I recently ran across a powerful video produced by Atlas Copco, the European maker of mining and construction equipment. The video tells the story of a hypothetical fleet manager at a construction company.
During the two-minute video the fleet manager, Bob, interacts with an online platform created by Atlas Copco that performs a variety of fleet and service management functions. The system Atlas Copco is offering to their customers includes several software applications working in combination. What’s so special about this platform? It’s an example of what enterprises can accomplish by implementing an integrated set of cloud tools, each designed to facilitate a particular business operation.
So, FleetLink takes care of fleet management and maintenance orders, Parts Online handles part lookup and parts ordering (using Documoto as the core application interface), and QR Connect keeps a record of all the machines and devices connected to the system and associated data.
As you see in the video, a fleet manager or service technician who logs in to Atlas Copco’s system can see where their machines are located, the machines’ service status and what maintenance items may be required. They can look up and order parts, and view videos that demonstrate repair procedures. They can even take advantage of automated diagnostic tools to further optimize machine uptime and work scheduling.
The right data flows where it’s needed, exactly when it’s needed for employees to efficiently complete their tasks. This is the future of service, and it’s a reality now for Atlas Copco and their customers.
The magic behind Atlas Copco’s system is the ease of integrating modern cloud applications thanks to common standards and protocols. Grizzled IT veterans cringe in horror at the thought of converting and migrating data from older legacy systems, but the software world is finally moving past those terrifying projects.
And the Documoto platform has proven its ability to play a vital role in a fully integrated cloud/SaaS service solution for top tier manufacturers. If you are curious about how your aftermarket service organization might benefit from modern parts management, give Documoto a quick spin by requesting a demo today!
Original equipment manufacturers (OEMs) devote most of their sales and marketing resources toward selling new units and discovering untapped markets. This is logical, since the majority of their revenues generally come from new equipment sales.
However, it’s a well-known fact that service and parts sales for capital equipment (that is, commercial and industrial machinery with operating lifespans of a decade or longer) are large—and growing—sources of profits for many OEMs.
Because repair and maintenance services—along with replacement parts and supplies—typically boast higher profit margins than new model sales, these revenue streams can contribute greatly to a manufacturer’s top line.
Traditionally, parts were sold by OEMs through one of two channels, either through a dealer network or direct to the equipment owner. Dealers kept printed parts books at the parts counter to help with parts lookup and identification. Owners may have been given a parts list in an Operator’s Manual and a toll-free phone number, at best.
Of course, the Web has blown away the limitations of those old ways of distributing goods and information. Given that disruption, what’s the best way to sell high-margin OEM parts in the Internet age?
#1 Put It Online
Wouldn’t it be great if mechanics, dealers and other part buyers could find a detailed drawing of every single part in a machine and have complete confidence in the accuracy of that information, because it comes from the machine’s maker?
Unfortunately, many companies still manage online sales by providing a generic contact form with a message saying something like, “Let us know what parts you need, your model number and any other information you have.”
This puts a heavy burden on a potential buyer. I doubt if many customers bother to fill out these forms, but likely decide to call the parts department immediately in order to avoid this unfriendly online experience. Or even worse, a buyer in a hurry will simply perform another online search, seeking an easier way to buy.
Only slightly better than a blank form, the most common format for online parts catalogs is the PDF. In general, these PDF files are not searchable or indexed by search engines, either on the Web or on the OEM website. That means they’ll never appear in search results, and users are required to browse through, page by page, in order to find the assembly or part they’re looking for.
What OEM equipment owners, dealers and other buyers need is an online parts catalog with as much specific detail as possible. That means clear images or drawings, expanded part descriptions, a history of superseded part numbers, availability, inventory locations and other data that can only be provided by the manufacturer. Depending on the software used and the business objective, companies may choose to add eCommerce functionality to the parts catalog and enable direct online sales.
#2 Make It Attractive and Easy to Navigate
The shorthand for this principle is “customer experience.” Some companies value their customers’ time so little that they publish industrial parts lists on web pages with no illustrations and very little context. Just three or four columns with part numbers, prices and a brief description that may or may not be helpful in making a positive ID. What kind of customer experience does this type of parts list provide?
Wouldn’t it be better to have a clear illustration, or a 3D representation, or even an augmented reality (AR) app that make parts lookup fast and simple? And users should be able to search by part name, number, description or other criteria as appropriate. The technology is readily available for those who are prepared to take advantage.Car mechanic fixing car with augmented reality application
For companies that do provide highly interactive electronic parts catalogs, the contrast for users is remarkable. While many people think of parts as commodity items—and believe that buying decisions are primarily based on price—this is simply not true. Buyers value speed and convenience in ordering, and they will pay to get it.
#3 Make Sure It’s Accurate
Of course, ease of ordering doesn’t matter if dealers and equipment owners buy the wrong part. Or have to buy multiple parts because they don’t know which one fits.
Digital parts catalogs make it easy to keep part information current
How many aftermarket departments track returns and express shipping costs due to customers ordering incorrect part numbers?
In our experience, it’s a subject most people don’t want to talk about. However, we occasionally hear stories about the extreme costs of express freight shipping when an error is made in a critical parts order. And the thousands of dollars an hour that operators lose when machines can’t be repaired on schedule.
Some people view outrageous shipping costs as the price of great customer service and a necessary component of doing business. Wouldn’t it be much greater customer service to actually send buyers the right part the first time?
Achieving close to 100% accuracy is completely realistic with modern parts catalogs that are dynamically generated from a database. Technical publishers don’t have to wait a year before printing the next edition of an outdated paper catalog, they just quickly change the data in a master database and everyone in the world who opens the digital catalog can see the updates right away.
#4 Add Value with Additional Content
In the “on-demand” world of today’s consumer, it’s not good enough to offer the minimum in terms of product support. That means an OEM can’t just publish a non-searchable PDF parts manual and call it a day. Not if they want to stay in business.
For example, people search online for video demonstrations when they need to fix their personal vehicles, and that behavior is leaking over into the commercial and industrial workplace. If you sell equipment that is maintainable by the owner, make sure you’re the first source that customers think of when they need reputable advice.
What else can you offer that is related to parts, service and technical support? Is your parts catalog smart enough to show buyers related items when they view a part? Like the seal kit that’s necessary when replacing a drive shaft, or a crush washer that goes along with installing a new bolt?
OEMs are in a unique position in their ability to provide buyers with warranty information, inspection certifications, operating instructions and other proprietary data. Turn that information into a competitive differentiator by exposing as much as possible to users.
It all adds up in a customer’s mind when they think about a manufacturer’s brand reputation and how much loyalty they will feel the next time they decide to make a major equipment purchase.
Remember, it’s much easier (and cheaper) to sell to an existing customer than it is to land a new one. Treat your current product owners at least as well as you treat potential prospects. That means giving online visitors the product information they want and need to keep their machines running.
Technology is changing the world, and it’s also changing manufacturing
Incorporating digital best practices, such as working from relational databases, providing real-time information to employees and customers and improving the customer experience through online sales is what will separate the manufacturing winners from the losers over the next decade.
What’s Changed in Manufacturing
The internet has changed how customers interact with companies. We now live in a digital economy, where the ability to purchase almost anything is at the tip of your fingers with one click of a button.
Online shopping used to be thought of as only something that companies selling direcctly to consumers needed to factor in. However, the digital economy has so deeply permeated our behaviors that this isn’t limited just to B2C customers anymore. Things are starting to change for B2B commerce too, and companies that are smart enough to get on board will be the ones to reap the most successes.
Here are a couple of statistics to back up this change in purchasing preferences. A recent study showed that:
93% of B2B customers prefer to buy online when they’ve decided what to buy.
74% feel buying from a website is more convenient than buying from a sales representative.
56% expect to make half or more of their work purchases online this year.
This shows just how critical incorporating digitization into B2B and manufacturing is. B2B buyers want to be able to purchase products and get the information they need anytime, anywhere. They want their experience to be effortless and easy. And companies that don’t do this are going to facing a much shorter life expectancy.
How much time do your employees spend searching for information, making changes or fixing errors from inaccurate information?
Outside of some of the biggest companies, manufacturing today remains largely a “pencil and paper industry”. This type of mentality has a huge impact on how productive your business can be. It leads to departments working in silos, not sharing changes and updates and tribal knowledge that could be useful for everyone staying isolated.
This is obviously very inefficient. You have departments all over, working on different documents and outdated information, which can lead to the loss of time, and, as people leave, the loss of tribal knowledge.
Take care of this disconnect and optimize your internal operations. Start by getting everyone using the same database to store their documents, manuals and notes. Using this type of relational database in the cloud (meaning it can be accessed from anywhere) allows everyone to be connected and working from the same information.
This not only will have an impact for your engineers, but will also allow your field techs and customer service reps to access up-to-date parts information.
Think of all of the time your people will save by having instant access to real-time information and breaking down communication silos. This alone can save hundreds of thousands of dollars for your company.
End users are more empowered than ever.
When making purchases, they want something that is high quality, low cost, delivered quickly and information they can get instantly.
Manufacturers in the past have relied on dealer networks or conducting business over the phone. While there will still be businesses where this works, more and more customers want to be able to get their information and ordering done online.
A recent study found that customers that have to speak to a sales rep to make a purchase are 4x as likely to go somewhere else the next time they need to buy something. We need get in a mindset of being customer-focused. If you can do that, you can gain loyalty, which will help sustain your business and sell more aftermarket parts.
One major source of revenue many manufacturers are missing out on is providing easy access to selling aftermarket parts.
Studies have shown that about $1 trillion dollars a year are spent on parts for machinery people already own. What may surprise you is that OEMs capture less than 50% of this market currently. It’s will-fitters and other dealers that are taking advantage of this high profit margin segment, which is too bad.
There is no one in a better position to sell your parts than you. You have a distinct advantage when it comes to enhancing the buyer experience. You have access to exclusive customer data, comprehensive product knowledge and more precise parts information.
Parts sales is a market that is sitting there for the taking and can provide a long-term steady stream of revenue after an initial sale of equipment. While there will always be some people who only want a bargain, shoppers have proven that they will pay for convenience and quality, which OEMs can provide.
In Summary The companies that are going to thrive and overtake their competition are the ones that recognize the opportunities available and incorporate technology into their operations and sales. By creating a strategy early, you will be able get a jump on the market and leave everyone else in the dust.
A leading customer experience consultant from the UK, Gerry McGovern, recently published an article titled, Your Digital Interface Is Your Brand. While Mr. McGovern typically focuses on more service-oriented institutions and businesses, the message is a definite reality for manufacturers.
Think about how the average customer interacts with a manufacturing company. Whether that customer is a dealer, a machine owner, a technician who is working to repair equipment…it’s very likely that whatever that person’s role, their first contact when seeking help or information will be in the form of a website visit.
Ten years ago, this certainly wasn’t the case, especially for manufacturers of heavy and industrial equipment. Their sales models generally involve a dealer network, and customers were trained to contact the dealer first with any needs, problems or support questions.
In this scenario, the dealer becomes the literal face of the manufacturer. And in the past, the dealer was the closest and most effective representative of the factory and the products it made.
Nowadays, rather than the local dealer being viewed as the closest extension of the manufacturer’s brand, customers see an OEM’s website as shouldering a larger share of the responsibility for brand loyalty.
As McGovern puts it, “Our impressions and experiences of brands today are increasingly digital.”
He goes on, “When I think about my bank today I don’t think about its physical buildings or its people. I think about the hassle I constantly have with Java every time I visit its site, how the navigation is not simple enough, and how if I have to ring support I can be waiting 10-15 minutes for someone to answer….”
Is this how your industrial buyers, dealers and equipment owners think about your website? Do you make it easy for current and future customers to access your site? Can they easily find what they need? What percentage of visitors can achieve their goals without picking up the phone? Are you putting an internal business unit’s needs ahead of the customers’?
If you can’t positively answer these questions, you haven’t given your online presence enough credit for the massive influence it has on branding, customer engagement and the future of your business.
Instead of looking at data or metrics for the answer, ask your team
If someone came up to you and asked, “Is your business winning or losing today?” how would you answer? More importantly, how would you come to that conclusion? Would it be looking at sales numbers? Safety ratings? Number of products made?
These numbers and metrics are obviously very important. But I challenge you to look at winning and losing a different way. Instead of crunching numbers, ask your employees who are taking care of the daily activities on the floor.
What insights they have might surprise you, and if you can identify trends and issues, it could lead to beneficial changes to your operations.
The value of hearing from people on the floor
We all have unique skill sets that allow us to excel at our jobs. For senior leadership teams, this is usually focusing on the bigger picture and long-term strategies for the company. But, this can lead to a disconnect from the day-to-day operations. To gain back that perspective, talk with your employees in different positions and departments. Ask them the question “Are we winning or losing today? Why?”
How ever they answer, ask a few follow up questions to find out the cause. If they’re feeling like they’re losing, why is that? Was a machine broken that day that slowed down production? Does your customer service team feel inundated with phone calls and it takes too long to respond?
The feedback can be useful to see if there are reoccurring problems or themes. If employees bring up issues, ask them if they have ideas for solutions. They’re the experts at their role, and their suggestions might be something that is easily implemented. Or, they might have proposals for operational changes to make everyone more successful.
At the end of the conversation, Don’t forget to thank them. Most importantly, follow up. This will keep an open chain of communication and reminds people they are appreciated and valued.
Find the tools to solve your problem instead of seeking out a problem for your tools to solve
How many times have you been pitched a cool new tool that will “revolutionize your business”? And how many times have you bought it, told your team to use it and been frustrated when the results aren’t as promised?
This is due to finding a solution and then looking for a problem to solve. If you’re looking for ways to use a product, or you don’t have a reason to use it right away, it’s not valuable.
Instead, once you’ve identified areas that need improvement via your internal conversations, start looking for a product to solve the problem. Keep your employees engaged by having them participate in choosing a solution. Not only will they have a better idea of what they need it to do, but it creates buy-in early on, and employees will be more likely to use it when it’s in place. Take the time to train employees on the new tool, so that they can be successful.
This method works.
We had a customer that followed a model like this. Viking Range produces high-end residential ranges and appliances and is one of the leading American brands in that vertical.
Senior leadership identified a need to increase their efficiencies in their publishing department. They system relied on an outside vendor to update their content via static PDFs and spreadsheets. Because everything had to be updated individually, if a part was changed and used in dozens of different pieces of equipment, it took even more staff time to make all of the updates. In total, it was taking TWO WEEKS to create a single parts book because of the processes that were set up. The technical publishers knew they needed a better way to execute revisions. Senior leadership listened, took into account the suggestions from employees, and researched and evaluated products that could fix this cumbersome process.
They chose Documoto, because the cloud-based relational database allowed technical publishers to update a part once and have it populate across any materials that part was found, solving one of the biggest frustrations.
Viking’s technical writers and illustrators started using the software right away, and the results were immediate. It only takes the publishing team 30 minutes to make changes and distribute. It has also given control over the whole process to the publishing team, instead of having to rely on outside vendors. This accurate and immediate information distribution has had a ripple effect and had a positive impact throughout the business. (You can read the full story here).
Viking’s story is just one example of how this approach can revolutionize your business using employee feedback and finding solutions to problems (instead of looking for problems for your solution). Once you’ve taken these steps, ask yourself the question again: “Is my business winning or losing?”
This time, the answer should be, “Winning. I’ve worked with employees to help solve our operational issues, leaving them happier and more productive, and our numbers and data reflect that.”
The manufacturing industry is going through a revolution, and companies that don’t modernize their business practices are going to be left behind.
It’s been several decades since manufacturing companies began adopting software and tools to make internal processes more efficient: CAD for engineers, desktop publishing and graphics programs for writers and designers, and accounting software for bookkeepers, for example.
But the digital impact on our world and economy has changed how customers expect to do business. Now companies are feeling pressure to extend the benefits of technology and information sharing to their customer base, in the form of greater support and improved service.
With websites open and operating 24-hours-a-day, customers have come to assume a higher standard when it comes to accessing product information, from technical specifications to operating instructions to video tutorials.
That same expectation is also driving companies to invest in more robust eCommerce technology. No one wants to spend two hours on the phone trying to look up and order the right parts. Mechanics can’t wait a week to repair a machine that costs its owner thousands a day in downtime.
Technology allows employees to work smarter, not harder. And modernizing distribution channels to effectively sell parts and other products online can be a game changer for OEMs.
According to an article in Chief Executive, 80% of manufacturing executives know that digitizing their enterprises is a critical driver to stay competitive. However, only 37% have a strategy in place, and only 13% of organizations have digital manufacturing capabilities today.
As these numbers show, there is a huge opportunity for companies who embrace technology and get a comprehensive strategy in place as soon as possible. Those that do will be the industry leaders in the coming decade.
How much time do your employees spend looking for information in a day? Once they find it, how accurate is it?
Hiperbaric makes high-pressure food processing machines that sterilize and preserve food products in factories around the world. As a company at the forefront of innovation, they were looking for a way to provide better technical support for customers.
Check out the infographic below to see how Hiperbaric has improved aftermarket sales, field service productivity and user experience using Documoto.
Aftermarket sales are an afterthought for many manufacturers, which is part of the reason that independent third-party suppliers have captured most of the market.
Many companies are content letting these independent suppliers take care of their customer’s needs. There are a lot of common concerns about what it will entail to have a successful part sales strategy, which hinders manufacturers and keeps them from tapping into this high-margin business segment. Not only can these parts sales help boost a company’s overall financial health, but they can even generate more profit and revenue than original equipment sales.
To stay competitive, it’s time to change how we think about the aftermarket. Here are 10 myths about aftermarket parts sales and the reasons you should rethink those misconceptions:
If you use SOLIDWORKS Composer or similar publishing tools to transform CAD data into technical documentation, you already understand the importance of providing clear and detailed illustrations in materials for customers.
Which is why it’s surprising that so many manufacturers invest in tools like Composer, but then take the valuable images they produce and export them as standalone PDFs. If you’re creating technical illustrations and parts info from a data-rich environment and then importing it into a desktop tool like FrameMaker or InDesign, your company is throwing away a large part of their investment and making employee’s jobs harder down the line.
By creating standalone PDFs, the amount of labor required to create the parts catalogs and more importantly, to maintain them, is unsustainable– leaving publications staff with the constant feeling they are drowning in their work. In addition, you lose valuable data, interactivity, and the efficiency of publishing in a cloud environment.
But, by adding Documoto to your publishing workflow, you can harness the power of a relational database specifically designed to create and manage parts book content for complex equipment.
Why add Documoto to your publishing workflow?
Easily translate images and bills of materials (BOMs) from Composer into XML, the first step in creating a structured data environment.
Re-use parts and assembly information in an unlimited number of documents.
Keep up with engineering changes by simply updating parts and assemblies in one location – Documoto automatically updates other books that refer to those components.
Automate content creation and updates with ERP integrations, APIs and web services.
Join us at SOLIDWORKS World 2017
If you’d like to see Documoto in action and learn how it can be a benefit to you, come visit us in the Partner Pavilion at SOLIDWORKS World 2017, taking place Feb. 5-8 at the Los Angeles Convention Center!
Come see us at SOLIDWORKS World 2017 from Feb. 5-8 at the Los Angeles Convention Center. We’ll be onsite in the Partner Pavilion providing live demonstrations of Documoto, and our team will be available to answer your questions.
SOLIDWORKS World is a 3-day conference where attendees can learn about the latest technologies and select from more than 200 breakout sessions on topics ranging from design automation and electrical design to simulation and product data management.
Stop by Digabit’s booth (#200) in the Partner Pavilion and learn how to:
Streamline publishing with SOLIDWORKS – Composer – PDM – Documoto
Convert BOMs and illustrations into structured data for search and re-use
Enable online sales using Documoto Cloud Storefront
Over 20 years ago, the Harvard Business Review published a commentary by the CEO of Caterpillar, website Donald Fites. The article is titled, “Make Your Dealers Your Partners,” and it discusses foreign competition, the importance of after-sale service, and the huge role that Caterpillar’s dealers play in maintaining Cat’s market leader position. It’s illuminating to read this decades-old perspective and realize that, with all our technology and the incredible growth of global trade, not that much has changed in the fundamental distribution strategy for heavy equipment OEMs. While some may view these arrangements as antiquated or archaic, there are many good reasons why OEMs choose to maintain traditional dealer networks as their primary distribution channels.
Over the past several years, all the business pundits, management consulting firms, and enterprise software sellers have jumped on the same bandwagon when it comes to the future of B2B sales…
Younger buyers are digital natives, and they want to buy online
Multichannel (or omni-channel) sales are necessary to retain or gain market share
Global competition is commoditizing products of all types at a faster rate
Digabit understands this mentality. Many manufacturers are interested in direct-to-consumer sales, similar to a B2C retail eCommerce environment. It means customers can order any time and anywhere, using any payment method, with a choice of shipping alternatives and other buyer-friendly options.
This idealized business model appears to cut out the traditional roles of distributor and dealer. In the hypothetical model, customers know exactly what they want, and they want to satisfy their needs at the lowest cost, with the least effort.
But for manufacturers of complex, expensive equipment, this “ideal” is a mirage.
Whether a company makes trucks, industrial robotics, or a 200,000-lb. wheel loader, the real world of capital equipment sales and after-sale service and support is a lot messier than the ideal scenario presented in a consulting firm’s strategy recommendation. Some manufacturing verticals still receive huge value from the physical presence of a dealer network.
Benefits for OEMs that build strong dealer relationships
Dealership employees are the OEM’s human face, for everything from warranty management to promotional collaboration. It’s true that everyone gets frustrated with phone support, help desks and impersonal customer service. But we’re clearly not at the point where apps and artificial intelligence can replace those functions…and some people still prefer face-to-face communication.
In spite of the hype about drone delivery and other futuristic fulfillment methods, having a tangible product in inventory within a reasonable driving distance is important to some large equipment owners.
Nobody aside from the OEM knows as much about products and how they’re used as dealers who work with actual owners and operators every day. From providing service and maintenance, to cross- and upselling other OEM products, a great dealer’s product knowledge is still more relevant and accurate than online sources.
Customer loyalty and retention are highly influenced by dealer performance. Rather than being archaic artifacts, dealers provide assurance for buyers who spend millions on equipment. Does anyone want to buy a $1,000 part for a $500,000 machine from an anonymous website? I don’t. That type of sale still requires a level of trust and accountability that you won’t get from slick websites or one-click processes.
In short, the OEM-dealer relationship is neither dead nor dying. The model needs some refinements that are readily achievable by modern technologies. For example, OEMs need better visibility into dealer activity and inventories. And dealers need better communication tools and higher quality product information from OEMs. Technology is poised to tighten and strengthen OEM ties to their distribution channels, rather than alienating—or outright eliminating—their most effective support system.
Technology matters. For large-scale manufacturers, picking the right software system can mean the difference between a huge return on investment and a huge tax write off. Modern enterprise systems must be secure, reliable, and scalable.
Just as important, today’s systems need to communicate to share and re-use critical data, with real-time synchronization so everyone in the organization stays on the same page. And one increasingly important characteristic of many enterprise applications is the ability to operate anywhere a user has a web browser and Internet connection – one main reason cloud software is now the norm.
When it comes to parts catalog software, only one solution truly fits the description: Documoto by Digabit. Documoto’s collection of web-based technologies not only checks all the boxes for large-scale software deployment, it translates into real-world improvements in efficiency, aftermarket sales, and subsequent profits.
Here’s how it works.
1. Increases your publishing team’s efficiency
With Documoto, all of a manufacturer’s parts data is stored in the world’s most powerful and extensible database system, MySQL. And one of the best tools for Web-based applications, the Java programming language, defines the business logic to intelligently manipulate and manage that data.
This sophisticated business logic understands how machines are constructed within a hierarchy of parts, components, and assemblies. Change a part number or other information and the new data will propagate to all related documents and machines…unless you don’t want it to. The underlying code allows for creation of custom business rules to control the revision process, changing only the documents you want.
Every Digabit customer has reported at least a 30% reduction in the total time and labor it takes to create a parts catalog. For most, the savings is over 50%, and for some processes such as updating part information we have seen 90%+ time savings.
2. Integrates with manufacturer’s other enterprise systems
Most manufacturers have made large investments in enterprise systems like PLM, ERP, EAM, and the like. Documoto leverages those past investments through its ability to re-use existing data in the publishing process with little manual intervention. Import CAD drawings and Bills of Materials during publishing, and pull real-time part numbers, pricing and availability dynamically during the order process—right when customers need it.
Providing secured access to well-defined elements of enterprise data eliminates many potential areas of redundancy in a manufacturer’s support chain.
3. Powerful search tools in a flexible, familiar interface
HTML5, the latest HTML standard, introduced greatly improved interactivity to browser-based applications, with powerful APIs that promise a better user experience. Documoto’s presentation layer (the interface seen by end users) is built upon HTML5, increasing responsiveness and reliability within modern web browsers on desktop or mobile. HTML5 allows for easier data exchange, enhanced media presentation, and the greatest potential for integrating Documoto seamlessly into other portals and platforms.
Another component that adds value for end users is the SOLR search engine, an enterprise search platform that is highly dependable and lightning fast. Large volume, complex queries return results in seconds, so no more thumbing through parts books or waiting on hold while customer support looks up your superseded part number.
4. Encourages cross- and up-selling behavior
Documoto’s flexible Java code structure lets manufacturers group parts into kits or assemblies, so they control how parts are sold. Customers are happier when they get all the parts they need to do the job without making two trips to the dealer or distributor. Manufacturers can also offer special pricing to different classes of external customers, offer sales and promotions, and create suggestive selling opportunities for related parts, consumables and accessories.
Web services provide the magic that connects manufacturers’ enterprise data to the Documoto technology platform. Open web standards like SOAP and REST work to make sure that end users get the most relevant data available, from current pricing to inventory to accurate part numbers. Dealers and distributors sell more parts and have fewer returns (and shipping costs!) when they have the right information at their fingertips.
It’s no secret that equipment manufacturers struggle to compete with third-party suppliers in the aftermarket. Today, we’re finishing up our look at ten common misconceptions that hold OEMs back from parts sales success.
If you missed the first five myths where we talked about pricing, employees, fill rates and more, catch up here.
Myth #6: You can apply the same software, tools and resources used for original equipment production to the aftermarket
Most manufacturers blindly apply ERP thinking to tackle the complexity of part and service networks, but these processes and tools don’t account for the erratic nature of the spare parts business. Managing thousands of SKUs, distributing parts information to dealers and customers, drawing up forecasts to mitigate risk, and responding to parts orders with rapid speed all require software specific to aftermarket service and support. Otherwise, you’ll be facing mismatches between supply and demand, which in turn affects customer service and profit potential.
Myth #7: Parts demand is impossible to predict
Maintaining an efficient inventory of spare parts is one of the biggest challenges of the aftermarket. Unlike original equipment, after-sales services can’t be produced in advance of demand. You’ll never know exactly which parts you’ll need until a breakdown or maintenance issue occurs. But new technology like predictive analytics makes it a lot easier to predict service events. By using demand histories that look at the frequency of specific repair types in the past, manufacturers can generate more accurate probability-based forecasts of parts requirements.
Myth #8: Most of your parts sales will happen over the phone or in-person
While brick-and-mortar parts sales are up 1.5%, online sales are projected to grow 14% for the next several years, according to research by Hedges & Company. Additionally, over two-thirds of consumers in the US use the internet for price comparison and location searches before buying spare parts. This research indicates that the aftermarket focus is shifting from in-person and over the phone assistance to online support. Many of our customers have certainly experienced this shift. Takeuchi, for instance, receives 98% of their parts sales electronically thanks to Documoto’s E-Commerce features. Check out this infographic featuring the stories of Takeuchi and other manufacturers.
Myth #9: New technology like IoT and telematics won’t affect the aftermarket
We’ve talked a lot about how new technologies are driving growth for manufacturers, but it can be hard to see how parts sales benefit from these improvements. The truth is that IoT does more than just increase demand for original equipment, it creates a customer-manufacturer communication channel that can drastically impact the aftermarket. By incorporating sensors and telematics systems into products, OEMs can automatically notify customers when they’re due for service or in need of repairs while, at the same time, recommending nearby dealers and service packages. These convenience features give OEMs an obvious advantage over other aftermarket suppliers.
Myth #10: The complexity of aftersales rules out customization
The vast majority of OEMs and dealers think that maintenance and repair issues are too diverse and varied to tailor aftermarket services to individual customers. This limiting belief might be keeping you from another possibility – customizing your aftersales approach for specific customer types. Segmenting your installed base into five or six broader groups allows you to assess key differences like values and service behaviors and react accordingly. While one group might want top services and VIP treatment, another group might want thorough explanations for the service and price. By knowing what your original equipment customers expect and desire from aftersales service, you can develop new service products and frame existing packages to give these different customer groups a more tailored experience… and increase loyalty and retention rates as a result.
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Since the end of the recession, manufacturers have enjoyed a strong surge in growth, with many believing their companies will continue to see expansion in the near future, according to the Industry Market Barometer from ThomasNet. But with this level of growth comes the need to ensure operations can keep up with current and future customer demands.
Not all original equipment manufacturers (OEMs) are making the most of their current market positions to boost sales and reduce costs. With competition from other distributors and aftermarket dealers, OEMs need to actively promote e-commerce strategies to keep operational costs from inhibiting growth potential.
Employ uniformity across all channels
Industrial Distribution Magazine noted that OEMs work with a variety of other companies throughout the supply chain, which can make it difficult to have a single message or brand. When potential buyers look for a specific service or product, they typically begin their search online – increasingly via their smartphones or tablets. However, 61 percent of people will leave a website for another if they can’t immediately find what they’re looking for.
“By packaging parts together, OEMs can get rid of low-value parts that are typically hard to sell.”
Further, buyers want to see a uniform experience when interacting with OEMs, as opposed to having to deal with a number of different representatives or dealers. By having a streamlined strategy across the supply chain, manufacturers can create a browsing experience that will lead buyers directly to the parts they seek.
Every webpage, mobile app and parts catalog viewable by customers needs to present the same information in an easy-to-follow fashion. With e-commerce conformity, there is less physical work to do on the part of sales teams because buyers will already be further along in the buying process, negating time-consuming parts searches and phone calls. This can help minimize downtime and free up financial resources.
Expedite the sales process
Some of the largest challenges facing OEMs are the complex shipping, pricing and inventory management processes, according to Practical Ecommerce. Equipment must be shipped through a number of channels before it finally reaches its destination. Orders that are highly customized or require excess assembly are even more time-consuming and difficult to produce and ship. And because OEMs must face the reality of aftermarket dealers pricing their products lower, it’s crucial to ensure OEM parts are optimized within the appropriate price range.
These factors can cause backlogs, slow parts ordering and potential overstock in warehouses, all of which lead to reduced operational efficiency. E-commerce can mitigate these pain points if employed successfully.
With electronic parts catalogs, OEMs provide buyers with an open-access portal to locate parts in real time. Warehouses, shipping companies and distribution networks can all have access to the same portal, which helps track the location, availability and eventual destination center of each individual part. This e-commerce approach expedites the sales process by moving the orders more rapidly, completing sales sooner.
At every stop and handover, OEMs can save money because orders are ensured greater accuracy through the electronic system. This reduces gaps in shipping and eliminates the need for re-orders.
Promote upsell opportunities
Buyers are not always aware of the promotions available to them, and sometimes they’re even unsure of the exact specs they need. This provides a great opportunity for OEMs to upsell products and offer parts that may have contained less value, according to Manufacturing Business Technology.
With user-friendly indexed catalogs, online discounts and greater interactivity, buyers are more likely to purchase parts that they may not have otherwise. By packaging parts together, OEMs can also get rid of low-value parts that are typically hard to sell.
To reap the rewards of this e-commerce strategy, OEMs have to make promotions accessible to buyers, which is why websites and parts books should always include easy-to-locate incentives.
Cut down abandonment rates
By capitalizing on analytics, e-commerce can serve as an entirely new stream of revenue. The problem is that only 13 percent of companies implement new changes to their business by looking at historical data, as Shopify reported. While the analytical tools are out there, OEMs can do more to take advantage of them, especially in the field of e-commerce, which lends itself well to updated tracking of buyer behaviors and online activity.
Instead of simply looking at page views, duration of visits and other common e-commerce tracking measurements, OEMs should focus more explicitly on items like cart abandonment. In some cases, buyers find the info they need but they don’t follow through with the ordering process and abandon their online cart.
Manufacturing.net indicated that abandonment can be reduced by expanding parts catalog options and incorporating video tutorials, how-to guides and other helpful features. By nudging potential buyers in the right direction instead of allowing them to simply drop off, OEMs can secure higher returns on each part and product.
This strategy helps OEMs redirect more time and resources to committed buyers while also turning skeptical customers into loyalists. Instead of investing heavily in strategies that may not pay off, OEMs can use their money more efficiently and solidify the customer base of those that are already interested in their products and services.
OEMs that actively engage buyers online are better positioned to expand in the future, as more business is routinely being conducted over the Internet. Not only can OEMs save money on daily operational and administrative tasks by relying on e-commerce, but they can also increase profits as well.
Although OEMs have been working in recent years to regain market share in the parts sales business, independent third-party suppliers still rule the aftermarket domain.
Part of the reason is that customers believe aftermarket parts are cheaper than OEM parts and of the same quality. This perception extends to service providers as well – customers rarely return to dealers for non-warranty service because they view independent service providers as less expensive and less likely to offer unneeded repairs.
Even though these generalizations aren’t always true, they’re widespread enough to hinder OEMs from gaining a significant foothold in the lucrative parts and service business. Manufacturers should endeavor to change these customer-held beliefs over time, but in the meantime, it’s much faster and easier to dispel the fallacies your own employees and internal departments have about the aftermarket.
Let’s take a look at the common misconceptions about success with parts sales:
Myth #1: You should keep your best people on the primary product
The basis of this myth lies at the heart of the OEM identity. After all, you manufacture original equipment, and that’s what you do best. But when you keep all your top people on the primary product, your aftermarket business stands no chance against third-party suppliers for whom the aftermarket is their primary product. OEMs need a business model that focuses on parts sales. The market segment is too competitive for a part-time focus to be successful.
Myth #2: Your customers will automatically choose your OEM parts
Last month, we talked about how you have to give a compelling reason for customers to choose OEM parts over the competition. The key ingredient is lock-in. Aftermarket sales growth depends on customers being locked-in to buy your product or service. Extended warranties, long-term service contracts, patented parts you can’t find elsewhere, specialty service expertise – these are all examples of effective lock-in strategies.
Myth #3: Branding, advertising and social media are irrelevant for parts sales
Most OEMs do a remarkable job of marketing their original equipment, but they stop short when it comes to publicizing their after-sales services. Unless your customers are locked-in for life, your brand’s parts and services need to stay at the forefront of their minds. Manufacturers and dealers need to work together to generate buzz through press coverage, consumer events, and in-store promotions.
Myth #4: You have to lower prices to be competitive
Since most customers believe aftermarket parts are cheaper, slashing your prices may seem like a logical solution. Unfortunately, this accomplishes three things: 1) it lowers the profit margins on parts and services sold to locked-in customers and the small percentage of people who buy OEM parts regardless of price; 2) it incites competitors to lower their prices, thus starting a price war; 3) it sets you up to sacrifice quality for the sake of price. Instead, OEMs should focus on improving the overall customer experience and making their after-sales services more convenient for the customer.
Myth #5: Fill rate is the best yardstick of aftermarket performance
OEMs often measure their success and efficiency in the aftermarket by the percentage of orders satisfied from stock at hand, or the fill rate. But, as Harvard Business Review pointed out, “the level of demand that can be fulfilled through parts at the manufacturer’s warehouse has no meaning to the customer if her product hasn’t been repaired.” To truly increase customer satisfaction, manufacturers need to base their aftermarket business on customer-focused metrics like machine uptime rather than internally-focused metrics like the part fill rate.