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.

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.

Relooking at Remanufacturing (REMAN)

$ 100 Billion strong Remanufacturing (REMAN) industry is not new to the World. It’s been active since Second World War, when only Army equipments were remanufactured. But, it’s potential has been realized in the past decade, as WCMs (World Class Manufacturers) started focusing on Remanufacturing as profits from their new product sales started shrinking.

Many WCMs are already yielding good profits from Remanufacturing. For example, in 2013, Cummins, a global leader in engines and related technologies, had 3,000 employees working from nine global facilities, contributing $1 billion to total sales of $17.3 billion. Automotive giant Renault has also expressed its growing faith in remanufacturing, as has Caterpillar & GE, to name a few.

REMAN

WCMs (World Class Manufacturers) are adopting Remanufacturing, because of following business benefits:

  1. Increases the life of materials & profitability
  2. WCMs will be able to offer quality products at lesser price, which also boosts profitability
  3. Reduces dependency on raw materials, whose prices are always volatile
  4. Supports the WCMs in meeting Environmental norms by reducing the use raw materials & lessens pollution by not discarding end-of-life products
  5. Helps WCMs in meeting the “Extended Producer Responsibility (EPR)” regulations

When trying to realize the above benefits, the WCMs are faced with many operational challenges, which are,

  1. Material Management and Operations Synchronization:
    1. Complicated inventory management
    2. Unable to source supply to meet demand
    3. Uncertainties in core quality, sourcing market, product life and technology changes
  2. Production Estimation and Remanufacturing Operations:
    1. Complex Reman cost Estimation, Planning and taxation
    2. Complex documentation and low automation
    3. Managing additional activities like inspection, dismantling and cleaning
  3. Non-synchronized interaction between procurement and redistribution entities
  4. Difficulty in generating customized reports on ad hoc basis

Without addressing the above challenges, it is difficult to realize the benefits of Remanufacturing. Companies that successfully implement re-manufacturing strategy will be the ones who sustain growth and success in the future.

Aftermarket service maturity: assess where does your company stands

Aftermarket service maturity: assess where does your company stands

In this paper published in “Indian management”, Dr TR Madan Mohan, Rudresh Basavarajappa and R Ganapathy describe stages of aftermarket maturity and how to traverse from initial stages to more evolved stages. The maturity model is a useful framework for all OEMs and their dealers across industries such as heavy equipment, automotive, construction, medical, industrial equipment and agricultural products industries where post-sale support exists.