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TIME FOR A DIGITALLY POWERED APPROACHThe opportunity is massive.Aftermarket services offer a huge revenue-generating opportunity for high tech companies worldwide. According to IDC, by 2020, manufacturers will capture 20% more aftermarket revenue by using product and service quality measures to enhance customer experiences.1
To unlock this significant source of business value, companies need a radically different approach. When asked about the most significant challenges associated with launching new business models in the
market, getting the aftersales support aligned with the new model comes out at a key challenge to global high tech companies in both consumer and enterprise-oriented segments.2
The main priority must be to minimize the operational burden of these services. How? Pioneering high tech companies must embrace cloud-based, analytics-powered outsourcing models, delivered end-to-end by a single fourth-party service provider (4PS).
1. IDC FutureScape: Worldwide Manufacturing 2017 Predictions
2. Accenture Vitality CMT Survey, 2017
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A COMPELLING CASE FOR CHANGE
Operations are becoming increasingly complex. More functionality calls for greater sophistication in after-sales services. In parallel, there is more user data than ever before. Today, companies can better understand and predict end-user preferences, potential issues and future support needs. The priorities? Aligning and integrating existing aftermarket IT systems. At the same time, commoditization and price pressure on hardware mean repair capabilities must become more cost-effective.
High tech companies need to address ongoing margin pressures by consolidating their often-fragmented service operations networks. This increases efficiency and provides improved visibility into aftermarket operations. In turn, this boosts the ability to detect warranty fraud.
Within this landscape, there are new demands and pressures to rapidly respond to changing customer expectations and needs. How to keep up? Companies must now deploy analytics and AI-powered services that can rapidly react to evolving market behaviors and more efficiently interact with customers. AI-enabled self-help will also allow manufacturers to cut costs by helping to avoid “no-fault founds”, which account for 30-60 percent of returns.
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THE OUTSOURCING ADVANTAGEThe task may seem overwhelming, but there is a solution. Outsourcing aftermarket operations management to a dedicated fourth-party service provider (4PS) provides clear advantages, freeing up resources that can be used for customer relationship building. The most exciting part? The solution is on-demand, and therefore highly responsive to customer behavior.
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Benefits of a 4PS conceptImprovement Potential *Claim Reduction
Claim cost reduction 5 - 12%
Repair / labor cost reduction 3 - 8%
Repair lead time reduction 66%1st time fix rate improvement 50%Service cost reduction 6 - 15%
"White collar" cost reduction 10 - 25%
Parts availability increase >10%Scrap reduction >50%Backorder reduction >90%
Quantity Service Incidents
Service Process Cost
Variable Service Costs
Fixed Service Cost
Service Revenue
Service Costs
Service Inventory
Service EVA
Performance Optimization
Inventory Optimization
Optimization Lever
Reduce labor cost
Reject unjustified claims
Reduce / limit goodwill
Increase 1st time fix rate
Reduce material cost
Reduce logistics cost
Reduce swap
Reduce penalties
Reduce scrap
Reduce fixed cost
Increased parts availability
Reduce capital cost
Reduce operational inv. cost
Reduce obsolescence scrap
* Based on Accenture project experience; dependent on maturity of current service process and tools.
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GET STARTED WITH 4PSOf course, service outsourcing in high tech is nothing new. It’s been on the rise since the 1980s and 1990s, when second-party service providers (2PS) were used to manage logistics and warehousing, customer contracts, and repair operations.
That paved the way to outsourcing more complex services to third-party service providers (3PS). Now the trend is very clearly in favor of outsourcing all aftermarket operations to a single fourth-party service provider (4PS).
By moving all their aftermarket operations to a 4PS, leading companies are gaining significant advantages from cloud-based, analytics-powered “product as a service” and “warranty as a service” models. As a result, these companies achieve tighter integration and greater control across all aftermarket activities – spending less on this function as a percentage of revenue than their competitors.
And that’s not all. Because these leaders view aftermarket services as an asset, and not solely as a cost, they create tangible shareholder value and boost their business performance at the same time.
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AUTHOR
Ritesh AgrawalManaging DirectorCommunications, Media and Technology Industry [email protected]
ABOUT ACCENTURE AFTERMARKET SERVICES FOR HIGH TECH
Accenture manages end-to-end aftermarket operations on behalf of manufacturers, introducing our people, technologies and integration experience to drive increased efficiency, transparency and control. Using advanced automation, analytics and control tower technologies, we consolidate our clients’ global aftermarket operations, delivering 360°, real-time insights into front-line activities (web, shop, call-center), logistics, warranties, repairs and returns.
ABOUT ACCENTURE
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
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