Between acronyms, shop talk, and insider jargon, the aftermarket service industry can be complicated. With a long list of words to know, it can seem like you need a whole new dictionary to understand a simple conversation. From factory to pricing, there are a lot of words to learn, so we’ve put together an inclusive list of definitions so you can start—and stay—informed.
Aftermarket
The market for sales, accessories, repairs and enhancements that comes after the sale of a product. This can be a highly valuable secondary market in large industrial and automobile industries with long lifecycles of products. Aftermarket includes service part and after-sales service.
Aftermarket Lifetime Value
The total revenue an OEM can expect from their installed product. This is usually calculated by product lifetime, lifetime penetration, and average annual-services revenue.
Aftermarket Service
The delivery of parts, repair, enhancements, and maintenance on a product after the sale. Software that connects products can help predict and plan for these services.
Field Service Management
The management of resources involving a company’s employees at or en route to a customer’s property rather than on company property. Examples include driver and service management, locating vehicles, billing and accounting, dispatching and scheduling work, and other back-office activities.
Inventory Optimization
To put it simply, the act of balancing available inventory while keeping in mind supply volatility and market needs, to make the most money (not simple at all).
Inventory Software
Software that helps original equipment manufacturers (OEMs) manage the supply chain of manufactured goods. Applications are designed to track and manage all production processes from sales to material purchases and delivery of goods.
IoT
The Internet of Things, or IoT, describes objects (or a collection of objects) that are connected by technology such as sensors, software or other processing capabilities. The technology allows objects to collect and exchange data over the internet or other networks. For inventory management, this can be particularly helpful when managing and optimizing a large number of SKUs.
Machine Uptime
Machine uptime, also known as machine availability, or simply uptime, can often be an element of a Service Level Agreement (SLA) and means the percentage of time a machine or piece of equipment is in operation. Poor performance and/or lack of availability of a machine can lead to work stoppage, which includes machine repair time and increased cost.
OEM
Original Equipment Manufacturer, or OEM, or simply Manufacturer refers to a company that sells products or parts of a product that are branded and/or put together by a different company and then sold under their brand.
PaaS
Product-as-a-Service, or PaaS, (not to be confused with Platform-as-a-Service) is a growing trend as the world has evolved into a new service economy. PaaS is about selling products and services together in the hopes of achieving a particular agreed-upon outcome.
Parts Pricing
This refers to service parts pricing in the aftermarket, also known as the “after-sales market.” Parts pricing has to be consistent and aligned with internal priorities, while also taking external market valuations in consideration. The goal is to maximize profits by getting the most value from parts with a competitive price.
Price Optimization
Price optimization is the practice of finding the most effective price for a good or service that will ensure profitability and drive demand from customers. In order to fully optimize pricing, a business should analyze historical data, analyze customer behavior, decide on pricing tiers, and be open to readjusting as necessary.
Pricing Software
Pricing software helps businesses collect and analyze current pricing data and execute optimized pricing based on the market. Pricing software is often split into pricing analytics, price management, price optimization, and price execution.
Remote Asset Monitoring
For better control and management of assets, remote asset monitoring is a system that allows for off-site remote monitoring and maintenance of machines. With two-way communication between the asset and the central application, businesses can cost-effectively manage and support industrial machines.
SaaS
Software-as-a-Service is a software licensing and delivery model, also known as on-demand software. Instead of installing and maintaining software, a provider can deliver an application over the Internet. This is also known as cloud-based software. There are a variety of benefits including security, scalability, and cost.
Service Contract Management
Service contract management refers to the entire contract process from creating, storing, and executing on terms and conditions of a service contract. The service contract outlines what the customer expects and what the provider will deliver. The management of the contract includes:
- Request
- Draft
- Negotiate
- Approve
- Execute
- Report and audit
- Review and adjust
- Renew
Service Contract Pricing
Service contracts bring in recurring profits for providers, and pricing them is not an exact science. The key component is finding a price that optimizes revenue and provides the customer with what they expect to receive.
Service Parts
Service parts are parts that need replacing after excessive use. With wear and tear, many parts require replacement like windshield wipers, brake pads, filters, etc.—which are usually replaced during a regular service visit.
Spare Parts
Spare part is a generic term for any part that can be used as a replacement. They’re usually made to be easily removed and fitted, and with the right strategy can provide an increase in revenue and profitability.
Supply Chain
A word that’s recently been taking over headlines, supply chain refers to the entire process of producing and selling manufactured goods. From production to product development to distribution, the supply chain is a network of systems that work together to take a product from idea to consumer’s hands.
Uptime
Uptime refers to the time that a machine is working and available. See also “Machine Uptime.”
Uptime Software
One of the biggest, unexpected costs in the industrial sector is unplanned downtime. Uptime software works to move from the break-fix model, to using the information and data at hand to anticipate failures before they happen. Predictive maintenance can reduce costs for manufacturers by getting ahead of problems and reducing downtime.
Warranty Management
Warranty management is an important practice when looking to run a profitable aftermarket services department or organization. It includes the creation, implementation, processing, and administration of warranties, extended warranties, service plans, service contracts, and claims, and it must provide customers with the right amount of confidence and assurance without costing a business too much.