The Uptime Blog
As many know, PTC acquired Enigma in July of this year, expanding its level and depth of Service Lifecycle Management offerings. PTC is a leading provider of technology solutions that transforms how products are created and serviced.
Since the announcement, we’re pleased to say that the entire integration process has been unfolding smoothly, with PTC and Enigma staff continuing to focus on the continuity of service and ongoing support of Enigma’s loyal customer base. We’ve gotten favorable customer feedback so far and are working hard to make the remainder of the transition just as seamless.
Rest assured though, that although offices have moved, we can still be contacted for customer support or product information.
Customer support remains the same. Just as it has operated in the past, the Enigma customer support portal is still available for customers to submit, view, edit and resolve technical service requests online.
Our Corporate Headquarters is now PTC
Our Burlington, MA USA headquarters has been relocated to the PTC Corporate Campus in Needham, MA. All calls are now being routed through that office. If you have administrative questions or would like to speak to someone in sales or marketing, please contact 781-370-5000 to be directed to the appropriate person.
Enigma (now a part of PTC) is gearing up for the 2013 Airline & Aerospace MRO & Operations IT Conference - APAC. The conference is slated for October 16th and 17th and will be held at the Amari Watergate Hotel, Bangkok, Thailand. It’s the world's leading aviation IT conference/exhibition for MRO and Flight Operations software solutions and one that Enigma has attended for many years. It is hosted by Aviation Maintenance Magazine, touted as the most cost effective, independent, commercial aircraft research tool on the web today.
The two day event includes presentations, case studies and interactive workshops led by industry experts as well as airline and MRO IT users who contribute first-hand insight and expertise. It is the ideal place to learn about new topics and discover the latest trends in aviation and aerospace maintenance repair and overhaul.
Enigma/PTC staff will be on hand to share some exciting information. First is the announcement that Enigma has been acquired by PTC and what that means in terms of being able to provide a broader based MRO solution. With Enigma now an active part of the PTC Service Lifecycle Management group, we’re able to add agility in sensing and responding to service parts demand on a global scale. Tools like service resource forecasting, planning, sourcing, and provisioning truly complement Enigma’s existing InService MRO. That, combined with service network planning, and a global sense and respond capability make our robust system even more powerful.
We’ll also be there to share information about our InService MRO software, with our InService Job Card Generator and InService Revision Manager with airlines, aircraft operators and MRO providers. Find us at booth E36.
In July of this year, Enigma shared some exciting news that we had made a strategic decision to join PTC (NASDAQ: PMTC), a leading provider of technology solutions that transforms how products are created and serviced.
As you might expect, we’re starting to make some changes as we become part of the PTC family. But, during the integration, we want to be sure we keep our customers, partners, and other connections informed on the topics and issues that are important.
Contacting Enigma Corporate Headquarters
You may have noticed some changes to the Enigma website. Most notably, Our Burlington, MA USA headquarters has been relocated to the PTC Corporate Campus in Needham, MA. All calls are now being routed through that office. If you have administrative questions or would like to speak to someone in sales or marketing, please contact 781-370-5000 to be directed to the appropriate person.
140 Kendrick Street
Needham, MA 02494
Contacting Enigma Support
Customer support remains the same. Just as it has operated in the past, the Enigma customer support portal is still available for customers to submit, view, edit and resolve technical service requests online. Please click on the link to access the portal and sign in to access.
We will continue to keep you informed of our integration efforts and hope you’ll be as pleased as we are with the results. We believe Enigma customers will benefit from the combined resources of Enigma and PTC – two global organizations with the common goal of delivering more value across the full service lifecycle of complex equipment.
Tags: parts and service, service information, InService EPC, Enigma, diane vautier, construction, equipment, construction equipment, fleet maintenance, PTC, service lifecycle management, SLM
Everything is up when it comes to Construction Equipment today. Take a look.
Construction is up. After taking a sharp fall in late 2007, tumbling for three years and finally bottoming out in the beginning of 2011, construction spending is showing a solid upward trend. In July of 2013 the U.S. Census Bureau reported construction spending topped $900,824 million dollars – not equal to pre-recession spending levels, but solid and steady recovery that is helping rebuild the industry.
Construction employment is up. According to the U.S. Bureau of Labor Statistics, “[E]employment in construction is expected to rise 33 percent by 2020, adding about 1.8 million jobs”. Much like construction spending mentioned above, the growth won’t bring employment in the industry back to prerecession levels by 2020, but the rapid growth is helping the industry regain its footing after the sharp and damaging decline.
Construction equipment is up. Research and Markets, in their “Heavy Construction Equipment Market - Global Trends & Forecast To 2018” report that “[T]the heavy construction equipment market is estimated to witness 8.5% CAGR within the forecast period for infrastructure development purposes. The BRIC countries and emerging economies of Asia-pacific including South Korea, and Australia are leading the growth for this market.” Confidence in the upward construction spend is picking up and companies are investing in equipment to meet their upcoming contracts.
Construction Equipment Leasing is up. According to the online construction publication ForConstructionPros.com, the equipment leasing industry continues in an upward trend. They report that “[T] the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $725 billion equipment finance sector, showed the overall new business volume for June was $8.6 billion, up 8 percent compared to volume in June 2012. Month-over-month, new business volume was up 15 percent from May. Year to date, cumulative new business volume increased 10 percent compared to 2012”. Funding for equipment is loosening up, making more options available for contractors to expand fleets.
Construction equipment rentals are up. Construction News Tracker reports that “[T]the latest forecast from the American Rental Association Market Monitor shows the equipment rental business continues to outpace the U.S. GDP by four times. Construction rental and consumer spending are driving the market with construction equipment rental forecast to grow over 8 percent this year and more in 2014.” Wells Fargo Equipment Finance, in their 2013 Construction Industry Forecast says that more than half (50.5%) of equipment distributors expect to increase the size of their rental fleet in 2013.
Increasingly contractors are including rental options to supplement their in-house fleets. They are tapping into a new service paradigm, paying for the equipment only when they need it, and allowing the rental house to take on the responsibility to maintain, service and repair the machines. In essence, they are paying for performance (hours used) and not the equipment itself.
Construction Equipment Rental Rates are up. The increase in rental demand is allowing construction equipment companies to increase rental rates. Rental Equipment Register reported that equipment rental rates increased 7 percent in December 2012 compared to December 2011. Rental Equipment Register also reports that in March of 2013, rental rates rose 6.2 percent compared to the same month last year for the rental companies participating in Rouse’s Rental Metrics Benchmark Service.
Construction Equipment Fleet Age is up. Engineering News Record reports that “[M]meanwhile, as rental rates have increased, the age of rental machines has, too. Rental fleets weathered the worst parts of the 2009-10 downturn by letting their machines get older, and fleets reached their high point at about 54 months”. The Rental Report, a monthly state-of-the-rental-industry newsletter by Rouse Services, tracks the age of the construction equipment fleet. In their most recent August 2013 Rental Report the average rental fleet age has come down to about 45 months – considerably less than at the peak of the economic downturn, yet still far above the average of around 36 months that was common a decade earlier.
Even contractors who own their own equipment are extending the life of their company fleets to accommodate tight equipment budgets. Associated General Contractors’ Constructor Magazine cites EquipmentWatch data that shows the average age of resold equipment is between four and eight years, with most equipment sold after five to seven years of use, outlasting the rental fleets considerably.
Construction Equipment Service and Parts Opportunity are up. What does it all mean in terms of equipment parts and service? Opportunity. With construction and construction equipment trends pointing toward growth, equipment OEMs, distributors and rental companies should be gearing up to support a growing global equipment fleet with warranty work, parts sales and performance contracts. Older equipment still in service will need ongoing maintenance, repair and service support, and will be looking for extended warranty contracts or cost plus service agreements. Good fleet managers know that there is money to be made in the operational details of equipment ‘uptime’.
Savvy equipment OEMs and service providers are aligning their service organizations for growth, formulating a consolidated service approach to streamline and optimize aftermarket service and parts operations. This service lifecycle management approach outperforms service teams managed functionally that address individual service processes separately. It brings all functions together – considering all aspects of aftermarket service, service parts, warranty and maintenance to realize true cross-functional benefits. A single system for service optimizes product and service performance, organizing service strategy and delivery around maximizing product performance to yield the greatest customer value and service performance.
Biomedical equipment technicians (BMETs) are important to today’s medical equipment uptime. They are the men and women who are relied on to keep all sorts of expensive, highly specialized, highly sensitive complex equipment maintained, properly configured and safely functional.
But the medical equipment and devices industry is in a flux with technological, political, and economic forces exerting pressure on every aspect of its existence. Will these forces prove too powerful? Will the biomedical equipment technician survive or become extinct in a world of mobile medical apps, self-diagnostic equipment monitoring and connected networking?
The Mobile Medical App explosion
The rise in mobile medical application development has experienced meteoric growth. According to the medical markets research firm Kalorama Information, “T [t]he market for healthcare-related software apps for use in mobile devices has grown and will continue to grow quickly.”
How quickly? They report that the market for mobile medical apps was worth about $150 million following a 100 percent annual growth rate between 2009 and 2010, and an almost 80 percent growth between 2020 and 2011. They go on to say that the expected 25 percent annual growth from 2012 to 2106. Although slower from the initial surge, it is still considered solid growth, competing with other large and popular app categories such as gaming, entertainment, social networking, and navigation.
Doctors prescribe iPads for digital connectivity
The influx of portable technology in hospitals has hit a tipping point. MobiHealthNews reports that in a 2012 ON24 and MedData Group survey, 45 percent of doctors reported that they now have and use iPads at work. Another 29% said they planned on purchasing an iPad within the next 6 months. Physicians use their mobile devices to check drug prescribing and safety information, review medical research findings, and share medical images with colleagues.
Personal and pocketsize medical devices
While physicians are using Medical Apps designed for them specifically, patients too are using apps on their mobile devices to better manage their own individual health care. Personal medical apps are helping patients improve healthcare recordkeeping, better track their health indicators and be more informed on health and lifestyle options and choices.
The increasing comfort level of physicians and patients with mobile devices and health related apps has led to their increased use. Activities formerly associated with an office visit check-up are being replaced with at home monitoring and a more collaborative relationship between doctor and patient. Patients are using their mobile devices as pocket size medical devices – medical devices that never need a BMET to keep them serviced and working.
The good news for BMETs
Despite the personalization and shrinking size of medical devices, there is good news for BMETs. Technology in healthcare is adding new devices every day that have not yet found their way to an iPad or iPhone screen.
Additionally, access to healthcare and medical devices is more globally obtainable now than ever before, allowing more countries world-wide to take advantage of the diagnostic tools previously unavailable to them. Market researcher Lucintel reports that “T[t]he global medical device industry has experienced significant growth over the last five years and is expected to continue, reaching approximately US $302 billion in 2017 with a CAGR of 6.1%during next six years (2011-2017).
Employment estimates support the optimistic future of the BMET. United States Department of Labor, Bureau of Labor Statistics projects that “[e]mployment of medical equipment repairers is expected to grow 31 percent from 2010 to 2020, much faster than the average for all occupations.”
The bad news for BMETs
The bad news is that the life of a BMET, as he/she knows it, is unlikely to stay the same. The medical device industry is undergoing rapid change with frequent mergers and acquisitions that are wholly reshaping the landscape. Changing and tightening regulatory controls as well as financial pressures associated with the Medical Device Tax are exerting influential forces leading to increased competition.
Fierce competition will incent corporations to look for innovative tactics that make marked, leap-frog advancements rather than incremental gains against their competitors. The service sector offers just such opportunity. Just as product lifecycle management (PLM) and enterprise resource planning (ERP) helped launch manufacturers ahead of competition in the past, service lifecycle management (SLM) presents a similar potential for paradigm shifting change today.
BMETs and their namesake equivalent Biomedical Equipment/Engineering Specialist (BES or BMES) are employed by three main medical equipment service providers:
• Original equipment manufacturers
• Clinical Engineering (typically in-house hospital departments)
• Third-party service providers
As these three entities volley for position and service revenue, BMETs may find it beneficial to realign themselves with the most forward thinking party that is redefining the service experience. BMETs not focused on the end service game may be left behind.
Every year Polk Automotive analyzes the trends in U.S. car and light truck registrations to gauge the age of vehicles on the roads. This year, like every year since 2002, they reported that the average age of all light vehicles on the road has risen. Today, the average age of America’s auto fleet is an impressive 11.4 years of age, up from 11.2 last year.
This is great news for the automotive aftermarket whose livelihood relies on the sale of replacement parts and service repair. Older cars mean more work and more profits. But while it is certainly notable that the age continues to climb and drivers are keeping their cars and light trucks longer, we wondered what other telling trends were behind the numbers. We learned a few interesting facts.
Baby Boomers are Still Setting Trends
According to a study by the University of Michigan’s Transportation Research Institute, Baby Boomers may be aging along with their cars. As a group, they still drive significant changes in all sorts of demographics, including vehicle purchases.
The study reports that older drivers are more likely to buy new vehicles. Even though auto dealers continue to court the Gen X, Gen Y and Millennial market, it’s the graying baby boomers that have the desire and means to purchase new vehicles. It turns out that nostalgia for the era of the car is a powerful influence.
What about younger drivers? In another study University of Michigan researchers found that younger individuals – those same Millenials that auto makers are targeting for advertising, actually purchase fewer new vehicles than expected. They found that a higher proportion of internet users (the digital natives) were associated with a lower licensure rate. Fewer younger registered drivers mean less reason to purchase.
Are Auto Makers Making Better Cars?
In an age of disposable everything, it looks like automobile manufacturers may be doing the unthinkable – making better, longer-lasting cars.
M. Simon, technical contributor for Manufacturing.net contents that “Engineers Killed Detroit”.
“Cars that are engineered to last longer require that you buy fewer of them in a lifetime. Remember when a car that ran for 100,000 miles was a good car? I do. Now a 200,000 mile or 250,000 mile life is considered a good car. Engineers (aided by competition) did that. And not just American engineers. Engineers all over the world.”
John Tammy at Forbes suggests that “The Unions Didn't Bankrupt Detroit, But Great American Cars Did”. He suggests that today all cars are engineered well. They are built to last. They are reliable, affordable and don’t break down that often like they did in the 1970’s era. Tammy says “In short, cars are simple, prosaic, and easy in a modern sense to manufacture well”. If you believe his position, reliable automobiles have become a commodity, contributing to the longer life of cars and trucks.
Aftermarket Vendors Vying for Parts and Service Business
No matter what the reason for the continued aging of American’s vehicles, one thing is certain. Automotive aftermarket vendors should be prepared to capitalize on the revenue opportunity that is presently available, even though there will be competition from other providers and strong economic obstacles.
Ratchet and Wrench reports that the auto service industry is actually experiencing a downward revenue trend. “In the last five years, overall industry revenue has declined at an annual rate of 2 percent to $30.3 billion. This decline was largely due to declines in the overall economy, which caused a decline in disposable income and corporate profit, effectively stifling the use of vehicles and the need to repair them”.
With tight competition, savvy aftermarket parts and service providers eager to tap into potential revenue streams are searching for the best path to take and have discovered that service operations hold the best opportunities. In Aberdeen’s recent State of Service Management: Outlook for 2013 report, sampled organizations stated that on average service margins were 10.7% higher than those from products.
Where the Opportunity Lives
As product profit margins shrink and service profit margins grow, more companies are placing higher value on the service model and transforming their service centers into profit centers. PTC’s Service Lifecycle Management approach is leading the adoption of service related attitudes with products like Enigma’s InService EPC which helps execute those service management strategies that lead to profitability.
Aftermarket parts and service providers not focusing on service profitability run the risk of being left behind. As Ali Pinder, Research Analyst for Aberdeen Groups says in a recent blog post “This ability for service operations to produce profitable growth has raised the importance of service in the eyes of the executive team, from a cost containment tool to a growth engine for many businesses”.
We have some exciting news to share. Enigma has made a strategic decision to join PTC (NASDAQ: PMTC) in order to provide our customers with a single source of service support. PTC is a leading provider of technology solutions that transforms how products are created and serviced.
For years Enigma has supported the service efforts of our maintenance and manufacturing customers with a best-in-class parts and service information delivery system. Our InService MRO (maintenance, repair and overhaul) software supports the maintenance, repair and overhaul of capital equipment such as aircraft, locomotives and other complex assets. Our InService EPC (electronic parts catalog) software is a superior web-native application that enables OEMs to easily publish and distribute accurate, updated parts and service information for their field service teams and dealer/distributor networks.
We’ve built quite an impressive list of national and international customers – Ford, FedEx, American Eagle (a network of American Airlines), Korean Air, Rolls-Royce Defence, Bobcat, DitchWitch, Dallas Area Rapid Transit (DART), and the U.S. Army and U.S. Navy to name just a few. For all our customers, Enigma has become an integral component of their core service operations.
Our decision to join PTC was driven by a desire to provide our customers with a more complete system for managing their products and aftermarket service efforts from start to finish. Enigma will become a vital part of PTC’s existing service lifecycle management (SLM) solution to thoroughly address the organizational, operational, and technological change which companies must tackle to emerge as competitive service-driven enterprises in the global marketplace.
Existing Enigma customers will benefit from the combined resources of Enigma and PTC – two global organizations with the common goal of delivering more value across the full service lifecycle of complex equipment. New customers will get a more complete solution to their product and service lifecycle by combining InService MRO and InService EPC with existing PTC SLM offerings. Distributed manufacturing industries worldwide gain a striking competitive advantage to keep them ahead of competitors with technologies that span the planning, delivery and analysis of service operations.
As we integrate into the PTC business structure and blend our parts and service software solutions into the more comprehensive offerings of PTC, we’ll continue to communicate with customers and partners. Customers can still contact technical support through the Enigma Support Portal, where you’ll reach the same trusted technical team that you already know, have built a rapport with, and have come to rely on. And of course, you can contact your Enigma representative, who is available to answer any questions you may have.
We’re excited to be joining PTC and hope you share in our enthusiasm. We’re looking forward to being part of a larger team of global leaders in the service lifecycle management space in which parts, service and aftermarket support of complex equipment thrives.
The 4th Asia Pacific Airline & Aerospace MRO & Operations IT Conference, organized by Aircraft Commerce, took place in Bangkok, Thailand this week.
Attending the conference were mid-to high-level managers from airlines and MROs in Asia with about 30 solution vendors vying for their attention (and future IT budgets). Conspicuous in their absence were delegates from the largest airlines in the continent – the Chinese – but this did not seem to impact the lively atmosphere in both the conference rooms and the exhibition space.
The mobility “buzz” dominated the conference proceedings, with EFBs (Electronic Flight Bags) leading the pack. I counted no less than six presentations with the words “EFB” or “iPad” appearing in the speaker summary notes. The proponents of mobile solutions also made sure they were creating a parallel “buzz” on the LinkedIn group “Aviation Service Lifecycle Management” by commenting to each other about the greatness of mobility in the cockpit. Given all this background noise, a visitor from Mars sitting in the conference ballroom would surely have reached the conclusion that the aviation industry is obsessed with one topic only: how to put iPads in the hands of pilots, and fast.
But if one were to turn from this hypothetical Martian in the conference room to an even more hypothetical fly on the wall in the exhibition room, the conclusion would have been markedly different.
When the managers and executives of the airlines actually sat down for serious discussions with each other and with the IT vendors, the issues that came up were very far from the “sexy” image of pilots in crisp uniforms holding an iPad in one hand and navigating the airplane with the other. The issues discussed were, alas, more mundane and down-to-earth: how to make maintenance mechanics more efficient, how to reduce unnecessary overhead in maintenance operations and how to make the multiple MRO IT systems work together in an integrated environment. As one sober industry executive put it recently: “The iPad is a basic, consumer product with limited built-in connectivity and content upload capability. It was never designed to be used in an aircraft environment and is not manufactured with aircraft-grade components. It is a consumer device, not an aircraft device”.
So it was encouraging to see IT and M&E managers sitting down for serious evaluation of the solutions available on the market. The hard times that have been hitting this industry for the past few years have helped introduce some rationalization in the airlines’ approach to MRO IT solutions. We no longer see extreme approaches to IT projects, with some airlines embarking on ambitious, all-encompassing, paradigm-shifting, multi-million dollar projects, with other airlines sitting on the sidelines and doing nothing for fear of change. It seems the approach today is more focused on achieving tangible results for a reasonable investment.
A welcome new vendor on the exhibition floor this year was Enigma’s partner, Oracle, offering their cMRO solution. Mr. Sook Hyun Cho, leader of the MRO ERP project at Korean Air gave a keynote case study presentation of the implementation of cMRO and Enigma’s InService MRO at the airline’s M&E organization, a project that went live almost two years ago. Mr. Cho highlighted the tight integration between the Oracle and Enigma systems, enabling KAL engineers to generate thousands of job cards daily. He stated KAL has met its project goals and can already boast efficiency improvements in MRO operations.
Kudos to Aircraft Commerce for organizing another successful Asia Pacific event.
Tags: Electronic parts catalogs, Bobcat, Dallas Area Rapid Transit, InService EPC, Enigma, dvautier, diane vautier, manufacturing, missing middle, OEM, midsize manufacturing, Ditch Witch, Toshiba America Medical Systems
If you’re a manufacturing company with over 500 employees, you’re not the middle. If you’re a single man shop with local customers only, you’re probably not the middle either. But if you’re somewhere in between, then you’re one of many that makeup the supply chain backbone that feeds the large OEMs. Collectively you represent more than twice the global employment of big name manufacturers. This bulging mid-section of the manufacturing world is what has been dubbed the missing middle.
“Being in the middle”, as the phrase suggests, comes with its own set of unique challenges and pressures. There is a gap between what is expected from this group of manufacturers and what they’re capable of delivering. They’ve become overlooked and under-resourced.
The Manufacturing Institute website says, “The United States funds and conducts extensive basic research and possesses the manufacturing base to commercialize products, but lacks the development, engineering, and prototyping assets that enables ideas to move from mind to market.”
Changing R&D Responsibility – pushing innovation downward
Big manufacturers used to lead innovation. They were idea generators, research and developers (R&D) and leaders of change. In the early 1980’s big companies contributed vast amounts to R&D investments. Today, their contribution appears paltry by comparison. “In the past 30 years, R&D investment in the larger companies has plummeted — from 72 percent of total in 1981 to 40 percent in 2007” cites Jon Riley & Matt Sakey of National Center for Manufacturing Sciences (NCMS) in a joint report by Digital Manufacturing Report and NCMS.
So where did innovation go? The middle.
More and more mid-size manufacturers have taken on the responsibility that big OEMs used to own. “Developmentally, 60 percent of R&D investment comes from the missing middle — up more than 40 percent since 1983” say Riley and Sakey. That’s a huge shift of time, resources and investment, and one that only the most fiscally sound manufacturers are poised to support. As many mid-size manufacturers are struggling with their new ‘innovation’ job description, they’re still contending with other more day-to-day economic pressures in order to survive.
Economic Challenges – first to get hit, last to recover
The missing middle of manufacturing is getting uncomfortably squeezed from all sides. Over and above shifting innovation responsibilities, a faltering economy has added even more pressure.
“Small to midsize manufacturers are often hurt early during economic downturn because they tend to have limited resilience: limited cash reserves and access to credit, few customers, and limited product portfolios and inventory. For the same reasons, small to midsize manufacturers also take longer to recover” says Joe Barkai, Analyst and Practice Director for Product Lifecycle Strategies for IDC Manufacturing Insights.
Is Technology the Answer?
Technology shines like a bright spot in a dismal sky. It can help midsize manufacturers find sure footing in an otherwise rocky middle landscape. NCMS’s Riley and Sakey believe that digital manufacturing – a computer based system of integrated manufacturing, modeling & simulation is the path to success. “Those companies that do not leverage this technology [digital manufacturing] will take longer to design more at greater cost and with less guarantee of success.” From Enigma’s perspective, we agree but on a much broader scale. Any integration of technology that improves an OEM’s manufacture, service and support leads to healthy competitive advantage.
As a software developer of an electronic parts catalog (EPC), Enigma has seen the impact first-hand, of technology on our own ‘middle’ OEM customers. As the demands of midsize manufacturing become more stringent, the power of software to maximize operational efficiency as well as aftermarket parts, service and repair becomes a fundamental imperative. InService EPC is a textbook case of how midsize OEMs can leverage their existing product, parts and service information to improve aftermarket efficiency and profits.
Enigma InService EPC has proven itself across industries. We’ve helped construction equipment manufacturers like DitchWitch and Bobcat as well as medical equipment manufacturers Toshiba America Medical Systems and public transportation like Dallas Area Rapid Transit (DART) leverage their parts and service content and integrate with in-house business systems to reduce cost and improve customer support.
We believe InService EPC is the best first step for the “missing middle” to apply technology because it uses information that already exists to enhance the most profitable part of a company’s business—the aftermarket. By extracting new value from existing resources, the missing middle will make room for more innovation and accelerate response to ongoing customer demands.
Previous posts have highlighted the fact that autos are aging and that there is stiff competition to properly maintain those senior citizen vehicles and keep them on the road. But what on earth does that have to do with the Medical Devices Industry? You may be surprised.
How Cars are like CAT Scan Machines
According to a recent press release by Global Industry Analysts, Inc., (GIA) the recessionary forces that have extended road life for automotive vehicles are exerting the same kind of pressure on the healthcare industry.
“With most medical equipment and systems, in particular medical imaging equipment, being capital intensive investments, tight liquidity, reduced credit availability, capital shortages, and high borrowing rates triggered by the recession forced hospitals and healthcare facilities to reduce capital expenditures on new equipment.”
The GIA report also goes on to say that “… the market witnessed a sudden spurt in demand for the servicing of older equipment.”
That means that hospitals and healthcare organizations are doing exactly what car owners are doing; they’re keeping their car (or in this case medical equipment) longer and relying on service providers to prolong the life of their X-ray, Ultrasound, CAT, MRI, PET Scanners and other medical devices.
Lost and Found Revenue
Because hospitals are fixing rather than buying new medical equipment, manufacturers are losing revenue and are looking for new ways to replace the lost income.
As the Automotive industry has shown, one logical place to find new revenue is in the aftermarket service (and parts) for their cars. Therefore, as medical equipment OEMs look for new business they may find that offering extended service and parts contracts is a good place to start.
But Who Will Get the Service Contracts?
Traditionally, medical equipment OEMs provided 60% of the aftermarket service of their equipment. But lessons from the auto industry’s battle for aftermarket parts and service dollars may provide some insight for ways to improve those numbers.
Regularly automotive OEMs see a sharp decline following the end of the car warranty when customers take their service and repair work to independent repair facilities (IRFs) rather than continue the dealer relationship.
Although medical device OEMs enjoy higher aftermarket service retention rates, they can still expect keen pressure from Independent Service Organizations (ISOs) and in-house Clinical Engineering Departments. ISOs and hospitals are both expanding their service offerings to aggressively bid for some of those maintenance and repair funds.
Consequently, much like the auto OEMs, medical equipment OEMs will have to step up their game and fight harder. In the auto industry OEMs have increased efforts to make it easier for dealers to do business with them and to purchase from them – key elements in dealer loyalty. Dealers in turn, with the help of their OEMs, are working harder to retain the customer’s service business after the warranty ends.
In the medical devices field, similar efforts will most likely be aimed at end users themselves – the hospitals that actually purchased the device – with the hope that better equipment support translates into higher loyalty, which turns into increased parts and service revenue.
A Common Tool
One tool that helps both automotive aftermarket and medical device OEMs nurture their dealer and/or client relationship is an integrated electronics parts catalogs such as Enigma InService EPC. InService EPC helps service technicians (like those of Enigma customer Toshiba America Medical Systems) be more prepared on site with access to all equipment diagnostic information, parts and assembly illustrations, maintenance procedures, parts availability and price, as well as technical instruction, technical service bulletins and even sales brochures. And because the system can be deployed via web to laptops, desktops, mobile devices such as iPads, tablets or even smart phones or traditional paper, it becomes an indispensable tool for field service technicians to have on hand.
So, even though cars don’t exactly look like CAT Scan Machines, we think there is well-founded cause for comparison. Medical device OEMs can learn much from their automotive OEM counterparts.
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