Written by Syncron 4/2023
Dave Hart of FSA discusses insights from Syncron’s recent study with data from 500 service and supply chain leaders across Europe and the United States
Have you ever wondered why the word resilience resonates with so many people? It’s not as if we’re all bouncing back from major trauma or hardship every day, or are we? Perhaps resilience is more than just a buzzword. Maybe it’s a way of life, a mindset, a philosophy, a mantra.
Resilience is what makes us human. This concept has never been more relevant for service businesses that need operational efficiency and real-time data to manage unexpected supply chain disruptions. By prioritizing service offerings and focusing on predictive maintenance strategies, companies can safeguard their revenue streams and continue shaping future growth.
Resilience was abundant in service and supply chain organizations during the COVID-19 pandemic—the lockdowns, travel restrictions, border closures and health protocols created unprecedented shifts in supply and demand patterns across different regions and industries. These factors, combined with other sources of disruption such as geopolitical tensions, trade frictions, cyberattacks, natural disasters and climate change, have intensified uncertainty. Additionally, the ongoing conflict between Russia and Ukraine continues to threaten energy supplies and security in Europe. These examples highlight how global supply chain networks face constant uncertainty, emphasizing the need for robust inventory management and proactive aftermarket strategies that preserve customer satisfaction.
Businesses today are comparing their operational impact to their peers and wondering whether they’re alone in facing these challenges. How are other organizations and industries reacting? How do differing geographic nuances come into play? When faced with these questions, businesses need to understand they are not on an island. Many industrial companies, from aerospace defense to manufacturing, have had to adapt their initial sales approaches to maintain an installed base, focusing on aftermarket service and maintenance repair. By strategically expanding their aftermarket offerings and leveraging artificial intelligence to provide real-time insights, these businesses can build a competitive advantage that drives ongoing customer relationships.
These challenges have exposed the vulnerabilities of complex, highly globalized supply networks that rely on a limited number of third parties. Many organizations have realized they need to diversify their supply base, reduce dependence on single sources or regions and increase regional or local sourcing capabilities. They also recognize the need to invest more in technology solutions such as digital platforms, advanced analytics and automation tools to improve visibility, agility and resilience across supply chains. Modern supply chain management now relies heavily on integrating field services for better service delivery and more effective service supply chain strategies, ensuring maximum customer experience and improved cash flow.
Exploring whether these issues are global or regional, industry-specific and whether large companies are affected as much as smaller companies are important considerations. Historically, it has been almost impossible to clearly establish the facts—until now. Collecting real-time data can help service business leaders identify market gaps and create aftermarket service offerings that deliver a reliable revenue stream, even when faced with major supply chain disruptions.
Vanson Bourne, an independent market research partner for the global technology sector, surveyed 500 companies in the United States, United Kingdom and Ireland, Germany, Austria, Switzerland and the Nordics. They contacted CIOs, CFOs, vice presidents of supply chains and service leaders to get an unprecedented view of their challenges. In this series of four blogs, we’ll delve into the findings to understand their plans for mitigating global forces and establishing their resilience levels. These leaders recognize that part of achieving resilience lies in fine-tuning product development processes, sharpening inventory management and fostering strong customer relationships to maintain consistent product sales and sustain revenue streams.
Key findings include:
Recessionary forces, labor and talent shortages and the rising cost of working capital are challenges being felt across all geographies and markets. Companies are looking to reinforce their supply chain management with advanced operational efficiency and predictive maintenance, ensuring that their long-term aftermarket strategy remains profitable in the face of disruptions.
95% of those surveyed agree or strongly agree that they expect to have to trade off the cost of parts with providing great service, with 85% stating that meeting customer expectations is often or always challenging. Covid may have gripped our economies in 2020, but it’s still impacting companies’ operating environments. Balancing exceptional customer experience with cost-effective service offerings remains a challenge that service businesses must solve to retain a stable customer base.
Only 24% of service leaders surveyed are using third-generation, agile SaaS solutions built specifically for service or supply chain. Most organizations (60%) are using non-agile or custom-built solutions instead. This highlights a gap in leveraging real-time, cloud-based systems that can improve competitive advantage and help manage complex aftermarket service business models.
99.8% of service leaders agree that spare parts optimization is a challenge they face.
Moreover, 99.6% of service leaders agree that they face challenges with spare parts pricing optimization. Virtually all 500 respondents are experiencing these significant obstacles. This underscores the importance of strong aftermarket offerings and carefully designed service supply chain processes that focus on both product quality and customer satisfaction.
Service and supply chain organizations face many barriers and trade-offs when trying to transform their operations. One of the biggest challenges is finding and retaining talent with the right skills and capabilities to support their digitization efforts and advanced planning systems. Another challenge is managing inventory costs while ensuring adequate service levels for customers who expect faster delivery times and more personalized offerings. A well-integrated service business can generate new revenue streams through consistent service delivery, promoting loyalty and keeping the customer base engaged. The combination of real-time data, artificial intelligence and predictive maintenance can further strengthen this model, ensuring aftermarket service offerings thrive in a global supply chain environment.
Research indicates that the average margin improvement respondents expect to see if they could invest in operational improvements is 10.5%. Resilience will be required in abundance to achieve that number. As companies navigate the challenges of supply chain disruptions, robust service strategies and a strong installed base can protect both revenue generation and overall cash flow.
