I interviewed Akshay Mate who discussed Aftermarket Supply Chain.
What is the aftermarket supply chain.
So, Dustin, first of all, thanks a lot. Aftermarket supply chain is also known as the after-sales supply chain. So mainly it starts from the time product leaves the shelf to satisfy the customer demand. Aftermarket supply chain also goes with the scenario where customers come back to service centers either to repair or return the defective products. And most of the time, such services are bound by contracts such as four-hour service or next business day service, depending upon the [inaudible 0:00:48] of the business and the contact which the customers will have with the company. So we can say this is a synonymous [inaudible 0:00:57] the logistics.
And typically, service organization networks have different forward stocking locations backed by central distribution centers. So after-sales support actually is difficult to manage, and the companies that provide these service effectively can generate very good revenue out of it.
So there are some challenges related to the aftermarket supply chain. Some of these are [inaudible 0:01:25] supply chain service. Supply chain service executives need to deploy parts [inaudible 0:01:32] at different locations in the service network. This is a really challenging task as sales networks need to deal with unexpected demand which may arise due to unpredicted returns of the product. And after-sales networks need to support all products of the company, which included new and already-sold products. So each different generation of the product may have different parts and different supplies.
So obviously service networks need deal with more number of stock units from different generations. So that is really a complicated task.
Why do you feel that this is an important area to with within?
This is a really important area to work for all companies because this is the age of the services. And to prosper, every company must transform itself in the service business. So companies can sales products more aggressively if they are backed with a good aftermarket supply chain. In fact, well-managed aftermarket supply chain always provides the competitive advantage and helps organizations to generate more revenue.
Customers don't expect products to be perfect, but they do expect manufacturers to fix things quickly when they break down. And this is [inaudible 0:03:01] manage aftermarket supply chain.
Each product sold by a company needs to be backed by good after-sales services. After-sales services and the [inaudible 0:03:12] can help organizations, as I explained, generate revenue. So in [inaudible 0:03:17] study, it was found that the service organization can generate 30% to more than 50% of the revenue by servicing the products.
Forward supply chains are well backed by technology nowadays. But we can say that this is not the case in the case of aftermarket supply chain, as it is a more complex, difficult to manage, and unpredictable nature. So I think sooner or later, all organizations need to concentrate their efforts on improvement of aftermarket supply chain.
What are the problems that you address, and how do you do this effectively?
The main problem we come across in aftermarket supply chain is a backlog. So backlog management is a huge task. It is the result of inaccurate forecast. Accurate forecasting is the need of this area, as we discussed -- that forecasting service is a very difficult task. As a practical scenario, unexpected breakdown will happen, and it is a part and parcel of aftermarket supply chain.
To address this, the companies need to collect and store the data, depending upon the feedback of the product. If feedback of the product builds confidence, you need to find a why by which they can [inaudible 0:04:42] with their product, like in the case of taking inventory.
In a current scenario, we can say that big data and sensors can help us to do that. Sensors can help to check health of the product, depending upon the feedback from the sensors. Planner can forecast more accurately because they will have real-time data. In fact, in some cases, planner can predict the breakdowns and can make arrangement to make available the required spare parts for the repair.
So currently, I think IoT, Internet of Things, will help in this case. Although it is a nascent technology, but big data and IoT, collectively, both can help planners in this regard.
The second part is that [inaudible 0:05:33] is also a challenging task in case of aftermarket supply chain, as forecasting techniques plays a very critical role to predict [inaudible 0:05:43] quantity. That is a [inaudible 0:05:45] quantity. So a recent trend is to use a profile-based forecasting technique to predict this. What I mean to say is the profiles which are used in the forecasting techniques, these are developed for each part, depending upon the historical need of the part. And this is a more effective way to forecast, instead of shipment-based [inaudible 0:06:06].
A third problem is that the [inaudible 0:06:13] alignment is the problem. So [0:06:14] alignment is a major challenge as services are managed and struggle to maintain uniform [0:06:20] across the different geographies.
Uniform [inaudible 0:06:25] will enable a lot of organizations to implement single-order broker demand strategy so that they can buy from the one location considering the global demand.
So these are the main problems which we need to address in aftermarket supply chain.
Thank, Akshay. Can you provide a brief background of yourself?
So I have been working in the field of supply chain for almost eight plus years now. I started my career as a production engineer, so fortunately, working on the shop floor in the initial stages of my career helps me a lot to understand [inaudible 0:07:10] about flow and art of people management. Further, I worked as an aERP consultant for [inaudible 0:07:15] applications. For the last five years, I'm working as a supply chain consultant mainly for aftermarket supply chain.
I've worked with well-known manufacturing [inaudible 0:07:26] for ERP consulting and with high tech companies for aftermarket supply chain management. So in terms of education, I have a Master’s in business administration and operations management and a bachelors in production engineering from University of Pune.
About Julio Franca
Supply Chain Consultant