Study: In Manufacturing, Aftermarket
Is Now the Growth MarketPosted at - 09:44 AM on Thu, Aug 29, 2013

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Study: In Manufacturing, Aftermarket <br>Is Now the Growth Market

A new IDC study shows equipment manufacturers must prepare to take advantage of the aftermarket that is coming to dominate revenues.

Capital equipment manufacturers have reached a tipping point where service levels and innovation will be the key competitive differentiators, according to Infor. This forecast is based on findings of the IDC Manufacturing Insights' white paper on the global capital equipment manufacturing industry.

"Manufacturers must incorporate service requirements right at the start of designing the product, as well as optimize the manufacturing and sales processes to ensure service excellence. The aftermarket is now the future growth market," said Warren Smith, Infor global industry director.

Key IDC findings

  • Globally, just 12 percent of capital equipment manufacturers expect a substantial increase in revenue over the next three years. 
  • In North America, just 9 percent of respondents expect a substantial increase in sales volume over the next three years, compared to 15 percent in EMEA.
  • Equipment service is set to be a vital tactic in countering the current market volatility and highly cyclical nature of new equipment sales.
  • With 70 to 90 percent of the total lifetime cost of heavy equipment to be found in maintenance and repair, services offer high profit margins and predictable revenues that can protect against market volatility. A comprehensive aftermarket offering enables a deeper, continual relationship, increasing customer retention and loyalty.
  • Accelerated investment in service excellence and the evolution from "products & services" to "service-centric" to "products as service platforms" is expected.
  • As part of this evolution, manufacturers will likely continue to invest in equipment software, including field service management, warehousing and inventory management, warranty and claims processing and procurement systems.  This will be augmented by investment in mobile devices, machine-to-machine (M2M) communication, cloud-based information storage, and delivery and analytic applications.

"There is little question that heavy equipment manufacturers, recognizing the trend of extended asset refresh cycles by the operators and owners of their products, are looking at services as a way to both bolster customer satisfaction and drive incremental high-gross-margin revenue. Indeed, not only will heavy equipment manufacturers invest in improving services delivery, but the balance in many companies will shift from products and services to products as service platforms," says Simon Ellis, practice director for IDC Manufacturing Insights.

Learn more.

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