February 27, 2018
By Deepak Saxena, head of global solutions, Manufacturing SBU, Virtusa
As Industry 4.0 continues to generate huge waves of excitement in the tech world, both the cyber and physical are coalescing in a manner that can help create unprecedented value for both manufacturers and consumers. However, a tech-only view hides the broader changes happening in the manufacturing world that have the potential to fundamentally alter the paradigm of the industry as well as create completely new markets and product possibilities.
A huge level of transformation is currently underway in the manufacturing industry, especially when it comes tomaterial science, Internet of Things (IoT), social platforms, analytics, artificial intelligence (AI), machine learning and, most importantly, the core manufacturing process as a whole. This transformation affects all areas of the manufacturing industry in many fundamental ways and will redefine business models and markets as a result.
Some of the most fundamental changes are taking place in the aftermarket sector as organizations realize that drastic improvement in customer experience through better service is possible. This in turn sparks brand loyalty that generates service revenue (which is highly profitable), repeat sales and cross sells with a much lower cost of sales, and additional competitive sales through the word of mouth of a satisfied customer.
The “Aftermarket” Marketplace
The after sales service market has always been a high-margin business for manufacturing companies. The market however has been quite fragmented traditionally and varies by segments. This precluded building best practices and reference business models which could help organizations to integrate the value chains into one holistic business.
When looked at from three broad segments, needs can be encapsulated as:
- Automotive OEMs: Link channels, use existing systems/data, warranty processes in sync with business needs and easy claims to achieve fast, efficient claims management and reduced warranty costs
- Industrial manufacturers: Plan, monitor, schedule, dispatch and route field service technicians and vehicles to fulfill service agreements and increase customer satisfaction
- Aerospace manufacturers: Plan recall process in a way that ensures customer satisfaction and tracks and manages each recall case while minimizing cost and reducing risk
The rapid pace of technology development, shortened lead times for product introductions and revisions and a vast improvement in the capability of ICT has now opened the doors for massive changes in how this sector is organized and does business.
Business challenges can thus be summed up as follows:
- Proactively monitor equipment warranties, maintenance agreements and SLAs
- Create and manage service contracts with related billing plans, price agreements and conditions
- Manage service and support requests and identify customers with their respective installed base
- Weak claims administration process and lack of visibility in warranty information
The above listed challenges are an integral part of the CIO agenda, which hinders manufacturers from being leaders in their industries. Therefore, the leading solutions specific to the aftermarket services segment in manufacturing include:
- Connected supply chain: Devices like RFID and IoT devices and technologies like cloud and edge computing enabled by large API libraries for interconnects are providing an entirely new capability to supply chains. The supply chains are now completely connected, which allows them to be much more agile and responsive. Managers have now much more real-time visibility into events taking place across the supply chains. Blockchain-based transactions allow multi-party transactions to be completely transparent and real time.
- Prescriptive maintenance: The process which starts with an equipment breakdown at a customer’s premises and its eventual resolution, traditionally, has been highly inefficient, time consuming and requires manual interventions and many follow ups. The ability of various organizations to provide a distinctive customer service is what differentiates them from their competition.
- Machine learning-based inventory optimization: Managing the spares inventory has always been a challenge for service managers. The inventory is distributed over many stores and substores with usage depending on service requests that arise from time to time. The replenishment is done based on a planner’s understanding of the locations’ inventory requirements. The cases of outages, as well as non-moving stocks, both occur in this scenario.
Manufacturers, whether they be automotive OEMs, industrial manufacturers or aerospace manufacturers, need to have a 360-degree view of all operations. Having the right emphasis on the outbound (aftermarket services) and incorporating it in a digital plan helps to not only build customer loyalty but also accelerate business outcomes.
About the Author:
Deepak Saxena heads Global Solutions for Virtusa’s Strategic Business Unit, which comprises industry verticals like manufacturing and distribution, travel, transportation and logistics. Deepak has over 20 years of experience in the industry. He previously served with Polaris Consulting and Services Ltd. Prior to this, he was with Tata Consultancy, focusing on ERP services. Deepak has a Master’s degree in thermal engineering.