In the first few weeks of the new year, major news stories all over the world have centered around the current changes within the manufacturing economic landscape. With durable goods manufacturers at the forefront of these stories, it’s impossible not to consider the impact these changes will have on the field service industry as a whole.
From social trends to economic waves, the climate of field service looks to be heading into what we like to call a “perfect storm,” an accumulation of all the right conditions for manufacturers with field service organizations. Syncron CMO Gary Brooks recently gave his insights on four of these trends and shared how, with the right approach, manufacturers in today’s evolving landscape can succeed in the wake of The Perfect Storm.
1. Durable goods orders are on the decline.
In 2016, the decline in demand for durable goods (e.g. airplanes, cars, heavy equipment and industrial machinery, among others) captured headlines, and the fluctuating sales trends continued for much of the year. This type of market volatility is causing most manufacturers to feel the pinch, and seek alternate revenue opportunities.
While new product-based revenues decline and margins diminish, after-sales service margins not only are healthy, but are increasingly providing new revenue opportunities for these manufacturers. In fact, upwards of 35 percent of manufacturers get more than half of their annual revenue from after-sales support, but just 12 percent say service and replacement parts are competitive differentiators. With this type of value coming from after-sales service, field service organizations must be optimized to run as efficiently and effectively as possible.
2. Millennials are shaping business strategy.
The hyper-connected, tech-savvy millennial generation will become the largest share of the American workforce this year, and by 2030 will make up more than 75 percent. This large, influential group is shaping business strategies across a variety of industries and segments, but what does it mean for manufacturers when it comes to after-sales service?
Thanks to speedy, at-your-fingertips service from companies like Amazon, Zappos and Uber, this same level of expectation will be required of manufacturers when it comes to millennials’ field service needs – both at home and at work. When a large piece of equipment breaks down, whether it’s a personal washing machine or hospital’s MRI machine, the user of that product needs and expects a quick repair. Manufacturers must adapt technologies and strategies to ensure service parts are in the right place at the right time, leading to quick repairs and happy customers.
3. The political climate is shifting.
With Donald Trump’s election in the U.S., the changing political climate brings both challenges and opportunities for global manufacturers. Trump’s national infrastructure plan could come with a price tag as high as $1 trillion – consisting of new or repaired roads, seaports, airports, sewer systems, schools, electric grids and more.
This facelift on the U.S. national infrastructure could lead to a significant impact on orders of durable goods – think of the equipment necessary to make these changes – and serve as a catalyst for owners and operators of currently idle equipment to capitalize on what could be a huge revenue opportunity. Field service teams must be prepared to see an influx in service requests, and able to complete the repair quickly.
4. Driverless cars are becoming more mainstream.
Most manufacturers have their eyes on autonomous vehicles, and how they could help or hinder their business – and these driverless cars could be just what manufacturers need to weather the “perfect storm.” According to Juniper Research, by 2025 there will be 20 million driverless cars on roads around the world, with them becoming most popular in North America and Western Europe by 2021.
For manufacturers, this emerging technology could be especially beneficial to field service. Driverless vehicles mean technicians can multitask – something that they can’t (or at least shouldn’t) do behind the wheel today. Multitasking allows technicians to use their field service app to ensure the upcoming appointment is as efficient as possible while en-route to the call – reading up on customer history, service part inventory and equipment data – so that the technician walks into the appointment ready to make the repair quickly and successfully.
All of these trends provide opportunities for field service technicians to do their jobs more efficiently and effectively, and for manufacturers to create that competitive edge with their service organization. Today’s most successful companies are looking beyond the new product side of their businesses and shifting the way they view post-sales service, implementing service-focused growth strategies and optimizing service operations.
All things considered, 2017 has a chance to be a definitive year for manufacturers, especially those with field service organizations. And while the future may hold some new waves and surprises, The Perfect Storm of these opportunities have the chance to revitalize and shape the future of major manufacturing brands – as long as they keep an eye on the forecast.