Tag Manufacturing

Tag Manufacturing

10 Differences Between Manufacturing and Service Supply Chains

December 29, 2015 Tags: ,
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After-sale service and part sales presents a gigantic market for powersports and equipment manufacturers. In the world of parts sales, for example, profit margins on OEM parts are often as much as 5x the margin on the original sale. That means an automobile manufacturer, for example, can net as much from selling $10 billion in parts as $50 billion worth of vehicles.

Unfortunately, most companies aren’t prepared to fully capitalize on this opportunity due to inefficient distribution channels, antiquated sales methods, and outdated technology. Dealers are geographically dispersed, have widely variable levels of technical capability, and are difficult to train uniformly. There may also be a cultural element at play: manufacturers are highly educated and attuned to sophisticated ways of maximizing production efficiencies, but the same mindset doesn’t apply to the service segment of their businesses.

Why? Because the challenges companies face in optimizing the manufacturing supply chain are quite different from those posed in improving service and aftermarket sales. Let’s look at 10 of the biggest differences between managing a production versus an after-sale service supply chain:

Manufacturing Supply ChainAfter-Sale Supply Chain
Market DemandChanges gradually over time and can be somewhat accurately predictedVaries based on factors that are not easily measured or predicted (e.g., weather, product malfunction); service must react quickly and adapt to change
Response TimeLong-term, scheduled in advance by manufacturerEnd customers have immediate needs for parts or service
Number of ProductsRelatively fewCould be thousands or millions of different part numbers, covering entire history of production
Type of ProductsSimilarWidely variable, can include personnel as part of service delivery
Distribution ChannelsMultiple dealer/distribution channelsUsually one network that must deliver multiple types of service
Inventory GoalSpeed up movement of resources through the production processHave resources in the right place at the right time
Two-Way Traffic?Products move only one direction through distribution systemReturns and repairs require managing reverse logistics
Length of Customer RelationshipEnds when product is soldCould be 20 years or more for products with long service life (long-term revenue stream)
Product TurnoverUp to 50x annually1-4x annually
Technology MaturityHighly developed ERP and EAM systemsStill in early stages of integrating field service and sales into enterprise systems

As you can see, there are many areas of opportunity for forward-thinking companies to gain a competitive advantage and increase top-line revenues from after-sales service and OEM parts sales. In order to do so, they should focus on each of the items listed and determine if improvement can be addressed through new technology implementation, workflow or process improvement, or other action.

Can market demand be more accurately predicted with a better system for tracking customer behavior? Can response time be speeded up through a more efficient ordering process, or better inventory management? Can the delivery of technical documentation be upgraded to provide dealers and service personnel with updated, rich content? Answer these questions correctly and manufacturers can take a big step toward increased loyalty and better sales figures.
 
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[Webinar] A Roadmap to the Future: Documoto by Digabit

August 3, 2015 Tags: , ,
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What’s the hardest part of a product’s lifecycle for a manufacturer to control? That’s right: After-sales service, with a potentially global network of dealers, consumers and support staff. All with different requirements for the vital information they need to get the job done.

The world of manufacturing and technical publishing is changing. It’s not just about parts catalogs. It’s about adapting the latest technology to make machines run longer, let people sell better, and keep your customers satisfied. If you don’t, your competitors surely will.

On August 18, join us as John Skinner, Digabit’s CTO, offers a forecast of the latest technology driving innovations in both manufacturing and the Documoto Authoring Suite.

You’ll learn:

  • Current trends in manufacturing and technical publishing technologies
  • How you can increase after-sales support revenues with Documoto
  • How improving dealer or customer workflow can massively affect your bottom line

Duration: 30 minutes
Presenter: Digabit CTO John Skinner
Date: Tuesday, August 18, 2015
Time: 8:30am MDT (10:30am EDT)

3 Things OEMs Are Worried About in 2015

February 12, 2015 Tags: , ,
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Thanks to new developments in technology and major supply chain shifts, the manufacturing sector is changing at a rapid pace.

In the past year, manufacturing production has increased faster than real GDP growth for the first time in over a decade, and, according to the Institute of Supply Management, revenues are expected to increase across 15 manufacturing industries in 2015.

While manufacturing activity has rebounded and there’s a more optimistic outlook for the future, original equipment manufacturers still report a number of concerns and business challenges weighing on their minds for the year ahead.

Let’s take a closer look at three areas OEMs are worried about in 2015:

1. Labor Costs & Retention

77.1% of manufacturing executives cited rising health insurance costs as their top challenge in this 2014 National Association of Manufacturers/Industry Week survey. With benefit costs climbing an average of 6.3% over the next 12 months, the majority of manufacturers are planning to increase copays, deductibles and premiums.

These changes may make it even harder to attract and retain a high quality workforce, which concerned more than half of the survey respondents. Not only are companies hesitant to hire due to healthcare costs and federal regulations, but many simply can’t find a capable labor pool of skilled workers.

As manufacturing and supply management consultant Patricia Moody explained on the AME blog, “We have a big problem with the labor base — nobody wants their kids to put tires on Buicks, and nobody wants to work in a factory. Factory owners can therefore only do one of two things — outsource or automate.”

2.Changes to Taxation & Regulation

Taxation, regulation and political unrest around the world can make production planning and capital investment extremely risky.

In the U.S., many OEMs are deeply frustrated by recent federal proposals. Regulatory compliance costs are skyrocketing, complex tax rules are becoming business prohibitive, and the Department of Labor is planning to revise overtime regulations.

According to Industry Week, “If federal agencies maintain their current pace of regulatory activity, the load will reduce manufacturing output by up to 6% over the next decade and by as much as $500 billion this year alone.”

3. Adoption of New Technology

OEMs are looking to boost efficiencies and productivity by implementing a variety of new technological tools. The IDC FutureScape for Worlwide Manufacturing predicted that, in 2015, customer centricity will require higher standards for customer service excellence, efficient innovation, and responsive manufacturing, which will motivate 75% of manufacturers to invest in customer-facing technologies.

Though the top technological trends for 2015, ranging from the Internet of Things to SMAC (social, mobile, analytics and cloud), present exciting opportunities, the challenge becomes getting employees, distributors, dealers and customers to adopt these technological advancements. If the intended users don’t recognize what the software can do for them, manufacturers will be hard pressed to get full engagement.

Next Steps

Manufacturers have little control over the rising healthcare costs and regulatory changes of today, but a successful software adoption is one concern that can be alleviated with proper planning.

Having the full commitment of senior management, setting expectations for deployment upfront, and investing in change management can fast-track user adoption. When considering the right technological solution, see what training and implementation services your software provider can offer. Digabit, for example, has a dedicated Services Team that helps manufacturers smooth the transition from the old to the new.

If you want to learn more about our technical services and implementation assistance, contact us today.

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