Transforming Parts Operation to a Resilient Aftermarket

The ultimate goal of servitization is to shift from selling space parts to selling services. All of the innovations and changes need to support this journey. Gjergj Guri shared with us how you can build your entire operation to support this shift. 

Understanding the Service Evolution 

Over the last several years, customers’ expectations have shifted significantly. There are four distinct stages of servitization, and the market is fast approaching the final stage. 

• Stage One: Reactive – Fix products when they break. The goal is to optimize inventory costs
• Stage Two: Preventive – Perform consistent maintenance to minimize break-downs and maintenance costs
• Stage Three: Proactive – Support customers before potential break-downs. The company is focused on minimizing contractural costs 
• Stage Four: Predictive – Exercise full control over the machines to ensure continuous uptime 

Throughout this evolution, there has been a less obvious shift. When you sell spare parts, the risk stays with the customer. However, once you advance to selling uptime,  the risk is placed on your shoulders as the manufacturer. 

This risk only grows when you have spare parts at every stage of evolution. Some of the sunk cost will be in labour, yes, but a lot of it will depend on managing your spare parts in a way that aligns with your service offerings.

To deliver the promised uptime, your company must have a strategy in place for 

• Inventory Management – Getting the right parts to the right place for optimal uptime 
• Spare Parts Planning – Understanding what parts will be required during the contract and having them on hand
• Service Footprint – Having a network of service centers that can quickly respond to service calls
• Optimization –  Lowering the cost per hour of work to maximize revenue

With so much to keep track of, servitization becomes a risky and intensive proposition for manufacturers. However, with enough planning and foresight, you can minimize this risk. 

Enabling a Robust Service Catalogue

A mature servitization operation will include several categories of services. Each of these supports the evolution towards predictive maintenance in its own way. 

• B2B(2C) Services – This is where a lot of the digitization lives in your service catalogue. It is about managing both your traditional and digital offerings and finding ways for them to connect
• Service Operations – The logistics behind servitization, including inventory planning, warehouse management, and more 

To successfully establish these areas of your service catalogue, you must enhance both your organization and digital tools.  

Organisation excellence requires a full understanding and optimization of your

• Operating Model 
• Processes
• Customer Care Center
• Partner Ecosystem 
• Performance Management 

The digital side requires you to have implemented 

• Services Software
• A Data and Analytics Platform
• IoT
• Data Governance 
• Cyber Security 

When you focus on getting robust and clean data on your process and inventory, you can use it to make strong decisions and even implement AI in the future. 

Areas for Improvement in Parts Operations 

To create a parts strategy that helps move your servitization from phase to phase, there are three major issues you need to address. Once your team has a handle on these elements, you will be able to fully support the service part of servitization. 

Supply 

Every manufacturer in the world has dealt with supply chain issues over the last several years. To continuously provide the services and uptime that are being promised, the supply chain must be tamed. 

It’s imperative that your team focus on mastering high availability and quick deliveries. There are several ways to do this, but Guri recommended taking a look at your logistics footprint.

How interconnected are your warehouses? How quickly can you get a spare part from one location to another? 

Take some time to consider your most critical repairs. In an emergency, what needs to be where? Reverse engineer the perfect logistical plan to ensure you can solve a crisis as quickly as possible. 

Offering 

With information often ending up siloed, it can take time to find the right parts when customers need them. Most aftermarket departments are dealing with limited resources, which can reduce the parts that you’re able to offer. This issue will only get more complex as products shift away from petrol to battery power. 

Service Footprint

A large product catalogue is great for customers and sales, but it can be a headache for aftermarket. Ensuring that there are service technicians who are fully trained on every piece of equipment available to every customer at all times is a logistical nightmare. This doesn’t stop customers from expecting it. 

One way to place a service workshop next door to every customer is to work alongside service partners. By sharing the load, you can have an expert on call whenever needed.

Elements of Commercial Excellence 

The final ingredient for the evolution of servitization is consistent commercial excellence. By taking these steps, your team can get everyone on board with the changes and prepare for full predictive maintenance. 

Install Base

Keep track of what each client has installed. By cross-referencing this data with historical service sheets, you’ll start to see patterns. This will allow you to predict the amount of service they’ll require, and plan ahead.

When you have an understanding of the patterns in the past, you can give your service partners an idea of which customers will require their attention and when.   

Service Offerings and Sales Force

When you’ve worked with a client for years and only offered traditional sales contracts for repair work, you need to plan to get them invested in something new. Coming to negotiations with results and proven success is a great way to move existing clients from one phase of servitization to the next. 

Internally, convincing your salesforce to sell servitization takes two paths. The first is incentivization, where you offer a reward for every service package sold. The second focuses on ease of use. 

If a sales representative can quote and sell a service contract in a few clicks, they are far more likely to do so. By investing in digitalization, you can encourage this upselling. 

Customer Experience

It takes maybe six months to sell a machine, but your clients will use it for upwards of 10 years. You need to ensure their satisfaction with your product long-term. 

Keep in touch regularly with your clients to check on their satisfaction with your machine and service. If you have a service contract, make sure they are utilizing all aspects of it. 

Gather feedback and continuously improve your services based on client needs. This will not only improve their experience but also strengthen your relationship with them and potentially lead to upselling opportunities.  

Conclusion 

While spare parts are a major element of aftermarket sales, don’t get caught focusing all your energy on parts management. If you plan and keep an eye on servitization and commercial excellence, you can expand your spare parts logistics while supporting servitization in the long run.