Andreas Noll on the subject of after sales service and visual search

Research has shown that experts need on average 12 minutes to identify a replacement part with the help of documentation, blueprints and instruction manuals. Often, this type of documentation does not exist in digital format, something which adds precious time to the task.

This represents a particular challenge for the inexperienced maintenance person. They are often unable to identify the correct SKU (Stock Keeping Unit / article number) when there are no barcodes, serial numbers or QR codes available to help them out.

In contrast, the positive identification of replacement parts using mobile applications takes a mere 6-8 seconds. With the application of artificial intelligence, the accuracy is also noticeably increased. Employees and maintenance personnel get important information about the part in question within a few seconds, and can connect directly to the online store or the repair manual as required.

Andreas Noll, independent business consultant and expert on the industrial aftermarket, and Patrick Schneider, sales manager at Humai Technologies, talk about new trends and developments in the replacement part business.

Mr Noll, you are a business consultant specialised in the capital goods market. Before that you were responsible for the replacement part business at KION and Ammann. What are the trends you are presently seeing in the aftermarket sales, and what are your thoughts on what you see?

In the aftermarket of the capital goods manufacturers we are witnessing major changes right now. On the one hand, there is the constant pressure to become faster. Service and maintenance providers keep fewer and fewer spare parts in stock, and this is why the ordering processes and the physical supply chain has to improve and become faster. Latency – the combined time it takes from a machine defect occurs until the machine is back in action – is nowadays carefully scrutinised by all users.

On the other hand, there is also the added pressure of increased transparency of replacement parts offered by OEMs on the Internet. Free traders, also called “spare part pirates”, are of course also familiar with these pressured margins. As they have no overhead, they can always undercut the OEMs on price. In this competition the OEMs often don’t see the forest for the trees: their focus is on the process design around the rapidly expanding flood of spare parts, rather than on the market proximity of the cash cows. But this is exactly where the competitors are attacking.

 

Why is the replacement part business not in focus in your opinion? 

Historically, the aftersales part of machine and plant engineering has been a source of irritation. Customers wanted parts that – of course – were not in stock and that took much longer to produce and deliver than the customers were willing to wait for, so many companies referred their customers directly to the parts manufacturers, quietly thinking: “Let’s see how they deal with THAT!”

In the meantime it has occurred to the companies that there is real potential for generating income from aftermarket sales. And the realisation behind this is not that services and parts should be sold, but rather time. Time saved by and for the customers. Because as we all know: time is money.

However, the industry is battling a master-data problem that has grown over time. There is a high degree of innovation and customer-specific solutions that require a continuous stream of new (replacement) parts. But the primary focus of the industry lies in the area of production, and the spare part business often forms only the last link of the chain. And you know the game of “Chinese whispers”: by the time the information reaches the end of the line, it has often changed dramatically. The sheer number of parts can’t be, and never could be, dealt with by a team dedicated to the administration of customer orders. And as long as the focus is on managing customer orders, a request for a team specialised in product management is often met with a “Pfft! It works! What more do you want?!”

In one of your blog articles (German), you address the topic of replacement part sales and prescribe a very simple remedy: Talk to your customers! For me, that was a real surprise.

The after sales service of the capital goods industry is from a marketing perspective mostly in an ideal position:

  • the steps of leads and prospects can be skipped, there are customers from day one, and there are a series of products (replacement parts) for which there is a monopoly,
  • the pricing of spare parts is not really worth a tender, unlike for machinery, industrial plants and electrotechnical equipment

A buyer is as such barely involved in the procurement. This has led to a mentality of “housekeeping” where only what is incurred gets processed. What’s more, only a few companies have enough staff. When this situation leads to stagnation or decline in turnover as a result of transparency and competition – as described above – then finding a solution could cost a small fortune. We have the already mentioned bad old habits where management insists on increased profit margins to close the gap to the highly competitive end products – and the external view is completely missing.

Those who are able to see the customer as more than just a number in the ERP are the ones who will make that all-important upward move. Customers help set priorities. Because customers know exactly why they don’t – or why they no longer – shop somewhere. And it is most certainly not always down to the price.

What do you think of the replacement part recognition technology from Humai Technologies?

Well, privately we’re already doing all sorts of stuff via our mobile phones. The B2B area is clearly lagging behind here, and in this area we’re getting in our own way over data governance.

At the same time we have a technology that supports the service technicians and maintenance staff so impressively with the most crucial part of production, namely to achieve uninterrupted operation. Why should we not add this one tool to the tool that everyone carries around anyway – the mobile phone?

Andreas Noll, Aftermarket-Expert & Management Consultant

Can you see the potential for those responsible for the aftermarket and for spare parts managers?

I’ve already mentioned that time is the all-deciding factor in after sales service. Anyone working in maintenance and every recipient of parts can verify this. Nobody can afford downtime.

Despite this – which is also historically conditioned – people continue to work not just offline, but keep all after sales servicing based on paper documentation. But the world has changed since machines, industrial plants or lines of production started operating. Parts have been replaced, certain uses are no longer allowed but have right of continuance, there are fewer suppliers, while other suppliers no longer exist.

Those who try to re-order on the basis of outdated information run into an endless circle of questions and answers. I mentioned latency. Digitisation offers exactly the opportunity we need to reduce latency. With the identification of a replacement part it is possible to access all up-to-date photos online. Even when the identification is not 100%, it still helps the service workers when they are faced with an entire ocean of options, as an example.

How does this work with the master data gap you mentioned earlier?

I am a great fan of the Pareto-principle. The bulk of the spare part business is made with 20% of the parts. They can also be used for older machine systems. After all, we don’t need to reinvent the wheel every day, do we? We often find identical parts that have been in use for more than 20 years. This way we can reduce the number of spare parts that have to be made anew.

Incidentally, from a maintenance perspective, these 20% can include several spare parts suppliers. I am thinking about parts that are used by several OEMs. Those who are a little bit forward thinking will also deliver parts for their competitors’ machines and systems. And here I would like to mention one more thing. The optical parts recognition technology is not alone. Together with electronic replacement parts lists it is possible to prepare the initial parts identification for the next level.

When the technician knows the exact name of the part, then he can “research” the term in his documentation, because it is by no means a given that the terminology of the maintenance engineer matches that of the OEM – not to mention the terminology of the different suppliers.

Herr Noll, thank you so much for this conversation!

Andreas Noll is a business consultant specialised in capital goods and the industrial aftermarket. He writes the blog no-stop.de and regularly publishes ground-breaking articles on the topic. Andreas Noll hosts fixed price one-day workshops where he supports specific projects.

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