By Gill Devine, VP Sales EMEA, Syncron.
The Right to Repair movement is gathering pace on both sides of the Atlantic, with manufacturers across industries reluctantly relinquishing control of the maintenance and repair of their products. Many manufacturers deploy a system where a restricted number of companies or dealers are authorised to fix equipment.
But customers are fighting back against being beholden to a certified service that can incur lengthy waiting times and high costs. As manufacturers are forced by law to make their products more easily repairable, they must optimise their after-sales service operations to meet customer expectations and improve financial performance.
The right to repair cars was hard-won in the EU several years ago allowing independent garages and retailers to access diagnostic tools from OEMs and repair vehicles, giving car owners choice and convenience through access to local and competitive markets. The EU is now preparing to extend this to other manufactured products by legalising a customer's right to repair and obliging vendors to design products for longer life and easier maintenance.
In the USA, customer power is winning over as farmers in Nebraska have started hacking their equipment with firmware developed in Eastern Europe and available on invite-only, paid online forums. Tractor manufacturers have licensing agreements for the software embedded in all parts of the machinery, from the engine to the armrests, that prohibits the owner from tinkering with it. But farmers' productivity depends on their equipment being in working order and they cannot afford to wait for a service technician, or travel hundreds of miles to the nearest dealer to have it repaired.
Despite resistance from manufacturers, Right to Repair legislation has now appeared in 18 US states, mostly centred around Apple product owners wanting to repair their devices on their own or work with an independent provider, opposed to working directly with the manufacturer. The legislation will have a residual impact on all manufacturers with service organisations, requiring manufacturers to "sell repair parts to consumers and independent repair shops" and "make diagnostic and service manuals available to the public."
It's clear that today's customers expect quick, reliable service on demand and for manufacturers, this means they must optimise their after-sales service organisations. The status quo of reactive, break-fix service models is no longer sufficient, and companies must invest in human capital and new technologies to transform their businesses to become more proactive and focused on maximising product uptime. Below are three strategic focus areas where manufacturers can start implementing change today to prepare for Right to Repair laws – ultimately improving financial performance and exceeding customers' expectations.
- A subscription-based service model focused on maximising product uptime is critical to success. As more products are equipped with smart sensors, it is more important than ever to shift from a reactive, break-fix service model to one focused on maximising product uptime, or preemptively repairing equipment before it ever fails. Right to Repair laws have surfaced because end-users feel helpless when it comes to repairing their own equipment. In many industries, including agricultural equipment, heavy equipment and mining, equipment is viewed as a revenue-generating asset for the owner. If the equipment is down, it can destroy crop yield for a farmer, and Right to Repair laws compound this problem.
To ensure customers rarely face equipment downtime – which results in lost revenue and productivity – manufacturers must leverage IoT data to ensure parts are pre-emptively replaced before they fail. An after-sales service organisation truly focused on maximising product uptime will eliminate much of the burden on customers to make their own repairs. It's time for manufacturers to reinvent their service organisations, adopting sophisticated, cloud-based solutions and new business processes to optimise service parts inventory levels while maximising product uptime, which not only will lead to improvements in revenue, gross profits and operational efficiency, but also the overall customer experience.
- Fair service parts prices are a competitive differentiator. It may seem obvious that selling a service part for the optimal price is a key way to create competitive differentiation, but unfortunately too many manufacturers are still using outdated methods like cost-plus or simple spreadsheets. With Right to Repair laws pushing for end-users to be able to purchase OEM parts on their own, competitively priced service parts will become more important than ever.
Modern service parts pricing technologies incorporate data from customers, competitors, IoT platforms and other legacy systems to create the optimal price – ensuring the end customer has a great experience, while the manufacturer is simultaneously maximising revenue and margins.
- Optimising service parts inventory management is more important than ever. With end-users potentially diagnosing and making some repairs on their own, service parts distribution will start to look a little different – and more complex. Currently, the break-fix model many manufacturers use today leads to long customer wait times due to poor part availability, excess stock and part obsolescence.
This 'just-in-case' way of doing business most often creates overhead that negatively impacts both the customer experience and the manufacturer's bottom line. To succeed, manufacturers must invest in both human capital and technology to fully optimise the service supply chain. While Microsoft Excel spreadsheets and legacy ERP systems may have been helpful for managing service parts in the traditional after-sales service model, using these outdated tools is no longer sufficient to meet customers' needs for maximised product uptime.
Cloud-based service parts management solutions easily integrate into existing ERP systems, allowing manufacturers to track service parts, eliminate excess and obsolete stock and forecast when new parts are needed. These practices are critical for meeting customer delivery expectations and maintaining an edge over both direct competitors and third-party ecommerce sites. Beyond keeping products in the right place at the right time, service parts inventory management technology also reduces carrying costs.
It's clear manufacturers are ready to rethink the way they manage after-sales service – Recently in the US, the Association of Equipment Manufacturers (AEM) and the Equipment Dealers Association (EDA) launched a Statement of Principles that providers end-users with the tools and resources they need to "minimise downtime and to maximise productivity of farm equipment." Those manufacturers that properly leverage IoT and advanced technologies will be well equipped to succeed in this new way of doing business, ultimately improving both the overall customer experience and financial performance, while edging out the competition.