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Is aftersales service your path to profitability?

Person wearing a jumpsuit and gloves operates machining equipment. The action of metal on metal generates sparks.

Manufacturers looking to leverage aftersales as a differentiator face an obvious dilemma: Ramp-up their existing in-house capabilities or collaborate with a logistics provider—or possibly both.

For small, domestic operations with under $5 million in annual sales, the choice may be simpler. Small manufacturers don’t typically generate the program scale that sets the stage for a mutually beneficial third-party relationship. Conversely, larger manufacturers with national or global operations are usually better aligned with a third-party provider’s infrastructure and financial model.

Third-party aftersales parts solutions, such as the UPS Access Point® network are growing in popularity with many small and mid-size manufacturers. These local pickup locations can help manufacturers intelligently distribute the daily required parts that each technician can retrieve for daily work orders, thereby reducing inventory carrying costs and improving overall system inventory visibility. Partnering with a third-party to provide aftersales and service is an individual decision, but most companies find it difficult to ignore the potential advantages of outsourcing all or part of aftersales operations to a trusted partner.

The risk mitigation advantage of third-party providers

The perils of growing and sustaining a service organization can be daunting in today’s unpredictable global economy. The business case is clear: Servicing a global customer base is a challenge unto itself. Add the typical 6-month machinery service cycle to the equation and the service networks quickly spin into global spider webs.

In spite of the challenges, 56 percent of companies manage aftersales in-house and plan to continue this practice; the other 44 percent is currently working with a third-party, or plan to in the.

Some may lack the capital to build or buy a network that supports their goals for service levels and customer satisfaction, and others want to expand internationally but lack the local connections and know-how needed to hit the ground running. Still others may want to minimize financial exposure while testing out new market opportunities. In general, third-party providers can help to remove many of the unknowns that hold companies back from expansion and growth.

Machinery makers are inventors and innovators that share a relentless drive to up the ante with each new product iteration. They want to make faster, more productive, smarter machinery that builds their credibility and product demand. Aftersales and service, while critical to success, may not propel makers into the shop or office every day. Relying on a third-party provider for aftersales and service can help manufacturers maintain focus on design and production. In general, a third-party can provide specialized expertise, and outside perspective, and a system of checks and balances that can’t usually be managed internally.

Getting critical deliveries to their destinations

In many cases, making the best choice between the do-it-yourself versus the thirdparty option depends on the type of industry.

If a customer needs repair parts to fix down machinery or equipment in a timely manner—a process that can also be managed through a partnership with UPS.

“For many customers, we’re able to respond quickly to emergency parts orders—even late into the evening with end-of runway services or the next flight out shipping,” says Charlie Chung, senior marketing manager, UPS. By outsourcing the aftersales and service component, the manufacturer can differentiate itself as the go-to provider in case of emergency and improve customer service levels, and enhance its revenue streams.

Your customers want more? Logistics providers are helping companies around the globe expand and scale to meet their customers’ growing needs.

By turning aftersales and service into a key differentiator instead of an afterthought, companies gain from the greater opportunity to maintain and grow marketshare by providing the excellent service that their customers expect.

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