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After-Sales Service and Economic Resilience

The global spread of COVID-19 is creating economic uncertainty for families, communities and businesses around the globe. The business world is working to figure out what can be done to weather the sudden economic downturn and even emerge stronger than before. This is especially true for manufacturers and suppliers.

For Original Equipment Manufacturers (OEMs) and suppliers, the decisions they make today will determine their success in the coming months and beyond. And with orders for new products and equipment falling, they must leave no stone unturned in finding ways to grow revenue. One huge area of opportunity stands out: after-sales service operations.

After-sales service is already a margin-rich side of business, but it is all too often sub-optimized. Below are three key benefits of optimizing the service supply chain:

Mitigate Parts Supply Chain Disruption

COVID-19 is one of the most disruptive forces the service parts supply chain has seen in a long time. And with uncertainty around the duration and containment of the outbreak, OEMs need to constantly monitor how their supply chain is exposed, what the impact is, and what counterpoising measures they can take. Immediate steps to stabilize the supply chain could include rationing critical parts, negotiating higher priority from suppliers and, of course, supporting supplier restarts.

Longer-term supply chain stabilization will require updates to service parts demand planning, further network optimization, and a search for and acceleration of qualification of new suppliers. Some of this may be advisable anyway even absent the current crisis, to ensure resilience in the supply chain—an ongoing challenge that the COVID-19 situation has highlighted.

Pay Attention to Pricing

Organizations must respond quickly to changing market conditions and competitor pricing movements. A quick response requires an understanding of which parts need price adjustments, what those adjustments should be and how they fit into KPIs. It also means executing on these changes quickly and efficiently. Organizations that use off-line tools like Excel spreadsheets to manage service parts pricing will find themselves at a competitive disadvantage that negatively impacts the customer experience.

Plan for the Future

In some industries, the economic downturn will result in idle equipment and a steep decline in utilization rates. And while this may seem like a time to scale back the scope of forecasting parts needs to the immediate term, the opposite is actually true.

When the economy begins to recover and product utilization rates improve, any idle equipment will need service before it is back in use, resulting in a bump in parts demand for machinery reentering the workforce. This increased demand in service and parts could stress sub-optimized service supply chains that didn’t keep an eye on the horizon and will result in revenue being left on the table.

In an environment where manufacturers and suppliers can expect product-based, top-line revenue to decline, having an optimized after-sales service and parts infrastructure is a must. Manufacturers and suppliers that are able to get their after-sales service businesses in order will play a huge role in revitalizing the manufacturing category once the world emerges from the COVID-19 depressed economy.


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