Capital Equipment News August 2017

AFTERMARKET SUPPORT

Barloworld Equipment recently announced an agreement with Caterpillar to establish a retail parts operation in the newly-built Caterpillar Parts Distribution Centre in Kempton Park.

FROM PRODUCTS TO SOLUTIONS

This is the golden age of services, and to survive and prosper, the capital equipment supply chain is transforming into a service-centric sector, moving away from just supplying products to offering end-to-end solutions. Although companies still push products, there is now a bigger focus on delivering the value that customers get out of using those products, writes Munesu Shoko .

W ith demand slowing, competition intensifying and profit margins imploding, the capital equipment supply chain is changing its approach, placing more focus on offering solu- tions instead of just products. It is evident that selling spare parts and aftersales services such as conducting repairs; installing upgrades; reconditioning equipment; carrying out inspections and day-to-day maintenance; offering technical support, consulting, and training; are becoming a munificent source of revenues and profits. In several industries such as commercial vehicles, industrial machinery, and ‘yellow’ and ‘white’ metal equipment sectors, to mention a few, suppliers have sold so many units over the years that their aftermarkets have become up to 10 times larger than their current original equipment businesses. As a result, OEMs and their dealers realise that ignoring the promise of aftersales services is imprudent, to say the least. Investments into local support structures by several OEMs and their dealers are testimony that services, especially parts and maintenance, are the future of the industry as end users are also now forced to keep their current equipment and vehicles longer, which means they also require added maintenance and service support. Investments abound Offering a quality product is one thing, and being able to offer crucial backup support once it is operational in the field, is quite another.

KEY TALKING POINTS • Equipment suppliers making big investments into aftermarket structures • Babcock invested R100 million in an ultramodern sales, parts and service dealership in Middelburg, Mpumalanga • Volvo Group Southern Africa inaugurated an upgraded R60 million integrated regional parts distribution centre in Boksburg • Caterpillar, its independent dealers and the Caterpillar Foundation to invest more than $1 billion in countries throughout Africa over five years • Wirtgen Group invested in excess of R50 million into a new facility for its Wirtgen South Africa subsidiary in Pomona, Gauteng

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