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.
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.