Abb Turbocharger Systems, After-sales Service Supply Chain Planning And Operations

In the markets nowadays full of strong competition, after sales service more and more, become the powerful arm of the companies as well as the most important resource of profit. It means the supply chain on service is strategic in operation management of the company. A report from AMR early issued in 1999 indicates, although the revenue in service business is only at about 24%, it contributes 45% of the margin. It is attractive! But many companies still consider it a hard job and ignore the great potential of it. Why? The reason is that it is too difficult to manage the service business. Only those companies who can provide the effective service can earn profit from it.That's true. No matter in which kind of industries, to provide service business is much more complex than producing certain products. Further more, the requirements of the service is stochastic and hard to be forecasted. The market itself often varies a lot. While, as management, we must be aware that after sales service is the promise company making to customers, which means response to customers within certain time. This definition inspires three important aspects:a. When the company is carrying on their promise, it shall treat the after sales service as they do in products design, producing, pricing and delivery to customers.b. Companies shall design a series of products in service. Although the different customers have the same products, they may have different requirements in service.c. The company shall design a certain supply chain in after sales service which distinguishes from the producing supply chain. And it provides the service to customers through its information system and net of resources.The period with customers' support is the longest term during the whole period of the products' life-cycle. To the companies, the after sales service business is the longest and continuous resource of income with the comparatively low investment. For an instance, in automotive market, half the OEM profit comes from the after sales. In accordance with the survey of Aberdeen Group, in other types of industries, besides the automotive industry, the revenue of after sales service occupies from 10% to 40% of the total income of the company. In ABB Turbo system, after sales service contributes more than 80% profit of the BU. Thus, we see that no one can really ignore the potential of the after sales market.