The Uptime Blog
Equipment uptime is critical. Hospitals need MRI machines to take accurate images in order to make proper diagnoses. Construction companies need boom lifts to build multi-story buildings, and auto manufacturers have a whole dealer network and extended independent repair facility network to support in order to keep their cars, trucks and vans safe and on-the-road.
Manufacturers of complex equipment support their products after the initial sale in order to maintain high performance standards for their customers. But supporting that equipment is challenging. Sometimes manufacturers work with third party vendors to contract that support. Other times, they maintain their own staff to supply parts, and perform service or warranty work. Either way, aftermarket support is a necessary function for customer loyalty and continued success.
Make It or Buy It?
The first question when considering aftermarket support software is whether to develop the software in-house or purchase it out of the box (OOTB). Original equipment manufacturers (OEMs) wrestle with this question regardless of whether they hire third party maintenance vendors or field their own maintenance teams to do the work. Their challenge is how to provide the parts and service information needed to keep their equipment (and their customers) up and running.
Benefits of Out Of The Box Aftermarket Software
While there are many pros and cons to both making and buying and aftermarket solution, we think there are some compelling reasons to choose an out of the box aftermarket software solution. Here’s why:
Software Development as a Core Competency
Software development is an arduous task, requiring a dedicated team of developers and a steady budget. Manufacturers undertaking an in-house, custom software development approach must step outside their core manufacturing competency to create proficiency in an entirely different discipline – software development. This shifts the focus away from what the manufacturer does best – produce products.
Instead, valuable time, money and attention is spent building a team, employing a highly trained staff of developers, and incurring expenses to maintain the team’s education in coding, hardware and ongoing knowledge of new and upcoming technologies. It can be done, but is not the best use of assets or resources. Mis-appropriation of valuable resources may result. In-house development staff members become overburdened with routine daily activity, interruptions and user troubleshooting for desktop applications, which compromises development time and the quality of the resultant software.
A better option is for manufacturers to do what they do best, and outsource the rest. Choose an established out of the box software developed by a company whose sole business is software development and that specializes in the task at hand. Enigma is a great example. Our InService EPC software is an electronic parts catalogs specializing in delivering critical OEM parts and service information for aftermarket maintenance of complex equipment – within a dealer environment, in-house field service teams or outsourced service companies. Our sole purpose is to develop software that provides an entire system for implementation, bug fixes, updates and compatibility. We build parts and service best practices directly into the framework of the software to improve the function and operability of a company’s service business. Manufacturers are then freed to concentrate on performance of their own core business function.
Scalability refers to the ability of the software to support an increasing numbers of users, devices and workloads without data transfers slowing down. If built with scalability in mind, software grows as a company grows – expanding to meet increasing demands while delivering the same high levels of productivity. This doesn’t just mean adding hardware to support increased activity, but ensuring that data integrity between application instances remains constant and synchronization across work processes remains stable. It takes into account security, equipment uptime, and integration with other business applications to improve the flow of information and commerce.
Scalability can be difficult to achieve. Matt Aimonetti, a Senior Software Architect at LivingSocial best describes the concept of scalability in his personal developer’s blog by saying:
“Designing beautiful and scalable software is hard. Really hard.
It’s hard for many reasons. But what makes it even harder is that software scalability is a relatively new challenge, something only really done in big companies, companies that are not really keen on sharing their knowledge. The amount of academic work done on software design is quite limited compared to other types of design, but shared knowledge about scalable design is almost nonexistent (Don’t expect to find detailed information about scaling online video games either, the industry is super secretive. And even if this is a niche market where finding skilled/experienced developers is really challenging, information is not shared outside a game project).”
Scalability makes aftermarket software flexible. It adjusts and allows businesses to adapt to changing market demands by growing rather than replacing the software system. Enigma’s InService EPC software application is created with scalability in mind. It extends the capacity and capability, without the need for new infrastructure, additional personnel, or the development of new software.
Time and Money Savings – Add More Value with Fewer Resources
The argument of core competencies and scalability should be reason enough to consider out of the box aftermarket parts and service software, but the issues of time and money really drive the point home.
Manufacturers today are being asked to deliver more value with fewer resources. The Manufacturing Institute and the Manufacturers Alliance for Productivity and Innovation (MAPI) partnered to produce the 2011 Structural Cost Study. The key finding was that U.S. manufacturers face a 20.0% structural cost burden in the global market compared to manufacturers in our nine largest trading partner countries. This is up from 17.6% in 2008.
To be globally competitive, OEMs are looking for ways to realize bottom line savings quickly with only modest investment. Out of the box software solutions deliver. InService EPC’s out of the box parts catalog furnishes OEMs with shorter implementation periods while Enigma works with them on issues of hosting, data prep, training, testing, and integration. Once in place, InService EPC saves money by providing scheduled updates and improved functionality without the burdensome costs associated with an in-house team.
Equipment uptime is critical. And manufacturers will do what it takes to support their products after the initial sale in order to maintain high performance standards for their customers. Enigma’s out of the box electronic parts catalog software can help make that happen.
Tags: aftermarket, electronic parts catalogue, parts and service, parts catalog, parts catalogues, shopping carts, InService EPC, dvautier, diane vautier, electronic parts catalog, epc software, software
The term “Losing to no decision” is a phrase sales reps use when their potential customer, after a lengthy exploration and proposal process, elects to take no action at all, rather than choose a solution from the sales rep or his (her) competitors. The process ends in stagnation, without a sale – a very discouraging experience for the sales rep trying to close the deal.
A Company’s “No Decision” Perspective
But if we look at the same scenario from the perspective of the company that had been searching for a solution to their business challenge, there are even more serious consequences. The company (and its staff) is worse off than when it began the search, with little to show for all the effort. The lack of action has spurred frustration about the project – possibly discouraging future problem seeking, wasted valuable resources and man-hours exploring the options while the opportunity is unrealized and the original problem is left unresolved.
Avoid Losing to No Decision
Let’s say that you are one of several aftermarket Regional Service Managers of a manufacturing company that makes high-ticket complex equipment like medical imaging machines, industrial robotic assembly components or mining equipment. Congratulations if you actually are the Regional Service Manager. If not, you can always aspire, right?
For a long while now, you’ve been thinking about making recommendations to senior staff that you feel will help the maintenance team become a more active contributor to revenue generation. You want to suggest that the company include additional functionality to the existing parts catalog or upgrade altogether to a highly functional electronic parts catalog.
You’re confident that such a move will reduce costs by providing more accurate parts and service information, streamlining service technician work flow, improving field service performance and minimizing parts misorders. You also know that deeper integration with the company’s business system would give your team access to parts pricing and availability and a built-in shopping cart ordering process would result in increased parts sales.
The only challenge is that you don’t know how to go about making the suggestion in a way that will have impact rather than being ignored. Here is what Enigma has found to be a solid foundation for moving through an electronic parts catalog project and making the right decision to resolve the challenge.
- Have a Goal: Maybe you don’t know all the upfront features, benefits and details like the Regional Service Manager example above. Maybe you just intuitively know that there’s a better way to do things. Any good idea has to be intellectually tangible to gain support, so avoid uneasy vagueness and establish clear goals of what you hope to accomplish. In the example above, the aftermarket manager wants to help the service department become a more active revenue generator.
- Identify Key Stakeholders: Not everyone is going to agree with your great ideas and that’s OK. You only need to gain the confidence of the people who have a direct interest or influence in the decision. This may be the service staff who may be most impacted, the IT department who would oversee integration, and of course the Regional VP who would benefit from an integrated electronic parts catalog or have the authority to veto its progress. Stakeholders are different for every project or company. Figure out who they are and start earning their trust and support. Decision makers can make or break your project.
- Assemble Your Team: Seek out people who share your keen insights, can influence stakeholders or support your efforts. They are your partners, your teammates, and your allies in transforming your inert environment into a dynamic one. They will help keep the project on course. It may be someone like the parts manager who may benefit from increased sales, the top field service technician willing to share insights and experience, or the new IT assistant eager to prove him or herself to the IT department manager. One surprising resource is the electronic parts catalog vendor. Vendors can provide the facts or structure you need to support your position. For example Enigma makes available an RFP sample that can drastically reduce the time and effort put into identifying and organizing the important project details.
- Build a Business Case: Anyone who is responsible for the profit and loss (P&L) of a department or company appreciates when you make a business case that speaks their language. Relate your goals to dollars – what costs will be reduced and by how much will the expected revenue increase? You can still include less concrete results like increased customer satisfaction, but don’t leave out the obvious connection to the immediate P&L bottom line.
Now that you have defined a clear goal, identified the stakeholders, assembled your team, and built a business case, you’re ready and able to help your company move forward with solid decision making.
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.”
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.
Tags: aftermarket, parts and service, parts catalog, Illustrated Parts Catalogs (IPC), Ford, dealer support, InService EPC, dvautier, diane vautier, electronic parts catalog, complex equipment
If you’re an original equipment manufacturer (OEM) or a fan of the movie Forrest Gump, you may intuitively understand the connection we’re talking about. If not, you may want to read on while dreaming about the perfect combination of any two items: peanut butter and jelly, baseball and hotdogs, chicken wings and the Super Bowl, beer and… well, that last one was a trick – beer goes with everything.
The point is this. Complex equipment and aftermarket support are the perfect complement to each other – just like peas and carrots.
First consider complex equipment – it’s pretty amazing. It has hundreds or thousands of detailed parts that require high levels of training to maintain, repair or operate. It performs complicated diagnostic tasks, enables production to the nth factor, or completes tasks that sheer manpower alone cannot achieve. Complex equipment also comes with a hefty price tag and an extended product life cycle that could last years or even decades. These are definitely not disposable or consumable types of equipment, but durable long-lasting investments that add capability and value to any business venture. Think medical imaging machines, cars and trucks, or masonry forklifts.
The sophistication of complex equipment, however, means that support extends well beyond the initial design and manufacture of the piece of equipment. It encompasses the entire product life cycle including warranty, post warranty service, and sometimes even remanufacture or deconstruction at obsolescence.
For these reasons, aftermarket support is like the hand in glove to complex equipment. We’re talking the serious business of parts, maintenance and service support to keep these highly valuable pieces of equipment functioning at peak performance with minimal downtime. It’s making sure the ultrasound machine detects the baby’s heart beat, the mechanic has the part and know-how to fix the transmission on your Camaro restoration, and the skid steer loader still turns on a dime while lifting a bucketful of gravel. Aftermarket support keeps life and business humming.
The Pairing and the Challenge
While complex equipment and aftermarket may exist independently, their pairing results in a delightful combination of minimal equipment downtime, higher customer satisfaction rates and exceptional brand loyalty. OEMs that understand this vital connection and actively blend efforts on new sales along with aftermarket support have the biggest potential for long-term gains.
What seems like a natural recipe for success though can be a challenge to achieve. With boatloads of advancing technology, keeping the maintenance and repair of complex equipment simple is becoming more difficult. This is especially true in scenarios like automotive manufacturing, which works with a network of dealerships for new car sales and service. OEMs are taking on more responsibility for helping their dealers understand the new technologies by providing better parts identification, easier access to service information, and new diagnostic tools.
Recipe for Success
A great example of a successful pairing of complex equipment and aftermarket support is Ford with their Ford Parts Advantage program. Their challenge was to deliver accurate service and parts information, and simplify parts look-up for their dealers. They chose Enigma InService EPC software system to streamline the parts identification and ordering process through a user-friendly interface. The system integrated with their key business systems (EPC, SCM, DMS and PLM) so the information was as current and accurate as possible. The deep integration allowed Ford dealerships to up-sell and cross-sell more by prompting staff with related parts and recommended service activities.
The Ford Parts Advantage was a huge achievement. They successfully combined the manufacture of their vehicles (the complex equipment) with an aftermarket support system (Ford Parts Advantage) that reached far into the extended product lifecycle making it easier for dealers to properly service and maintain the vehicles for car owners. Ultimately this gave Ford a competitive advantage by securing higher customer satisfaction and brand loyalty.
Manufacturers looking to recreate the achievement of Ford can find similar recipes for success by considering electronic parts catalogs that can help their own service staff or those of their dealers better maintain and support the equipment for the life of the equipment. After all, without the peas, would we ever eat the carrots?
Cost containment used to be the buzzword for field service. Do the best job you can with the least possible expense while keeping the customer happy. Not an easy task, yet managers in every industry imaginable – from construction equipment to mining rigs, MRI to ultrasound machines, industrial robots to ATMs – have worked diligently to minimize costs associated with aftermarket maintenance, repair and support, even if it didn’t fix the real field service problem.
Luckily, aftermarket field service is changing, undergoing a fundamental shift in how it’s contributing to the original equipment manufacturer’s (OEM’s) bottom line. As it comes of age, aftermarket field service is bringing with it some hefty strategic incentives that companies should not ignore. According to the Technology Services Industry Association (TSIA) “More and more companies are realizing that field agents, with their face-to-face interactions with customers, can have a major impact on customer satisfaction and incremental revenue.”
Field service and customer satisfaction – that makes sense. Field service has long enjoyed a well-established connection to customers and thus impacts the level of customer satisfaction a company enjoys, especially after the sale.
But can field service go beyond creating customer satisfaction to actually generating revenue. Savvy aftermarket service organizations recognize the untapped potential of an OEM – installed customer base as an asset capable of generating a profitable revenue stream. They see the strategic opportunity and are transitioning away from the outdated concept of field service as a cost center – the necessary evil. They are embracing a more progressive approach to field service as a profit (and potential growth) center. Aftermarket service operations – technicians, departments, and managers – now represent the promise of emergent revenue.
A promise of revenue isn’t as tangible as revenue itself, however. As the Blumberg Advisory Group points out, “In order to operate as an Aftermarket Service as a profit center, a company must be able to generate income.” One way many are accomplishing that is through the adaptation of technology, including mobile technology. Aberdeen Group, a Harte-Hanks research firm, notes that “seventy percent of field technicians carry at least one mobile device for field work.”
In addition to tool belts, service technicians are now wielding a whole new set of high-tech tools, making them more effective, efficient and ultimately more profitable. Tucked inside service tool belts are mobile devices loaded with knowledge management software, remote and embedded diagnostics and other smart technologies for spare parts & logistics, like InService EPC. InService EPC is a tool that reduces support costs, reduces catalog costs and increases parts revenue making the generation of profit a more attainable goal.
In service work, managers know that time is money. InService EPC provides the most accurate and up-to-date parts and service information at the point of need so field service technicians are more self-sufficient. They don’t waste call center support time and are able to expertly perform service work quickly with confidence.
From an operational perspective, being able to go digital and manage updates in-house can save even more field service expenses. InService EPC reduces printing and distribution costs. The ability to create updates in-house reduces the costly outsourcing expense associated with updating, printing (electronic or hardcopy) and distributing volumes or CDs of catalog and service information.
Where InService EPC really shines is in the revenue generation part of the equation. It makes parts ordering easy through deep integration with a company’s enterprise resource planning (ERP). With InService EPC, techs can order directly from their laptop or tablet, with highly accurate product and service information right at their fingertips. This generates more parts orders and reduces mis-orders. In fact, it works to eliminate all of the 7 deadly sins of field service operations.
While some service organizations cling to old school cost containment methodology, aftermarket service innovators are arming crews with tools that turn opportunity to profit.
On the first Tuesday of November, 2012, voters in Massachusetts overwhelmingly approved a ballot initiative called “Right to Repair.” The Right to Repair law promises access to diagnostic, service and parts information for car owners and service stations/independent repair facilities (IRFs). Perhaps it’s not surprising that manufacturers (OEMs) opposed the measure, claiming it adds cost, complexity and uncertainty to the already fragmented environment of automotive service and support. OEMs claim that:
- Costs will increase as OEMs must standardize and reveal more vehicle data to ensure compliance with new laws throughout the life of a vehicle
- Complexity will increase as OEMs must open up additional channels of support to IRFs that are not necessarily “trusted” by the OEM
- Uncertainty will increase as OEMs lose the visibility they get from dealers about how vehicles are behaving in various environments, which raises warranty, performance and liability concerns
Consumers may see new car prices increase to accommodate OEM costs associated with Right to Repair compliance. This is especially true when considering that certain aspects of Right to Repair are retroactive to the 2002 model year and all aspects are fully imposed on 2018 vehicles. (Click here for another view on the impact of Right to Repair.)
While the margin of victory for Massachusetts’ Right to Repair law was huge, 86% in-favor and 14% opposed, the fact it was passed isn’t surprising given that the name sounds so patriotic, Right to Repair. After all, to vote “no” sounds like you’d be voting against choice and Americans cherish their freedom of choice above almost all others.
The Right to Repair law is more complex than the title makes it sound, however now that the law has passed the difficulty of OEM compliance is irrelevant because failure to comply carries some very expensive penalties. Therefore the challenge for OEMs is to figure out the most cost-effective way to comply with Right to Repair.
The most pressing task for OEMs is to figure out how to get the required service and parts information up on the web, in a way that makes it accessible to IRFs while also protecting their intellectual property. To this end, an electronic parts catalog (EPC) that combines diagnostic, parts and repair information integrated with ecommerce and order management technology would do the trick. Such a solution would allow IRFs to access required information and also open up a new revenue stream for OEMs where IRFs are directed to a nearby (or preferred) dealership to procure the parts they ordered. In this way, OEMs could actually augment their franchised dealer’s parts business by expanding their role as a distributor.
The use of single sign-on (SSO) for the EPC would improve tracking of IRF access to ensure Right to Repair compliance and also automate many aspects of parts procurement. One area of interest might be the ability to download electronic control unit (ECU) and programmable control module (PCM) software updates/revisions, which are often tracked with unique part numbers, and then to help the IRF automatically upload those revisions into the vehicle. Throughout this process, franchised dealers could expand their business as regional consultants and training facilities for the IRFs working on the OEM’s vehicles.
Finally, an online EPC can collect a lot of data about who is accessing the web-based system and what problems, parts and documents are being researched the most – including an analysis of pricing requests/quotes. In a very short period of time this becomes a treasure trove of information about the OEM’s vehicles and Big Data analytics can be employed to reveal even deeper insights about warranty, performance and liability concerns.
Clearly the Massachusetts’ Right to Repair law is ushering in dramatic changes for the way OEMs support dealers and IRFs alike. However OEMs that view Right to Repair as an opportunity, rather than an obstacle, can find themselves ahead of their competitors in more ways than one.
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.
- Challenge: “It takes too long to look up parts and service information”
- Translation: slow data retrieval and order processing
• Easier, faster, more intuitive parts and service lookup
• Make ordering OEM parts easier
• Speed rate of repair
- 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
• Put current, accurate parts and service information in the hands of mechanics
• Remove ‘guesswork’ from the equation
- 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
• 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.
Tags: aftermarket, OEM parts, Electronic parts catalogs, parts and service, Automotive Aftermarket Industry Association, Carlisle & Company, warranty, J.D. Powers and Associates, EPC, InService EPC, Enigma, dvautier, diane vautier
Auto dealerships experience a massive drop-off in service and repair work following the end of a vehicles’ warranty. It’s a sudden and steep drop with devastating financial implications for auto OEM’s and dealerships alike.
Even the best dealership service departments are not immune. According to Steve Finlay of WardsAuto, citing a J.D. Power and Associates’ Customer Service Index Study, customer retention rates for maintenance and repair are often less than 60% and only top dealership networks with superior reputations for service do better.
Carlisle and Company research shares similar results with one of their clients reporting up to 50% loss in customer loyalty on the day the warranty expires.
Why the Drop?
Soon after the sweet romance of the new car purchase in the flashy front showroom, owners are whisked away to the backroom service department for the rest of their auto ownership relationship. The experience they have in your service department over the following years has a significant impact on their loyalty and satisfaction.
Finlay again sites Jon Osborn, J.D. Power's research director: “Since dealer service is the last touch-point in the vehicle ownership cycle that auto manufacturers have with customers, providing superior levels of service can leave owners with a lasting favorable impression of the brand”. Poor impressions damage brand loyalty and ultimately reduce future service revenue and new car sales. Customers simply seek out independent service shops or change brands all together.
Losing 40-50% of service business after the vehicle warranty ends suggests that dealers are not giving owners a lasting favorable impression.
Why is post warranty revenue important?
In today’s tough economy, drivers are purchasing fewer new cars and keeping the cars they do have on the road longer. This has pushed the average age of a vehicle up to 10.8 years. Savvy automotive OEM’s and their dealers have recognized the shift and are looking to that lost post-warranty revenue as a source of additional profits to offset fewer new car sales.
Both OEMs and dealers are eager to capture a larger piece of the post-warranty pie, which can add up to serious profits given the increased length of ownership.
So, what’s the issue?
Carlisle and Company is studying the challenge. Some of its preliminary findings are that customer expectations are not in alignment with the service practices of dealerships, which leaves everyone (the OEMs, dealers and customers) unhappy and probably a little bitter.
Carlisle identified the top 26 factors (grouped into 5 categories), which customers value most and compared that against what service departments offered. The results show that dealers aren’t stacking up. “According to the customers, their business migrates to operations perceived as more trustworthy, easier to do business with, and lower priced”.
What can be done to earn more post-warranty revenue?
Auto OEMs and dealers can eliminate some of the gaps by understanding the expectations of customers and delivering what they want. One tool that has proven to accelerate repairs, increase quality and improve customer-dealer-OEM relationships is Enigma’s InService® EPC (Electronic Parts Catalog). A well-executed EPC system streamlines the dealer’s diagnostic, troubleshooting, estimating, parts availability and ordering activities, which accelerates repairs, improves estimates and increases quality (first time fix). The right EPC also provides OEMs with on-demand analytics and dashboard reports so they can spot service trends faster, and minimize customer snafus before they become a recurring issue.
InService EPC makes it easier for dealers to communicate openly and effectively with OEMs and to answer customers quickly and accurately, which helps them build a long-term, trusted relationship.
And as we’ve learned from the J.D. Power and Associates’ Customer Service Index Study, top dealership networks with superior service retain a higher percentage of maintenance and repair dollars.
The Aging Vehicle Population
Drivers are keeping their vehicles longer; a lot longer. In fact, according to R.L. Polk & Company research, the length of vehicle ownership as well as the overall average age of vehicles has risen. Today, the average age of autos on the road has hit a record 11.1 years (10.8 years for cars and 10.4 for light trucks). Not surprisingly this trend has been tied to the economic downturn as more and more owners are extending the life of their cars and trucks through ongoing maintenance and repair. This continues the trend of aging vehicles seen in a 2009 Polk study that pegged those numbers at 9.4 years for cars and 7.6 years for trucks.
However, the real question is what those figures mean for automotive OEMs and their dealers.
The Aftermarket Opportunity
The aging auto trend is expected to continue. Freedonia Research agrees in their “Automotive Aftermarket in North America to 2014”, which estimates that “The aftermarket for light vehicle components in North America will increase 2.9 percent annually through 2014.” This means that service and parts continues to be a growth business, and OEMs need to position themselves and their dealers to capitalize on the opportunity.
As autos age, each vehicle requires more service. And since parts and service carry higher profits, this is a very lucrative endeavor. A few OEMs, like Enigma customer Ford Motor Company, are capitalizing on this opportunity —increasing earnings by improving customer and dealer support—but the question remains, why aren’t more OEMs doing this?
So how do OEMs garner more from the profitable automotive aftermarket? By streamlining the aftermarket processes for diagnosing, and repairing cars and trucks (and any other type of vehicle).
Claiming a Sweet Victory
First, OEMs can rein in the parts inventory and leakage challenges with service parts planning and inventory management. Second, they can automate scheduling to optimize human capitol. OEMs and dealers have already implemented these first two steps, delivering respectable results. But it’s a third component, which is less obvious but more influential that can really give OEMs a competitive advantage and that is an electronic service and parts catalog (EPC).
A fully integrated, online/offline EPC helps OEMs quickly assemble, distribute and update the technical information needed to properly service and support today’s complex vehicles. An EPC that supports bi-directional communication (from-to OEMs and dealers) provides more than just parts and service procedures, it becomes the heart of an advanced customer support strategy that accelerates repairs, improves quality and reduces cost.
Such an EPC is richer and more beneficial than manuals, bulletins and parts lists alone. The sum is truly greater than the parts. When an OEM implements an advanced EPC it provides immediate value to dealers. It delivers more detailed and accurate information to make the dealer’s job easier while positioning the OEM as the most reliable resource. It also saves dealers money by bettering the first time fix rates. And, it improves staff productivity by consolidating all service and support information and data into one source that can be accessed with just a few mouse clicks.
The real bonus though is what an EPC yields an OEM. It builds dealer loyalty and increases preferred vendor status, which leads to more parts revenue. By making it easier to do business with the OEM, and simplifying maintenance decisions, a well-executed EPC strategy will help improve influence and control of parts purchasing in the critical post-warranty period of auto ownership.
Forward thinking OEMs have been turning to Enigma to help them capitalize on the aftermarket opportunity, which has been driven by aging vehicles. Ford Motor Company, a longstanding automotive icon and leader, recognized the potential of increased revenue from longer auto ownership and elected to implement Enigma software early in the aging auto trend, and is now enjoying increased parts revenue and stronger, healthier dealer loyalty.
Aging autos serve up a sweet aftermarket opportunity, so grab a big spoon and dig in, there’s still time. Learn how Enigma can help you turn sweet opportunity into tasty profit.
A new report from Gartner indicates that e-commerce is the hot new trend in discrete manufacturing. The report says that, “E-commerce can be used for the direct sales of new products, services, digital goods/ content, replacement parts, accessories, entertainment, travel and much more.” Three items stand out in this list: services, replacement parts and accessories. Each of these items represents a new sale related to an existing product or piece of equipment (already owned by an end customer). In other words, e-commerce is changing the aftermarket.
Manufacturers typically start down the e-commerce path by implementing a few limited, tactical projects. Once there has been some success, initiatives get bigger and more strategic until e-commerce is ultimately viewed as a “mission critical” component for the entire business. According to Gartner, e-commerce is now viewed as an imperative for discrete manufacturing and to meet corporate expectations a consistent approach, across all departments, is required.
For discrete manufacturing, the Gartner report describes two business opportunities that are driving e-commerce: 1) create direct sales to counteract competitors and private labels; 2) reduce the cost of sales and marketing activities/ materials (printing and distribution). Gartner says, “…interest by both groups [revenue and cost] in online selling may have started with the sale of spare parts or accessories, and the groups are now moving on to selling the products.” In other words, allowing dealers and technicians to place online orders for service parts has proven to be so efficient and so valuable that OEMs are now opening up e-commerce to more products and additional customers. Gartner’s findings reflect a similar trend that Enigma sees where customers follow a multi-phase approach to making product, service, and parts information available online, offline and mobile.
The Gartner report tries to measure the interest in e-commerce for discrete manufacturing according to three different dimensions of business impact:
- High heat—reflects the level of interest observed during client inquiries and market analysis
- High rate of change—described as, “how fast organizations are changing their websites to improve the amount of sales coming through the websites”
- High customer-facing business potential—described as, “the degree to which an organization’s customers expect a company’s website to offer online transactional capabilities and their willingness to buy through the Web”
As the report from Gartner clearly indicates, more and more industries (like discrete manufacturing) are turning to their websites for increased revenue, reduced cost and better customer support. Enigma has 20 years of experience helping companies turn the promise of e-commerce into a reality and a recent webinar on electronic parts catalogs (EPC) freely shares the lessons we’ve learned over that time.
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