Three Ways After-Sales Service Aids Construction Efficiency and Profitability

Time is money in the construction business. Any equipment downtime can be troublesome and costly. Plus, projects can take a serious hit for each day that a revenue-generating piece of machinery is out of service waiting for a replacement part.

As such, construction equipment manufacturers must find new ways to optimize their businesses and avoid downtime, especially as competition grows from third-party parts vendors such as Amazon. After-sales service (i.e., the service delivered after the initial sale of a new product) is often viewed as a margin and revenue opportunity, but having a well-oiled after-sales service operation—especially for heavy equipment manufacturers—can have a real impact on productivity and be a differentiator for brands and dealers in the space.

Following are three key after-sales service areas on which construction equipment manufacturers and dealers should focus to boost efficiency, revenue, profits and customer loyalty.

1. MANAGE SERVICE PARTS INVENTORY

Managing service parts inventory has always been challenging for manufacturers, and the boom in e-commerce sales, expansion of SKUs and demand for quicker delivery from customers is creating more headaches than ever. Adopting a cloud-based service parts management solution can be a game-changer for manufacturers and providers of construction equipment. These solutions tie into existing enterprise resource planning systems, allowing organizations to track parts and eliminate obsolete parts. Also, they can reduce carrying costs, which account for an estimated 25 percent of a company’s total inventory value. Most importantly, inventory management solutions reduce downtime by ensuring that the right parts are where they need to be at the right time.

2. OPTIMIZE SERVICE PARTS PRICING

Pricing is a key lever when it comes to increasing margins and remaining competitive and profitable. However, many manufacturers continue to use Excel spreadsheets and cost-plus pricing strategies to determine service parts prices, often leaving money on the table in the process.

Pricing should not be static. Instead, it should be the result of a variety of factors, from weather to the day of the year. For example, Amazon saw a 27 percent increase in sales in 2013 after it brought in a dynamic pricing approach. All factors need to be linked under one umbrella to adjust pricing and glean accurate, actionable data—regardless of time of day, geography or currency—to ensure a company is continuously winning the pricing game and selling goods.

3. MIGRATE TO THE CLOUD

To compete in today’s crowded manufacturing space, companies must have a complete view of business operations. Performance information and production updates should be available to make decisions fast and easy in today’s always-on business ecosystem. To make sure the best business intelligence is available, manufacturers must move beyond the siloes of traditional computing and migrate to the cloud.

By the end of 2016, the public cloud market alone was worth $208 billon, and for good reason. Migrating to the cloud enables organizations to merge all their data into a single view. This is the epitome of efficiency, making pivotal insights and knowledge available from anywhere on the planet with no downtime.

While trying to stay on the cutting edge can be daunting, it is also a massive opportunity to drive growth and revenue.