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Gary Brooks

A new year always brings new challenges, new opportunities and a time to reflect on the goals and expectations for the forthcoming months. For durable goods manufacturers in particular, there are several things brewing — both socially and economically — that could influence 2017 and the years to come. 

Below, are outline four key trends manufacturers are seeing today, creating a “perfect storm” full of opportunity if approached correctly. These tips should help manufacturers succeed in today’s evolving landscape.  

No. 1 - Durable goods orders are on the decline. 
In 2016, the decline in demand for durable goods (e.g. airplanes, cars, heavy equipment and industrial machinery, among others) captured headlines. Unfortunately, the downward sales trends continued for much of the year, with significant dips in the spring and fall months. This type of market volatility is causing most manufacturers to feel the pinch, and seek alternate revenue opportunities.

While new product-based revenues decline and margins diminish, after-sales service margins not only are healthy, but are increasingly providing new revenue opportunities for these manufacturers. In fact, upwards of 35 percent of manufacturers get more than half of their annual revenue from after-sales support, but just 12 percent say service and replacement parts are competitive differentiators. Today’s most successful companies are looking beyond the new product side of their businesses and shifting the way they view post-sales service, implementing service-focused growth strategies and optimizing service operations.  

​No. 2 - Millennials are shaping business strategy. 

The hyper-connected, tech savvy millennial generation will become the largest share of the American workforce this year, and by 2030 will make up more than 75 percent. This large, influential group is shaping business strategies across a variety of industries and segments, but what does it mean for manufacturers when it comes to after-sales service? 

This large population is accustomed to an on-demand economy, thanks to speedy, at-your-fingertips service from companies like Amazon, Zappos and Uber. This same level of expectation will be required of manufacturers when it comes to millennials’ service needs — both at home and at work. When a large piece of equipment breaks down, whether it’s a personal automobile or hospital’s MRI machine, the user of that product needs and expects a quick repair. Manufacturers must adapt technologies and strategies to ensure service parts are in the right place at the right time, leading to quick repairs and happy customers.  

No. 3 - The political climate is shifting. 
With Donald Trump’s election in the U.S., the changing political climate brings both challenges and opportunities for global manufacturers. 

Trump’s national infrastructure plan could come with a price tag as high as $1 trillion — consisting of new or repaired roads, seaports, airports, sewer systems, schools, electric grids and more. Additionally, he plans to build new Navy ships and add jets to the Air Force’s arsenal, while also easing regulations on oil and gas drilling. We’ve already seen an impact on U.S. manufacturing, with companies like Ford expanding output from its Michigan factories. This facelift on the U.S. national infrastructure could lead to a significant impact on orders of durable goods — think of the equipment necessary to make these changes — and serve as a catalyst for owners and operators of currently idle equipment to capitalize on what could be a huge revenue opportunity. 

While these changes could pave the way for increased revenues and profits for many manufacturers, it could also highlight disparities in their often sub-optimized after-sales service organizations. 

No. 4 - Driverless cars are becoming more mainstream. 
Most manufacturers have their eyes on autonomous vehicles, and how they could help or hinder their business — and these driverless cars could be just what manufacturers need to weather the “perfect storm.” 

According to Juniper Research, by 2025 there will be 20 million driverless cars on roads around the world, with them becoming most popular in North America and Western Europe by 2021. For manufacturers, this emerging technology could be especially beneficial to field service. Driverless vehicles mean technicians can multitask — something that they can’t (or at least shouldn’t) do behind the wheel today.  

Multitasking allows technicians to use their field service app to ensure the upcoming appointment is as efficient as possible while en route to the call — reading up on customer history, service part inventory and equipment data — so that the technician walks into the appointment ready to make the repair quickly and successfully. The possibilities are endless — if a vehicle is not equipped with the correct service part, it could self-drive to a warehouse to retrieve it while the technician is working on other aspects of the repair. This emerging technology provides new and easy ways for technicians to do their jobs more efficiently and effectively, and for manufacturers to create that competitive edge with their service organization. 

With these factors, 2017 has a chance to be a definitive year for manufacturers. While there are many unknowns on the horizon, the “perfect storm” could create huge areas of opportunity to revitalize and shape the future of these major brands — as long as they keep an eye on the forecast.

Gary Brooks is CMO at Syncron.

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