Durable goods manufacturing is a volatile category. Order volume can swing back-and-forth like a pendulum. Just last month, the US Commerce Department found that new orders for larger durable goods – think bigger, heavy machines like cars and tractors – fell almost four percent in January. This was the biggest decline since July of last year. To counteract the decline in orders, smart manufacturers are looking for innovative ways to make money and boost margins.
One area they’re turning to is after-sales. After-sales is the period following a product purchase, when customer service, maintenance and spare parts are required. An example would be if a bulldozer needed a new crankshaft. The bulldozer’s manufacturer can service the machine and provide the crankshaft to the machine’s owner or leaser. For enterprise manufacturers, this is big business. The revenue from after-sales can be as high as 55 percent.
But managing after-sales is challenging. The global maintenance of thousands of goods and millions of parts across thousands of customers is prone to errors. Mistakes mean lost revenue and angry customers. This is what Syncron, a company making artificial intelligence tools for the after-sales, is trying to solve.
“There’s more interest in after-sales service now than ever before,” says Syncron CMO Gary Brooks. “Manufacturers understand the value that exceptional service experiences can bring to a company’s long-term financial performance. Most reports indicate that after-sales service averages a gross margin of 39 percent. It’s much higher than margins on most new products.”
Syncron has been around since 1990. It’s a Swedish company with a massive presence in the US and globally. According to Brooks, Syncron was started with the idea that after-sales services could be a source of competitive differentiation, revenue and customer loyalty.
Initially, Syncron built and provided basic software to help manufacturers with after-sales inventory and supply-chain management. But, in the last several years, the company has started investing more in AI, infusing it with its core products to make them more intelligent and predictive. As a result, Syncron’s revenue increased 40 percent last year, with a record of more than $30 million.
“The Syncron of yesteryear is fundamentally different than the Syncron of today,” added Brooks. “In 1999, we were basically a boutique consulting company with a technology solution that served a small group of companies in the U.K. and the Nordics. We have grown substantially.”
Now Syncron has 10 offices around the world and is doing business in more than 100 countries. The company has completed over 20,000 solution implementations across a client base that features huge manufacturers like Volvo, Brother, Caterpillar, Electrolux, Hitachi, and Mazda.
Syncron’s pillar products are Syncron Inventory and Syncron Price (you can buy them all in one tech stack called Syncron Service Cloud). Syncron Inventory helps manufacturers manage their after-sales parts supply chain. It can forecast restocking needs based on seasonal patterns and trends. Syncron Price can dynamically identify the best price for a part. It spits out a price after looking at global and regional price lists, discounts, rebates, and more. The algorithm calculates the optimal price for both the manufacturer and customer.
“Our machine learning empowers manufacturers to make the best and most accurate decisions in real-time,” said Brooks. “This is why we invest 20 percent of our annual revenue into R&D.”
JCB, a top construction equipment machinery company, uses Syncron Inventory to manage parts in its global network of 14 distribution centers, with over 2,000 dealer locations. Volvo’s construction machinery business uses Syncron Pricing. Brooks says Volvo has more than a quarter million unique parts to manage across 1,300 locations, with 500 price lists and 17 currencies.
“Syncron Inventory optimizes the complete service parts supply chain while Syncron Price lets you price according to true value,” says Brooks.
Syncron also sees the Internet of Things as a massive product opportunity. Later this year, they’ll launch a new technology called Syncron Uptime. The goal, Brooks says, is to cut down on “downtime” – product failure – by helping manufacturers forecast when and where a repair or replacement part will be needed before the machinery fails. This is where IoT data ultimately comes into play.
“Today, more parts than ever have smart sensors,” Brooks pointed out. “This gives us massive amounts of readily-available data. Currently, manufacturers have access to this data, but are still figuring out how to act on it. The only way to make it truly actionable is to apply machine learning. It allows manufacturers to redefine the way they manage after-sales service. Right now, it’s a reactive, break-fix service model. AI can help move us towards a model that maximizes product uptime by preemptively repairing equipment before it ever fails.”
The way the service works is it’ll track, in real-time, equipment uptime and downtime, using sensor data for anomaly detection and malfunctions. Then, it layers predictive analytics on top of everything to forecast error codes and emergency order routes in case a product goes down.
Brooks and Syncron see this as the future of after-sales. And the research backs that up. Global reports forecast IoT spend on parts in manufacturing will reach nearly $3 billion by 2022.
“The durable goods manufacturing industry is on the brink of one of the most impactful transformations in history,” Brooks concluded. “After-sales is a key growth and profit lever. Syncron is prepared to be with these brands every step of the way. Our unique and specific focus on after-sales service offers something our customers can’t get from other platforms or places. We lead our industry in innovation and will continue to build solutions that help manufacturers around the world – from North America to APAC, globally – tackle the most complex after-sales service challenges.”
SHARE THIS POST