Manufacturers around the world are currently facing an unforeseen economic downturn, creating feelings of uncertainty and stress for both employees and customers. However, I believe when challenges like these present themselves, as leaders we must act quickly to instill feelings of security and productivity not only for our teams, but also for our end-users.
So, how can manufacturing leaders help their companies navigate an economic downturn while simultaneously improving margins and increasing customer loyalty?
Today’s most innovative companies will turn to their after-sales service businesses. We know from the last downturn in 2007-2008 that customers will not buy new products, instead investing in the long-term maintenance of existing equipment. If customers experience exceptional service in this time period, they are more likely to purchase new equipment from you – instead of a competitor – when the economy recovers. Therefore, it is now more critical than ever for manufacturers to shift from a “product” to a “service” mindset.
Manufacturers around the world will need to make sure they have the proper technologies, resources and strategies in place that will maximize financial performance and the customer experience. These near- and long-term strategies should support increased financial and operational performance, exceptional customer experiences and competitive differentiation.
Below, I outline key areas of optimization in the service supply chain that can deliver immediate value:
Service Parts Availability
Perhaps the biggest uncertainty during this time period is customer demand – the unpredictability of the timing and extent of the demand rebound will result in confusing signals for several weeks. However, a sophisticated service parts planning solution can support:
- Robust order visibility to review open orders and determine if orders need to be delayed or canceled based upon demand
- The ability to relax excess criteria and redistribution rules to ensure existing inventory is used prior to purchasing new
- Analyzing and adjusting forecasts to reduce the bullwhip effect the downturn will have on inventory
- Increased time to test strategic initiatives with simulation capabilities
A cloud-based service parts planning solution allows manufacturers to exceed customer delivery expectations and maintain an edge over the competition – ultimately resulting in increased financial performance and an enhanced customer experience.
Service Parts Profitability
When sales begin to decline in a downward market, most organizations slash prices in order to gain sales. However if a competitor takes a similar approach, it can lead to an eroding market. Pricing decisions should ultimately be made with long-term vision in mind, and modern service parts pricing technology enables this, specifically by:
- Segmenting the business to determine the best pricing strategy for each segment
- Adjusting quickly to changing market conditions to understand parts that require price adjustments and how the adjustment will impact different segments
The most successful organizations will create a pricing strategy map that clearly identifies segments, segment strategy and the associated pricing strategy. A cloud-based service parts pricing solution that leverages advanced algorithms to analyze real-time data from multiple sources like customers, competitors and legacy systems allows for optimal dynamic pricing – ensuring the end customer has a great experience, while the manufacturer simultaneously maximizes revenue and margins.
Looking to the Future
It is clear that the world economy will suffer in 2020 and that consumers’ and companies’ buying patterns will be affected negatively in most industries. At Syncron, we were founded on the idea that after-sales service acts as a significant source of competitive differentiation, revenue, profits and customer loyalty. And while this unexpected disruption in the market can be damaging to businesses, it’s also an opportunity to evaluate and optimize key operations within the service supply chain.
We are steadfast in our commitment to ensuring manufacturers’ success and believe we will emerge more resilient and productive than ever.
To learn more about the increasing importance of after-sales service in a down economy, please join us for a 20 minute webinar where we will discuss how to build a competitive advantage for business, identify new revenue streams and retain customer loyalty.
Join us at 9:00 AM ET / 3:00 PM CET on April 1, 2020. Don’t have time to join? Register now and we’ll send you the recording right after the event.