The Uptime Blog
It would be difficult to manufacture anything without an accurate manufacturing bill of materials (mBOM) – that list of items (and instructions) that are cut, molded, welded, wired and assembled into a finished product. So why would some manufacturers expect their dealers and in-house technicians to service that same equipment without a service bill of materials (sBOM)– that list of serviceable parts and repair instructions that provide a critical maintenance road map for the life of the piece? Each bill of material serves a different purpose in the lifecycle of a product from conception, design and manufacture to service and finally disposal.
While much attention is paid to the early stages in a product’s life – the excitement of an idea being born, the exploration of engineering design and the satisfaction of commercially producing a piece of equipment for sale, not as much consideration is paid to equipment servicing during its useful life, and eventual end of life. It is during the “useful life” that a service bill of materials (sBOM) can make or break a revenue stream for makers of complex equipment. Having one can open up a healthy, free-flowing parts and service revenue stream, while not having one can choke revenues to a trickle.
Why is Aftermarket Parts and Service Important?
The aftermarket service of equipment and parts replacement during a piece of complex equipment’s most productive time – its useful life – is where we see the an outstanding opportunity to capture revenue. According to research firm Frost & Sullivan, in their report, “360 Degree Perspective of the North American Automotive Aftermarket", the aftermarket is expected to have an annual compounded growth rate of 2.3% from 2010 through 2017 – that’s over 91.0 Billion dollars in expected revenue. That’s good news for the automotive aftermarket industry but what about manufacturers of other types of complex equipment?
Similarities to other complex equipment manufacturing industries lead us to believe that they too have much in common with the aftermarket trends in the automotive industry. For instance, comparable economic forces are exerting the same kind of pressure on the healthcare industry. How Cars are Like CAT Scan Machines — What the Medical Device Industry Can Learn from Automotive Manufacturing.
Knowing how lucrative aftermarket parts and service can be and understanding the importance of providing the information needed to perform the work, two things become clear. Manufacturers need a functioning service bill of materials, and they need to quickly and accurately deliver it to their dealer network or in-house service staff for use through an electronic parts catalog.
What’s in a sBOM and why is it so special?
A service bill of materials contains a list of serviceable parts, which can be considerably different than the materials used to design or produce the equipment itself. A serviceable part is an individual part, assembly or component that can (or is designed to be) serviced separately after the equipment is assembled and sold. It is the service bill of material or sBOM that supports the equipment maintenance, repair and servicing after the sale. There are two important ways that the sBOM is different than the mBOM.
In-house assemblies. During manufacture the production team may use many small parts to create an assembly or component that is included in the piece of equipment – let’s say a suspension arm. Engineers designed the component for replacement, not repair meaning if any individual part that makes up the welded piece malfunctioned or wore out, the whole component would be replaced, not the individual plate steel parts of which it is made.
Purchased Assemblies. Now let’s say that the production team outsources some components that make up their equipment – a drive axel assembly for example. They install the ready-made drive axel during their production process. Although the drive axel is purchased as one ‘part’, it has been engineered for repair (ie. bearings and bushings) rather than full replacement like the suspension arm.
Negative Impact of using a mBOM as a sBOM
Using an mBOM to support the repair and maintenance of complex equipment rather than preparing and using a sBOM can shrink parts and service revenue as well as future new equipment revenue. Here’s why:
- Parts Ordering – parts used for manufacturing are not always the same as serviceable parts. Confusion on parts identification can cause mis-orders, missed or omitted parts needed to perform the repair, high rates of part returns and delays in repair resulting in costly equipment downtime.
- Repair Costs – there is a real cost to OEMs to repair complex equipment including both the parts themselves and the labor to perform it. Misinformation on parts, poor order processing, and not having access to the right repair and installation information all contribute to higher repair costs and less service and parts profit.
- Warranty – OEMs and customers incur costs associated with warranty items. For OEMs, the cost of warranty increases if the wrong parts are repaired/replaced. For instance, service technicians may not be aware that a warrantee part may include the replacement of surrounding parts that impact the life of the warranty part. In similar fashion, if a warranty applies to an assembly designed for replacement, but the mechanic doing the repair references the mBOM instead of the sBOM, he/she may perform a repair on part of the assembly rather than replace it, voiding the warranty for the customer. Additional time and materials costs to fix the errors drive up costs.
- Customer Satisfaction – in-house service technicians or the service team of a OEMs dealer network have a big impact on custom satisfaction. The purchase of the equipment may have been a positive experience, but long after the memory of that experience fades, the service team is still interacting and representing the brand and the product. Ongoing negative experiences with service can lessen customer satisfaction ultimately resulting in less goodwill, fewer referrals and/or repeat purchases.
Maintaining a service bill of material is important step in widening the aftermarket parts and service revenue. Distributing that information is just as important. Without a clear method of distribution the value of the sBOM is lost in a sea of inaccessible data. It must be available to dealer and service support staff to realize the real value. InService EPC (Electronic Parts Catalog) is a superior web-native application that enables OEMs to easily publish and distribute accurate, updated parts and service information for their dealer/distributor networks, opening the floodgates to aftermarket revenue.
A new production method is shaking up the manufacturing industry for good. MIT Technology Review calls it one of the top 10 Breakthrough Technologies of 2013. Additive Manufacturing – the latest breakthrough technology – is redefining how producers compete in a global industrialized economy.
A Brief History of Additive Manufacturing
At its core, Additive Manufacturing is based on 3D printing technology. And while it all seems to be shiny and new, 3D printing has actually been around for a while – since the late 1980’s. “… [I]n fact, 3-D printing has been slowly evolving in labs and in the market since Chuck Hall invented stereolithography back in 1986 with his company, 3D Systems” says Tim Hessman, Industry Week Associate Editor in a slide show titled “The History of 3D Printing”. It was a short step from there to the concept of laser additive manufacturing in 1997 by Aeromet (an MTS Systems company). According to a 2005 Aeromet press release, laser additive manufacturing (LAM) was the “process for the direct, rapid fabrication of three-dimensional titanium components, directly from computer-based solid models without the use of molds or dies”.
The beginning of commercial 3D printing for manufacturing had become a reality. Aeromet’s radically new technology gave them a competitive advantage in the production of laser formed titanium components to the worldwide aerospace industry that both reduced costs and accelerated time to market across aircraft manufacturing.
Although the idea of 3D printing has been with us for a while and research continues, the broader concept of Additive Manufacturing as a viable production process in manufacturing is relatively new. It also consists of far more than 3D print technology alone. The Additive Manufacturer Users Group (AMUG), which has been in existence since the early 1990s, educates and supports users of all additive manufacturing technologies including:
- 3D Printing (3DP)
- Direct Metal Deposition (DMD)
- Direct Metal Laser Sintering (DMLS)
- Electron Beam Melting (EBM)
- Fused Deposition Modeling (FDM)
- Laser Consolidation (LC)
- Laser Sintering (LS)
- Multi-Jet Modeling (MJM)
- Selective Laser Melting (SLM)
- Selective Laser Sintering (SLS)
- Stereolithography (SL)
Benefits of Additive Manufacturing
Most would agree that Additive Manufacturing reduces raw material use and provides a fast production, low cost method of delivery. Ed Morris, director of the National Additive Manufacturing Innovation Institute, in a recent presentation to the AMUG conference, was more specific in what he believes are the benefits of the process as it relates to the Department of Defense (DoD).
- Efficient use of Resources
- Small-Lot Production
- Rapid Manufacturing
- Agile Manufacturing
- Reverse Engineering
- Lightweight Structures
Manufacturing news and insight website Manufacturing.net sites five more top benefits of Additive Manufacturing that you might not have considered:
- Freedom to design and innovate without penalties
- Increased supply chain proficiency with ‘3D faxing’
- Support of green manufacturing initiatives
- Bottom line improvements through factory physics
- Get parts – fast
Additive Manufacturing and the Role of Parts Management
The last benefit on the Manufacturing.net list of top benefits really caught our attention. “Get parts – fast”. While the technology exists for rapid manufacture, not everyone will have at their disposal a 3D printer (or other additive manufacturing method) and detailed CAD drawings for easy reproduction of parts.
So, even though the methodology of manufacturing production may undergo a radical paradigm shift in how things are actually produced, the one constant is that complex equipment will still be constructed of individual parts. And parts (identification, ordering, payment, installation instructions, assemblies and service related bulletins) must be managed regardless of whether the parts are pulled from the warehouse stocking shelves or picked fresh from the 3D printer.
Integration with a manufacturer’s business systems has long been a key benefit of Enigma’s InService EPC software. It builds the bridge between the company’s enterprise resource planning (ERP) and product life management (PLM) that includes the critical aftermarket parts and service component of complex equipment maintenance.
Looking forward, Enigma is perfectly positioned to adapt to the new manufacturing paradigm that Additive Manufacturing is sure to introduce to the world. We’ll be helping to redefine how producers compete in a global industrialized economy.
a list advertising parts for machinery along with prices. (from Dictionary.com)
Over the years Enigma has connected with a lot of OEM companies who tell us they maintain and actively use a parts catalog. By many definitions they would be correct, whether that was a printed page distributed via snail mail or even a collection of PDFs that could be shared via email, they published a list of parts and associated prices to share with their internal service teams or network of dealers/distributors.
End of story, right? Wrong.
Vintage Parts Catalogs – what a parts catalogs used to be
“[A] list advertising parts for machinery along with prices” is an antiquated definition of a parts catalog, even by small scale manufacturer’s standards. It’s entirely inadequate to describe the types of tasks that parts catalogs are regularly called upon to perform while maintaining the uptime on an expanding fleet of complex equipment.
While technically speaking, companies may have a printed parts catalog – or even what they consider to be an electronic parts catalog (collection of PDFs), those definitions are far too limited to be of value to an OEM looking to support their equipment after the sale or to support their network of dealers that maintain their equipment.
The expectation of what a parts catalog does and can do has evolved. Service technicians, dealers, and even customers want immediate access to in-depth information, not just a list of parts and their prices. They want to see illustrations of individual parts, sub-assemblies and their relationship to the entire piece of equipment. Service techs and dealers want access to service manuals, service bulletins, marketing product sheets as well as parts availability. The manufacturers themselves want the parts catalog to become part of their revenue model with facilitated ordering and to provide analytics on orders, parts or service searches, and maintenance.
Integrated, Illustrated, Electronic Parts Catalogs – what a parts catalogs looks like today
Parts catalogs have advanced to become the backbone of the service organization. Today an electronic parts catalog is a vital part of an OEMs aftermarket maintenance information structure and knowledge base. It’s a mission critical tool that allows maintenance and repair teams to access service information, identify parts, check availability and order online, share best practices, and integrate with other business functions.
According to the The 2012 Field Service Benchmarking Report by WBR Research, over the next five years, the service market will:
• Involve more integration with customers and focus on core deliverables for business growth
• Be technology product driven due to the demand (gratification) for immediate information
• Move toward predictive maintenance, BI to OLS, customer self service, and cloud based software services
• See “Bring Your Own Device” to work impacting delivery models outsourcing of more service related activities; consolidation of service providers into adjacent space”
Enigma has been pre-emptive in researching and adding features and functions to our parts catalog to stay ahead of the changing service trends. We offer a web-native application that enables equipment manufacturers to easily publish and distribute accurate, up-to-date parts and service information for their dealer/distributor networks.
Parts and Service Information
Parts catalogs house far more than just parts information
Transactions and Integration
- Illustrated parts catalogs display a parts list and assembly illustration together with dynamic part information (pricing, location, availability)
- Parts lists, alternative parts and assembly views that provide dealers and service technicians with the information they need
- Part cards display detailed information regarding the selected part, such as price, cost, quantity in stock, quantity on order and warehouse location (BIN)
- Complete parts, sales and service information delivered by serial number, product line, model and options
- Support for multiple data formats including tables, text, graphics and video
- Shopping carts, lists and e-commerce integration to streamline and automate the parts ordering process
- Choice of DVD, web/online or print distribution packages, with incremental updates
- Administrator tools to generate and automatically distribute parts and service updates
- Open architecture enables integration with back-office applications such as warranty, diagnostics, inventory and ERP systems
- Search functionality that enables simple or advanced searches according to free text, serial number, part number, description, product type, family and model
- On-the-fly creation and viewing of collaborative e-notes for maintenance and feedback
- Bookmarks and history to save and recall the model, assembly and serial number filtering, and allow users to easily return to previously viewed parts catalogs or product information
- Complete support for foreign languages and currency
- Dashboard Reporting providing business intelligence and predictive trends
- Flexibility for on-line, off-line, and mobile service environments
- Browser and device independence to address BYOD concerns
Is Your Parts Catalog Vintage or Mission Critical? Questions to Ask Yourself
The following are some questions to see how your parts catalog compares. Is your company operating a vintage parts catalog or have you embraced the modern definition, features and functions that are necessary to succeed in the aftermarket support of complex equipment?
- Does it include more than just parts (ie Service manuals, service bulletins)?
- Does it include dynamic illustrations of parts assemblies with hot spotted parts?
- Does it easily support multiple file formats (even video)?
- Is it integrated into critical business systems (like ERP, PLM)?
- Can it scale as the business grows?
- Is it easily navigable and provide contextual search with highlighted search results?
- Is it mobile and can it be accessed online or offline?
- Does it provide analytics to managers and/or executives?
With a good sense of the type of parts catalog you’re operating, along with a clear understanding of where the service industry is moving you’ll have the tools you need to successfully navigate your company’s service growth.
Tags: aftermarket, electronic parts catalogue, parts and service, parts catalog, InService EPC, dvautier, diane vautier, automotive aftermarket, electronic parts catalog, epc software, maintenance, complex equipment
Aftermarket support can be inexact. It’s hard to define, hard to differentiate, and even harder to transition from cost center to profit center. But, armed with three strategic best practices, aftermarket operations can find and capitalize on opportunity with success.
Benchmarking compares a company’s business processes and performance metrics against best in class or other similar industry standards. Management consultant, university professor and author Peter Drucker best described the value of benchmarking when he said “what's measured improves”, and benchmarking makes meaningful measurement possible.
Benchmarking in OEM or third party aftermarket support is an important step for ongoing and continual improvement. It is the process of identifying key performance indicators (KPIs), measuring them, establishing goals for improving them and then monitoring them to evaluate the level of improvement. According to a Blumberg Advisory Group study, “benchmarking is the key to understanding aftermarket services … and identifying areas for improvement.”
What types of performance metrics are benchmarked in aftermarket industry?
That depends on the industry. For instance, the telecommunications and consumer electronics industries consider key performance indicators to be No Fault Found and the overall length of the depot repair cycle. Blumberg Advisory Group found that “No Fault Found (NFF) remains one of the most cost prohibitive issues for manufacturers. 80% of respondents stated that they are looking for alternative solutions to combat high levels of NFF.” They also found that the overall length of the depot repair cycle is critical because it is essential to operational readiness and sustainability and impacts on-hand inventory stocking.
Accountants and advisors Moore Stephens Automotive, in their Key Performance Indicators for Automotive Retailers report, identify gross return on investment and gross profit percentage (among other indicators) as top automotive parts KPIs. They include gross profit percentage of labor and the parts/labor ratio as KPIs (among others) for service work.
Find and benchmark whatever aftermarket metrics are important to your industry and let those KPIs inspire strategies for improvement.
Integration connects a company’s various departments and business centers. It improves communication, streamlines operations, creates valuable channels for monitoring established KPIs, and helps drive revenue.
Integration in aftermarket operations creates a significant competitive advantage and is an important factor to future success. Enigma’s partner SAP in its whitepaper Best Practices in Complex Equipment Manufacturing, Sales, and Service writes:
“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.Typically, these cost centers have ‘island’ systems that are not integrated to the enterprise, inhibiting communication with customers and customer service organizations, service groups, engineers, vendors, and suppliers.”
They go on to say that “[i]ntegrated applications, especially parts and service catalog information, enable organizations to position inventories, either globally or locally to better service your customers.” SAP’s conclusion is that “manufacturing companies with integrated parts and service information are enjoying reduced inventory levels without a decrease in customer fill rates.”
Jonathan Carey, Managing Director and Head of the Automotive Aftermarket Practice at BB&T Capital Markets, in his 2012 Automotive Specialty Products Alliance (ASPA)presentation Current State of the Aftermarket estimates that the retail online penetration rates for the auto/autoparts industry has a “conservative growth potential of 12%.” That’s a huge growth opportunity that will elude OEM parts organizations still clinging to outdated “island” systems that are not up to par with progressing online usage estimates.
Continued focus on incorporating new technologies and responding to new trends allows integrated aftermarket organizations to outperform their competitors. The introduction or upgrade of an electronic parts catalog, with field service mobility, and browser and device independence (HTML 5 and CSS3 compliance), position OEM aftermarket organizations for continued success.
3. Predictive Analytics
Predictive Analytics unleashes the power hidden deep in business data. Whereas traditional reporting tools show you where you’ve been, predictive analytics uses data patterns to uncover forward-looking trends (either positive or negative) that help guide critical strategic business decisions. It’s the closest thing you’ll get to an aftermarket crystal ball.
According to a Forrester Research study, “predictive analytics enables firms to reduce risks, make intelligent decisions, and create differentiated, more personal customer experiences.” Enigma has identified three critical areas where predictive analytics can provide a competitive advantage for OEM or third party aftermarket service and parts support – to evaluate service and parts processes, identify product and service trends, and drive parts purchases.
- Evaluate Service and Parts Processes
o Gain service & parts insight about how often the EPC is being used and for what purpose
o Gauge the impact of the EPC on business and identify opportunities to capture revenue
o Align people, processes and assets to optimize performance for productivity and profitability
o Measure KPI’s to evaluate goal attainment
- Indentify Product and Service Trends
o Detect hidden service patterns and part search associations
o Efficiency of technical service & parts content
o Learn which specific equipment or models are causing the most (and least) EPC usage
o Identify quality training issues
o Identify opportunities to capture revenue
o Measure the number of lost parts orders due to shopping cart abandonment
o Understand online parts purchase flow and value via submitted carts
o Strengthen customer retention
o Improve cross-selling opportunities through service patterns and part searches
Engima’s most recent InService EPC Version 5.5 release has introduced a Dashboard Reporting feature that sheds light on these three areas to uncover business information, and giving managers and executives more insight into these three critical areas of aftermarket operations.
Knowing and working the three strategic best practices in aftermarket support will position aftermarket operations for continued success.