Market uncertainty has become the norm for the manufacturing industry. Despite investing significantly in new equipment and disruptive technologies, manufacturers are still battling challenges on all fronts to ensure revenue growth. Unpredictability of demand and escalating inventory costs, coupled with obsolete parts in the inventory, further complicate this scenario. Dipping profit margins and intense competition have made manufacturers look for brighter opportunities.
What are forward thinking businesses doing to generate newer revenue streams?
The Shape of Things to Come: A Digitized Order
Selling spare parts and offering after-sales services (maintenance and repairs, installing upgrades, and reconditioning equipment) are an obvious alternate source of revenues. In fact, service parts for the automotive industry is rapidly evolving into a pivotal part of the larger operational matrix. According to a recent report, the Indian auto parts aftermarket business is predicted to grow to up to $16.5 billion by 2021, ten times faster than in North America and Europe.
However, spare parts demand does not follow the same patterns as product demand, and is difficult to predict in the absence of the right digital tools. In order to survive in a landscape as complex as this, you need to be equipped to drive smart and streamlined supply chain management. This requires employing network and inventory optimization techniques to appropriately manage spares availability and replenishment.
So, what constitutes a smart spare parts supply chain?
The market today is brimming with smart devicesengaged to create agile, efficient, hyper-connected and simplified workplaces. Soon, most devices around us will be embedded with sensors, generating massive volumes of dataenabling advanced analytics, enhanced customer understanding, and improved decision-making. Manufacturers are constantly monitoring, mapping, estimating, and evaluating this data deluge to generate valuable data insights. In turn, these insights can be leveraged to propel actionable demand signals to the spare parts supply chain.
The New Tech Blueprint
Let us break this down to study the potential impact of digital technologies on spare parts supply chain performance.
The Internet of Things (IoT)
Organizations across industries are already utilizing IoT technologies to get accurate data, understand consumers, build better relationships, and bolster performance. OEMs, too, can predict spare parts requirements and ensure timely repair services through IoT-enabled remote asset health monitoring.
Equipment manufacturers can leverage social media platforms to capture customer sentiments and influencer data to measure product performanceit also enables them to study product failure trends, and arrive at timely product recall decisions. Investing in platforms that promote knowledge sharing and communication could yield benefits such as improved knowledge management and customer relationships, and faster business processes. Terramac LLC and Hagie Manufacturing Company used social media to get real-time feedback and metrics on their online contenthelping in evaluating and modifying their present course to suit evolving market requirements.
The mobile working population is growing rapidly expected to surpass 105 million in the US by 2020. Manufacturing, construction, retail, and healthcare industriesinherently more mobileare expected to see faster growth in their mobile worker population. With the growing affordability of smart devices, and the adoption of bring your own device (BYOD) policies, field sales forces have been greatly empowered. Field service operations is mostly centered on spare parts management, and can benefit widely through a mobile solution that enables technicians to access a comprehensive repository of spare parts and their availability in the local or central warehouse. Real-time access to the parts list has multifold benefits, such as accurate estimation of the time required to fix issues. These measures help drive quality of service and propel performanceenhancing relationships with consumers and defining new standards for satisfaction and responsiveness.
Analytics can help firms identify trends in, and glean insights from, inventory use. Studying the consumption pattern of spare parts will help reduce instances of overstocking, and cut down on costs. Organizations can implement accurate forecasting practices, and manage obsolescence before incurring significant losses.
Towards Smarter Inventory Control and Demands Forecasting
The obstacles that have so far impeded the spare parts business can be addressed by deploying the right tech tools, at the right time. Timely and smart innovation can boost parts forecasting accuracy and enhance predictive recall capabilities. Manufacturers would also benefit from real-time monitoring of deployment and inventory scenarios, as well as ensuring rigorous delivery mechanismsall of which lead to increased profitability. The truth is that the industry will continue evolving at a breakneck speed, and only future-oriented organizations can survive. The silver lining is that emerging technological breakthroughs offer immense opportunities to arrest revenue leakage, boost bottom lines, and deliver outstanding customer service, at the same time.