For software vendors like Enigma, doing business in the aviation industry – with OEMs, airlines and MROs – almost always means answering RFPs (Requests for Proposal).

The scenario is a familiar one. Business and IT managers decide it is time to check what is the “latest and greatest” out there. They sit down (or pay a consultant to sit down for them) and fill out dozens of Word pages and Excel spreadsheets specifying all the requirements and features they would like – real and imagined. They send the RFP to several companies, usually a mix of loosely connected software vendors and systems integrators. Even though the process of writing the RFP will take them months to complete, they will invariably ask the RFP recipients to submit their responses within a ridiculously short time frame, say two weeks. The process then typically entails on-site workshops with shortlisted vendors, followed by several months of back-and-forth discussions about requirements, scope, commercials, terms and conditions, etc. A year or so down the road, assuming internal budgets are approved the two exhausted parties – customer and vendor – finally sign a contract and kick off the project. By this time, strong imaginative acumen is necessary if one is to find strong resemblances between the original RFP requirements and the project SOW (Scope of Work) document.

Can things be done differently? This article, recently published in Inc. Magazine, suggests a radical approach for vendors who receive an RFP: just say no. The article lists seven reasons why companies should walk away from RFPs, the more salient ones being:

• Diluted differentiation. Because the RFP goes out to vendors whose solutions and value-adds differ widely from each other, the result is an “apples vs. oranges” comparison that is doomed to fail. By responding to the RFP, vendors are thus agreeing to be judged almost exclusively on price.
• Playing by the customer rules. Yes, the customer is king. But does the king always know best? Most of the requirements and features are, at best, “nice to have” and in many cases totally unnecessary. To get to the short list, vendors answer “yes” to essentially all of the requirements, knowing they will find a way down the road to eliminate or modify them.
• Most RFPs are rigged. This might sound a little harsh, but even if they are not rigged, in many cases a vendor close to the customer lent a “helping hand” in shaping the RFP requirements and conditions to favor its own solution. This requires the other “competitors” to jump through hoops just to qualify through to the next stage.

So what is the alternative to answering the RFP? The article suggests sending a short, polite letter to the customer extolling your solution’s value and proposing a direct discussion. Chances are, concludes the article customers will circle back to you after failing to implement the cheap solution they selected in the RFP process.

Can this approach work in the aviation industry? Can software vendors ignore RFPs from OEMs and airlines, placing their faith solely in the merits of their solutions? A colleague of mine pointed out that this approach is wishful thinking when it comes to the conservative aviation industry. Innovation is slow, regulation is binding and procurement rules mandate the issuance of an RFP. For a vendor to win business in this industry, RFPs are the only way in.

I agree. It is indeed almost impossible to do business in the aviation industry without answering RFPs. But after many years of selling into the aviation industry (and countless hours working on RFP answers), I believe vendors should adopt a more sober approach to RFPs. Gone are the days when customers would issue an RFP for an IT system and expect software vendors to jump to attention and do their bidding, costs be damned. In these harsh economic times, when customers expect heavy discounts and concessions from vendors, the “my way or the highway” approach no longer works. Vendors simply cannot afford it. Too many vendors have been driven out of business because they had no choice but to play by the rules dictated by the RFP processes. No more.

A sober approach to answering RFPs means qualifying directly with the relevant stakeholders if this is a real opportunity or just an exercise in knowledge gathering or idea fishing. It means stating clearly in the RFP answer which requirements are nothing but fantasies that will cost a lot to implement but will deliver precious little benefit. It means scheduling more online demos and conference calls and fewer on-site visits. It means not caving in to terms and conditions that guarantee financial loss in project implementation. And, most importantly, it means knowing when to walk away from an RFP and nurture direct relationships instead, thus foregoing the immediate (and probably imaginary) opportunity for a future (and more real) opportunity.

I know; easier said than done. As writing and receiving RFPs remain an inevitable part of aviation maintenance business, I urge you to download our free RFP sample, here: MRO: Requirements for Maintenance, Repair and Overhaul, to make the task less formidable.

Finally, the automotive industry is on the rebound. Unit sales, exports, and even motor vehicle employment have made significant gains since their landmark free-fall that began in late 2007. The U.S. Department of Commerce, Economics and Statistics Administration reported that “the U.S. motor vehicle industry has made a remarkable comeback after experiencing an incredibly deep decline during the most recent recession.”

The depth of the fall was remarkable. Motor vehicle unit sales, which had been hovering around the 16 million mark from 2006 – 2008, plunged well below 10 million within the span of a year, hitting bottom in the first quarter of 2009. Since then, it has taken three years to climb back to 15 million units per year, a sales level that hasn’t been seen since the second quarter of 2008.  

A Rocky Road
The rocky road to recovery, however, has been filled with pot holes leaving lasting marks on the automotive industry while redefining business relationships, dealer networks, and customer expectations.

Dealer Consolidations – As the number of new car and truck sales dramatically fell throughout the recession, auto dealerships felt the pressure.  Dealers, fighting for more sales from fewer customers experienced savage competition and high promotional discounting, forcing many struggling dealerships to shutter their doors. According to a Wall Street Journal report, auto makers also cut hundreds of dealers during bankruptcy reorganization with Chrysler closing more than 780 and GM closing 1,650 dealerships.

OEM Misalignment – While production was bottoming out, consumer preference of car types was changing. Electric cars, hybrids, and compact vehicles with better gas mileage gained in popularity as drivers struggled to battle rising fuel prices.  OEMs eager to capitalize on the frugality trend were out-positioned by imports that were already well established in the compact, sub-compact and mileage friendly models.

Light at the End of the Tunnel
Despite substantial changes, the automotive industry is seeing the light at the end of the tunnel. According to Edmonds, an online resource for automotive information, in their Auto Industry Trends for 2013 report, “The U.S. auto industry has shown sustained momentum the past few years, making solid progress toward recovery of pre-recession sales levels. Momentum will slow in 2013 but growth will continue.”

Stronger Dealerships – The same Wall Street Journal article confirms the trend toward stronger dealerships saying “wrenching consolidations behind them, surviving new car retailers enjoy higher sales and profits.”  Automotive dealerships and dealer networks are stronger, more profitable with less competition.  The same article reports that “the nation's 17,659 surviving outlets posted dramatic profit gains last year, according to a survey by consultant Urban Science. Its survey shows dealer earnings individually climbed by between 38% and 129% over 2009.”

New Technology and New Models – Automakers, responding to customer preferences, have introduced more new models and redesigns than ever before hoping to recapture lost market share.  On their website, Enigma customer Ford declares, “No One Has More Cars with 40 MPG.”  In a recent blog post, industry analyst Polk, reports that “GM is Relying on New Product Blitz to Halt Share Decline.” They say that “[t]he next 18 months are important for all OEMs, but perhaps more so for GM than for any of its rivals. From mid-2012 through mid-2014, GM will unveil the greatest array of all-new or re-designed vehicles in recent memory, if not in the company's history.”

Potential Potholes
While news about the state of the automotive industry is mostly optimistic, there are still some potential speed bumps on the road to recovery.

Continued OEM/Dealer Tension – Dealer consolidation culled the weaker dealerships from the network leaving stronger dealers less tolerant of strict OEM franchise demands. In a recent Forbes article, “Auto dealers push back on required renovations,” we see that, in particular, dealerships are resisting the edict to undergo costly facility updates citing thin margins and questionable ROI.

Dealers are also grading OEMs more harshly on their relationship skills. According to DealerNews.com’s 2012 OEM Report Card, “The marriage between franchised dealers and their vehicle manufacturers is a bit worse for wear…”.  In particular “…dealers [were] critical of advertising co-op, Service department and merchandising programs, and in some cases OEM rep support”.

OEM Concerns  – Gauging consumer preferences and expectations will continue to be a tricky endeavor. Americans are choosy when it comes to automobiles. Just as economy models are rolling off production lines, consumers are upping the ante and demanding more luxury options in those economy vehicles.

Additionally, the explosion of new models and options combined with new technological complexity of the vehicles themselves may take a toll on aftermarket parts and service profits. Producing, distributing, and maintaining updated service information and parts details will become even more exacting and challenging.

Those with nimble, updateable parts catalogs in place (such as Ford, which uses Enigma InService EPC) may fare better as car and truck redesigns continue to respond to fickle consumer preferences.

The U.S. Department of Commerce, Economics and Statistics Administration reports that “[w]hile both car and light truck sales have risen in the first quarter, car sales grew faster. In fact, sales of new cars made up 53 percent of all motor vehicle sales in the first quarter, the highest share since the third quarter of 2009. Higher gas prices have played a role here, as rising gasoline prices tend to shift sales toward more energy-efficient autos and away from light trucks.” Something that’s encouraging to auto both manufacturers and drivers alike.

Can OEMs can find a way to improve customer satisfaction and brand loyalty through “Right to Repair?

Recently we posted a blog article about the passage of a new law in Massachusetts called “Right to Repair” that promises to improve choice and reduce costs when people get their cars serviced. On several occasions Enigma has written about what we perceive to be the false claims behind Right to Repair (RTR) however, now that RTR has become law it is time to focus on how manufacturers (OEMs) should respond to this new reality. As unpleasant as RTR may seem to OEMs, this law gives them an incredible opportunity to improve customer satisfaction and brand loyalty.

While dealership groups have been vocally opposed to the passage of RTR, the OEMs have kept their concerns more muted. There are two reasons for the OEM’s caution: 1) OEMs would be hard pressed to publicly oppose a bill that promotes consumer rights without alienating their customers; 2) given the potential for bad publicity, OEMs must focus on protecting their own spare part sales rather than protecting the dealer’s service revenue. (OEMs don’t get paid for dealer service, only for parts.) Dealers, on the other hand, raised concerns about independent repair facilities’ (IRF) ability to ensure quality and safety of repairs. The reality is, OEM and dealer concerns that RTR will add cost, complexity and uncertainty to an already fragmented automotive service and support environment have yet to be proven.

Moving forward OEM’s have two primary concerns:  1) protecting their service parts business, including the intellectual property associated with parts, diagnostic tools and service procedures; 2) finding ways to increase revenue and profits for vehicles and service parts. Curiously, these are the same concerns OEMs had before RTR legislation was approved. Both of these challenges become more manageable if OEMs can find a way to improve customer satisfaction and brand loyalty.

Improving customer satisfaction and brand loyalty were the key points of a recent Right to Repair blog post by Enigma and now an IRF is making the same claim for OEMs that cooperate with IRFs (not just dealers). The challenges IRFs face from overly protective OEMs was highlighted in this Accurate Automotive blog post but more importantly was the observation that OEMs like Toyota have significantly improved customer satisfaction and brand loyalty by making it easy for IRFs to get the information needed to fix Toyota’s cars. Accurate Automotive claims that whenever customers feel they can get reasonable service performed quickly, accurately and inexpensively they are happier about their vehicle choice, which benefits the OEM.

Carlisle & Company is seeing something similar and has highlighted the customer satisfaction problem in a recent blog post that offered a first-hand description of a recent dealer service experience, comparing it to an episode of the TV show “Seinfeld.”  (I’ll let you read it for yourselves but it’s a fascinating, first-hand account of a service visit gone wrong.) Carlisle however didn’t stop with a complaint; They took action and recently announced the creation of a dealer forum – a website called MyGuy. It’s Carlisle’s attempt to help dealers learn how to improve customer satisfaction while still staying profitable. In fact, the web site promises “if [dealers] employ consistent ‘MyGuy’ practices, you can achieve significantly higher levels of service retention, customer service satisfaction, and vehicle sales retention [brand loyalty].”

Ideas like MyGuy are a great way to help OEMs and dealers figure out how to profit in the RTR world. But OEMs have an opportunity of their own to improve how dealers and IRFs service their vehicles. By rolling out a comprehensive electronic parts catalog (EPC) that combines parts and service information, diagnostics and service bulletins OEMs can revolutionize how their cars are serviced (by dealers and IRFs) and score major customer satisfaction points and lock-in brand loyalty. Products like Enigma’s InService EPC have helped companies like Ford ensure that repair decisions are always based on accurate parts and service information. Offering an OEM-branded EPC to IRFs (delivering it beyond the dealer) provides an incredible opportunity to improve customer satisfaction and brand loyalty that is both fast and easy. And an EPC may help OEMs comply with the Right to Repair law at the same time.

2012 was an interesting year in aviation and aerospace. Soaring fuel prices threatened the stability of the airline industry as well as the MRO service companies that support it.  The FAA officially entered the debate over accessibility of instructions for continued airworthiness (ICA) while some aviation OEMs continued to push for restricting access to service and parts information.

Airlines increasingly started looking to MRO IT systems to fully automate their Engineering & Maintenance (E&M) systems so they could leverage highly important maintenance and repair information as a service asset. And tablets, the ultimate symbol of mobility, dominated discussions at nearly every aviation service event, leaving many wondering how mobility will impact the future of aviation maintenance repair and overhaul.

Enigma followed the aviation and aerospace maintenance and repair stories throughout the year, giving our take on topics we feel are important to the industries and customers we serve. The following articles are our most popular MRO-related blog posts of the year. We hope you enjoy the sampling of posts and encourage you to share your opinions, whether you agree or disagree, in the comments.

We’re looking forward in 2013 to seeing how this year’s issues unfold and what new trends and topics emerge.

1. Boeing Plans to Exploit Maintenance Data – More Bad News for Airlines?
2. OEMs Driving Up Aircraft Maintenance Costs – What Will They Say at MRO Americas?
3. Safety Held Hostage? – FAA Enters the Debate
4. SAP User Group (SUGAIR) Dives into S1000D, PDF and Tablets
5. OEM Information Policies Increase Costs at FedEx (and Create a Tornado of Complaints at MRO Americas 2012)
6. Clouding the Issue of PLM's Role in MRO and Social Media
7. Is Social Media Relevant in Service and Maintenance Operations?
8. The Ultimate MRO IT System (as defined by Aircraft Commerce)
9. Talking Up Tablets But Standards Are the Sticking Point – Report from ATA E-Business Forum
10. Korean Airlines Leverages Its Greatest Asset: Information – with Help from Oracle and Enigma

The Right to Repair initiative recently passed as law in Massachusetts creates a win-win-win-win (4X win) scenario for auto manufacturers, auto dealers, automobile owners, and independent repair facilities alike.

Auto Manufacturers
Auto manufacturers have a lot to gain from Right to Repair. Most notably, they have an opportunity to increase brand loyalty through improved customer satisfaction, improved reliability of their maintenance, service and parts information, and a new layer of dealer support.

Customer Loyalty. According to the National Business Research Institute (NBRI), “Customer loyalty is important because it drives increased same-store sales. Customer service drives intent to return. Intent to return is the measurable indicator of future same-store sales.”

That means that positive repeat customer service interactions have a direct correlation to customer loyalty. Buying a car or truck is only the beginning of a long-term relationship. And while OEMs have traditionally relied on their dealers to forge the all-important relationship of trust and loyalty with customers, Right to Repair now provides the single biggest reason for a customer to maintain a direct interaction with the OEM following an auto purchase.

As the primary source of maintenance and service information, OEMs are well positioned to establish new, more personal relationships with customers and offer additional information on accessories, recommended maintenance schedules or other topics that have real value.  

Reliability. OEMs are responsible for the accuracy and consistency of diagnostic and repair information. That information positively influences the customers’ experience with—and perception of—the brand.  Right to Repair encourages OEMs to have a direct conversation with customers, allowing for online feedback via electronic notes. That feedback improves product design and increases overall product reliability.

Dealer support. While dealers have a strong propensity to purchase authorized OEM aftermarket parts, DIY customers and independent repair shops may not share that same sense of brand loyalty. By authoring and managing their own information and interacting directly with customers and independent repair facilities, as Right to Repair suggests, OEMs are in a unique position to provide diagnostic guidance, and make parts and service recommendations.

Naturally, a recommendation to the closest authorized dealership supports the OEMs dealer network in a very direct and measurable way.

Auto Dealers
Authorized auto dealerships also benefit from Right to Repair by becoming the go-to source for DIY customers and independent repair shops for parts and extended service.  Recommendations from OEMs regarding parts needed to complete a repair help customers and independent repair facilities find reputable and reliable parts to complete the work.

OEM recommendations of where service work can be performed if the difficulty of the repair exceeds the customers’ or repair shops’ expertise also provide a high level of customer confidence that the OEM and its dealer network are committed to supporting the vehicle through the life of the auto.
 
Automobile Owners
For a long time car owners have been driving in the dark, endlessly searching the internet chat rooms and forums for tidbits of automotive information or blindly relying on the word of a mechanic or dealership as their sole source of maintenance wisdom. Right to Repair ensures that customers have direct access to reliable, authorized information they need to make informed maintenance and repair decisions for their vehicles.  

In many instances, OEMs are starting to respond to customer desires for more information access even without the mandate of Right to Repair.  In fact, some OEM brands are taking the opportunity to begin a personal, one-to-one relationship with car owners to make it easy to learn about and maintain their cars for the life of the vehicles.  Much in the way that Lowes Hardware is rolling out MyLowes.com, the MyLowes new "home asset management" website, auto OEMs like GM, Mopar (for all the Chrysler brands) and Enigma customer Ford, are gearing up to help customers track their cars' maintenance history and future needs with websites designed specifically for owners.   

Independent Repair Facilities
Right to Repair gives independent repair shops access to the information they need to service vehicles requiring technical diagnostic equipment to evaluate. This allows them to broaden the range of makes and models of vehicles they can work on, putting them on an even playing field with larger maintenance shops.

Right to Repair changes the dynamic of dealer/independent shop interactions to a more convivial one where independent repair shops search and find the repair and parts information from the OEM and are then directed to their local dealership to source the parts. Independent repair shops can become part of the feedback loop when they are encouraged to provide service and repair insights to the OEM. These insights help OEMs increase product reliability and ultimately help the small shop mechanic improve his/her repair. The feedback to the OEM from a professional mechanic decreases the mean time to repair as more users read and apply the documentation. The steps and instructions are improved as more people use the data.

In Right to Repair, we see an opportunity for OEMs to build stronger ties with customers and dealerships while opening new channels with independent repair shops.

Yes, but how will OEMs know their outreach to customer is increasing their loyalty?
Good intentions aside, can adherence to Right to Repair turn resistance into market opportunity?

Measuring success would be difficult without analytics, Big Data technology and business intelligence. Luckily, forerunners in service and parts catalog software like Enigma are introducing advances in reporting capability and trend spotting. Newly developed dashboard reporting tools capture and display electronic parts catalog activities and purchases, presenting them as easy-to-read charts that highlight pre-defined key performance indicators (KPIs).  

The InService EPC Dashboard provides OEMs with real-time, data-driven insights into their aftermarket. It adds a layer of business intelligence not found in other electronic parts catalog software. The Dashboard gives OEMs a strong competitive advantage when developing aftermarket service and sales strategies by identifying patterns in equipment repair, parts ordering and dealer, customer or independent repair facilities behavior.  

The Win-Win-Win-Win Recap
OEMs are happy because they now have a means to deliver information to help all participants in the vehicle maintenance process. They improve their customer loyalty in the process and support their dealer network through referrals.

Dealer are happy because they sold the parts to the independent shop and perhaps picked up some more complex service work that the small shop was not suited to complete. 

Customers are happy because their car or truck is fixed. Independent repair shops are happy because they are paid for service work and are able to broaden their base of makes and models that they can work on.

In sales, there are two ways to increase revenue — Find new customers or generate more business with existing customers.

Both have merit but according to Inc. Magazine, “Acquiring new customers is expensive (five to ten times the cost of retaining an existing one), and the average spend of a repeat customer is a whopping 67 percent more than a new one.”

The responsibility for new customer acquisition typically rests with the sales and marketing team selling the new equipment, whether that is medical device equipment, cars or construction equipment. They seek out new connections to turn into customers, and hopefully into long-term accounts.  The parts and/or service department however, plays a center-stage role in driving more business with existing customers. They must develop customer loyalty, ensuring a positive aftermarket experience and manage repeat business after the initial (new customer) equipment sale is made. It’s a natural alignment of responsibility.

This is great news for parts managers. It means they can concentrate on generating outstanding results from repeat customer business over the life of the complex equipment (ie. CT scan machine, mini-van or skid steer loader). The success of earning additional revenue from existing customers really comes down to how well parts and service managers are able to execute on their efforts to deliver great service to the installed base.
We’ve found that there are two tools in the service and parts manager’s arsenal that help them get the job done: The cross sell and the up sell.

The cross sell. With the cross sell technique, parts and service reps suggest related services or products that complement the work that the customer is having performed. For instance if a customer’s backhoe is having hydraulic work done, the service and parts manager could recommend new cylinder seals, new hoses and a hydraulic pump overhaul – services that would extend the uptime of the equipment and improve performance.

The up sell. With the up sell technique, parts and service reps may suggest upgrades or more expensive items to complete the service transaction. Using the same backhoe example, the parts and service rep may suggest top of the line synthetic oil instead of standard or upgraded hydraulic cylinders, stainless steel hoses and a new hydraulic pump following an inspection showing cracks or wear.

A robust parts catalog like Enigma’s InService EPC supports the cross sell and up sell efforts of a parts and service department by putting all product and related information in one place, a knowledge library.  A core element of InService EPC, the knowledge library delivers all product data such as parts catalogs, maintenance manuals, technical specifications, warranty information, and sales collateral.

InService EPC makes it easy to identify parts, make recommended service suggestions, easily look up and recommend part assemblies or group kits, all with the click of a mouse. InService EPC gives parts and service staff access to the information they need, when they need it to cross sell, up sell, and better service their customers for all types of parts and service work so each interaction is a chance to increase revenue and improve customer satisfaction.

Original Equipment Manufacturers (OEMs) and their dealers have long had the type of relationship that needed nurturing to thrive. Quite simply, it’s the nature of the business partnership as one organization builds equipment and the other sells and services it.

But maintaining those relationships is getting more challenging. Economic pressure on customers to get higher output and longer life out of their complex equipment has put a burden on OEMs and dealers for better equipment that’s easier to repair and cheaper to maintain.

The result has caused a fracture in the OEM/Dealer relationship. It has challenged dealer loyalty to the OEM’s parts and compromised service quality and efficiency. Ultimately OEMs are telling us that it’s costing them serious revenue. So how can an electronic parts catalog improve your OEM/Dealer relationship and ultimately business?  

One word: Control.

We’re not talking the kind of authoritarian control that makes dealers cringe at the mere thought of it. We’re referring to a well-planned, supportive program that makes it easier for dealers to do business with their OEM. Keep in mind that OEMs play a big role in helping service organizations perform to the highest standards. So, if you, as a manufacturer, control your dealer interaction – meaning access to service and parts information – then you can also control your products, protect sensitive product and customer information, influence dealer purchases and ultimately improve the working relationship with your dealer network.

Here’s how:

Processes – There are two types of electronic parts catalogs (EPCs) in the marketplace, those that support the original equipment manufacturer/dealer relationship and those that don’t. OEM-centered EPC software puts the control and interests of the manufacturer first while supporting a healthy interaction with dealers. For instance, OEMs that use Enigma InService EPC can manage their service and parts data in-house, making and distributing incremental updates as frequently as needed so dealers always support customers based on the most accurate information.

Outsourced electronic parts catalogs have a different approach. They don’t support the OEM/dealer relationship because they concentrate on the needs of dealers, ignoring the intellectual property rights of the OEM and minimizing the relationship between the dealer and the OEM. As such, the manufacturer becomes the generator of information, but loses control over publication, distribution, and usage. The outsource parts catalog vendor becomes the purveyor of the information – making money off the manufacturer’s data without regard for the manufacturer itself.

Products – Proprietary product, service and parts information has value.  Real value. OEM-centered EPC software allows manufacturers to manage and protect the use of their proprietary information.  When manufacturers choose instead to use an outsourced EPC, they are reliant on the vendor to maintain the security and quality of their data, however anytime proprietary information is shared with any vendor it puts your company’s product and customer information at risk. Since the EPC is the basis for all aftermarket parts and service decisions, outsourcing this data is a risky strategy.

Purchases – Every manufacturer wants to increase revenue through their dealers, especially in aftermarket parts where there is a growing opportunity for unrealized income. According to an SAP Whitepaper, “Best Practices in Complex Equipment Manufacturing, Sales and Service”, “With their spare parts business growing rapidly as a percentage of revenue, many complex product and equipment manufacturers have found their cost centers growing into larger and larger profit centers.”  That means that there’s money to be made (or lost) in aftermarket service and parts. Manufacturers need to control their dealer relationships to capitalize on that profit.

OEM-centered parts catalogs like InService EPC, helps dealers lookup service and parts information and then encourages direct purchase from the manufacturer by integrating with OEM online ordering systems.  On the other hand, outsourced EPCs allow and encourage dealers to search for the OEM part in the catalog and then cross reference the OEM part and price with alternate (knock-off) parts providers. Comparison shopping devalues the OEM part, undercuts the already established relationship between the OEM and Dealer and strangles a potential revenue stream for the OEM. Outsourced EPCs encourage dealers to purchase the parts from someone else!

There is no doubt that a parts catalog is a valuable tool for manufacturers and dealers alike. Ford introduced the “Ford Catalog Advantage” and quickly reduced the cost of delivering parts information to dealers and distributors, eliminated delays for implementing updated information, increased the accuracy of parts orders and improved service bay productivity at Ford dealerships.

The issue facing OEMs is whether they’ll choose to employ an EPC that helps or hurts their dealer relationship and ultimately their bottom line.

Mechanics know a lot about the tools they use and the equipment they repair. They are a rich source of information, if only someone would listen. Dealers and field service organizations count on mechanics and technicians to properly maintain and repair equipment, but often overlook the competitive advantage of experienced service technicians.

We were curious about just what sorts of insights top performing equipment mechanics could bring to the topic of parts catalogs, so we asked a handful of equipment service technicians what common service related challenges and roadblocks they encountered during their workday.

Here’s what we found.

Time. Overwhelmingly mechanics and service technicians agreed their most common challenge was time – they’re under great pressure to fix equipment quickly and correctly in order to minimize equipment downtime.

One task that slowed them down and ate into their repair schedule was looking up parts. For mechanics still using printed parts and service manuals, this made sense. But surprisingly mechanics using digital documents, PDF parts lists and service manuals, also experienced the same frustration. They noted that it was difficult to lookup parts or search for information. To make matters worse, the information they needed was spread among many different documents, in many different formats stored in many different locations.  Additionally, the programs used to browse, sort or search for parts were hard to navigate and not intuitive. And, once they finally found the right replacement part, they had to use a different system to order it, or have someone else order it for them.  

Accuracy. A second irritation for mechanics was that the part and/or service information was wrong. A part may have been discontinued with no indication of what replaced it, there may be confusion about which part is actually the right part to order or service bulletins with the latest service tips may not have been distributed.  Inaccurate parts information, service manuals or bulletins could be important to what they were working on, especially in the case of discontinued parts that had been replaced with new parts altogether.

The mechanics were often left with two options: call the OEM or customer service manager to get the most current information and wait for a reply, or blindly order the parts anyway and take the chance that the new parts or service bulletins would ‘probably work’ about the same. That kind of guesswork was a risk they regularly took in order to keep the repair moving forward.

Portability. A third common thread for field service mechanics in particular was portability. Information that is available at the shop may not be available to the mobile technicians working on-site at a remote customer location.  As a result, field service technicians felt they had to do more preparation, more organization, and be more knowledgeable than shop mechanics precisely because they often had to work out of a van.

It would be easy to see how some operations executives may regard these three areas of concern (time, stale info and portability) as simply grumpy mechanics complaining about their work environments.  But astute managers may see them for something more – indispensable kernels of insight that any OEM would love to know so they can improve the number of parts and quality of support delivered to their customers.

If we take each point and deconstruct it, we begin to see the wisdom that mechanics add to our understanding of aftermarket parts and service repair.

Time

• Challenge: “It takes too long to look up parts and service information”
• Translation: slow data retrieval and order processing
• Opportunity:

    •  Easier, faster, more intuitive parts and service lookup

    •  Make ordering OEM parts easier  

    •  Speed rate of repair

Accuracy

• Challenge: “When I finally find the information, I’m not sure it’s accurate”
• Translation: Inaccurate info leads to guessing, parts ordering errors, and poor first time fix rates
• Opportunity:

    •  Put current, accurate parts and service information in the hands of mechanics
    •  Remove ‘guesswork’ from the equation

Portability

• Challenge: “I need information where I’m working, no matter where that is”
• Translation: Lack of access to information puts service technicians at a disadvantage
• Opportunity:

    •  Equip all equipment mechanics with online and offline access to parts and service information so everyone has access to best practices

Mechanics want to do their jobs well but they need the right tools to succeed.  After all, the success of each mechanic and technician contributes to the success of the OEM; they represent your brand to your customer. The insight and experience of mechanics can teach OEMs a lot about how to improve the efficiency of aftermarket part sales and equipment service to help make it more profitable.

Learn more about how Enigma InService EPC (electronic parts catalog) can help you translate your mechanic’s challenges into your operational efficiency and aftermarket parts profit.

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.