For many companies, particularly in cutting-edge high technology industries, an evolution has occurred as post-sales services have become an important part of their business. Post-sales services have become a significant source of revenue and profit, a way to build long-term customer relationships, and a source of competitive advantage. As healthcare evolves, the importance of services is likely to grow, creating a corresponding need for post-sales supply chain management.
Supply chains can be thought of in three categories:
- Manufacturing. At this stage, the supply chain supplies raw materials and parts so a product can be manufactured.
- Finished goods. At this stage, the supply chain distributes finished products to end customers. This is the part of the supply chain that tends to receive the most attention.
- Post sales. Also thought of as the “aftermarket” stage, this involves all of the services and activities provided after a customer receives a finished good, such as repairs, testing, recycling, and disposal.
Post-sales services can be an important source of revenue and profit. Some high tech companies, which previously generated most of their revenue and profit from product sales, are now generating as much as 50% of their profits from services and support. By focusing on post-sales services, many high tech companies have turned what was a cost center into a profit center, which could be a model for healthcare. Also, as companies look to build their brand and relationships with customers, post-sales services can create loyalty and lead to repeat purchases.
We see six macro service supply chain trends that are affecting the delivery of post-sales services:
- Cost containment. Many of the challenges companies are facing are increasing their supply chain costs, at a time when controlling costs is more critical than ever.
- “Cradle to grave” customer expectations. The service cycle (shown below) begins with a service event, which might be a broken piece of equipment that needs to be repaired. The cycle typically involves distribution of a part to a field-based technician who makes the repair. Increasingly, customers are looking for partners/third-party logistics partners who can manage the full service cycle. This is based on the belief that effective management of the entire service cycle can yield multiple benefits in terms of costs and service.
- Increased customer demands. The overall velocity of supply chains has become much faster, which has increased customers’ expectations for speed and convenience during the return and repair process. Also, to compete, companies are committing to aggressive service level agreements that promise high levels of responsiveness, creating more challenges for their service organization.
- Emerging markets. These markets pose significant challenges in distributing finished products, and pose perhaps even greater challenges in figuring out how to service these products. But, because of the growth and opportunity in emerging markets, companies have to find service solutions for customers.
- Increasing legislation. Legislation is increasing in both developing and emerging markets. Regulations include mandates that repairs must be made in-country, which can add complexity and costs. Companies are looking for solutions that comply with regulations and help them manage their services in a cost-effective way.
- Sustainability awareness. There are increased government regulations related to sustainability, particularly related to the disposal of items at the end of their life. Also, there is increased emphasis on recovering and recycling from finished goods raw materials that are in limited supply.
Our counterparts in the high tech industry have tried and tested many solutions for the post-sales phase – it will be important for healthcare companies to be aware of these best practices so they can implement them and change that cost center to a profit center.
For an overview of UPS’s post-sales capabilities, with a global post-sales infrastructure involving distribution centers and over 950 field stocking locations in 125 countries, click and continue reading.
|Tags:||healthcare, healthcare logistics, Healthcare Technology, reverse logistics, supply chain, supply chain management, UPS, UPS Returns|