action during recalls and exchange programs
  1. Refurbish

Refurbishing will spread the reach of manufacturer as devices become affordable. Refurbished equipments are 50% to 60% cheaper than the original equipment cost and they come with same post sales service contracts like the new equipments, which adds to the consumer’s confidence in these devices.

  1. Comprehensive IT Systems

Deploy IT Systems which connects manufacturer, distribution network, service network and customers and which manages:

  • Service, parts and sales
  • Warranty, Inventory and Refurbishment
  • Field Service and Service helpdesk
  • Faster dispatch of spare parts
  • Recalls, returns and exchange management
  • Manuals Creation and distribution: Owner manuals, Service manuals, etc
  • Manage the complexity: According to Global Medical Device Nomenclature (GMDN) medical equipment industry is quite wide with > 14,000 different products types. The products range from wound closure pads to stents and IVD machines of medical devices
  • Manage Diversity: A system which can accommodate multiple languages and tax systems
  • Multimedia training to technicians and hospital engineers to reduce downtime. On an average, 67% of complaints are minor (first hand level), which can be resolved by hospital engineers. But due to lack of effective training, they are only able to resolve 32% complaints.

Achieving success in Aftermarket is crucial as it not only delivers monetary benefits in short term (45% of manufacturers report that in next 3 years more than 30% of their revenue will come from service) but also enhances customer satisfaction and loyalty in the long run, which eventually yields repeat orders and customer recommendations.

Contact to know more:

Mail: sales@questinformatics.com Web: www.questinformatics.com

How Power Tool Manufacturer can raise $$$….

Tools for many people are obscure and low investment that needs to be made to run their business. While it may not be eye-popping like e-commerce, power tool industry is around 200 Million Euro and expected to reach 250 Million Euros by 2020. Power tool industry includes electric power tools, Portable Power tools, Industrial Power tools, Hydraulic Power tools, Cordless Power tools, just to name few.  While Asia is a major producer, European and Japanese Manufacturers hold significant share of high end tools. About 60% of tools are imported and “made to order” tools require higher lead time. Hence, in most cases, end users stock enough safety stocks to manage inventory risks.

Power tool manufacturers in recent years have been hit from commoditization at one end and sagging demand of end user industries at another. While tools sale is what has been the primary focus of revenue generations all these years, of late many of the tool manufacturers are realizing the need to address after sales.

The companies are realizing a need for a 360 degree view on tools utilization, tools movement, availability, maintenance, component life cycle, service history, segment realization, performance across different markets and performance across different applications. Even the end users of tools are realizing the need to manage their tools operations from cost and utilization perspective.

Some of Major Challenges faced are:

A tool manufacturer or an end user like an OEM need real time data of Distribution channel visibility, Tools uptime, Challenges of end users, Warranty Management, Support, Training and Replacement economics.

An OEM may require additional information on,

  1. Warranty & life time service offerings
  2. Job site solution
  3. Online repair submit
  4. Do it yourself (DIY) projects
  5. Online service status tracking
  6. Online parts ordering and stock availability

How System / Process can help to overcome these challenges?

How Power Tool Manufacturer can raise $$$....

  • Resource scheduling feature along with personalized calendar
  • Centralized customer center to all types of communication
  • Visibility of inventory across different locations and distribution channel
  • Population visibility across different locations, applications used and segmentation
  • Utilization visibility with regular updates which enables for consumables
  • Planning based on life of power tool, application where it was used along with life cycle of component
  • Import or exporting possible with different costing features along with configurable tax structure
  • Track warranty and renewals
  • Option to have AMC with different verticals
  • Alerts on preventive, calibration and other types of services based on type of power tools.
  • Complete history of service done, parts replaced, complained faced along with first hit rate, repeat complaints, component failure rate etc.
  • Judge warranty based on warranty terms
  • Track service history
  • Publish and control on recalls
  • Online access to parts catalogues and parts ordering
  • Inventory Management
  • Knowledgebase
  • Track response and resolution time
  • Service schedule planning
  • Parts availability to user

Implementing centralized system with features like, Complete Inventory visibility, Logistics features, Import/export, Warranty, AMC, Ticketing system, Resource visibility, Population visibility, History, Planning & forecasting-etc. and along with KM system will have major impact on process and revenue improvement.

For more information email us @ Sales@questinformatics.com , also please visit www.questinformatics.com