Elevating the automotive and industrial manufacturing value chain with IBM and Oracle

a person using equipment in manufacturing and automobile | Elevating the automotive and industrial manufacturing value chain with Oracle and IBM

No equipment can last forever, but what do businesses do when their purchased equipment needs aftercare?

The aftermarket and spare parts sector, as part of the automotive and industrial manufacturing value chain, has always served an important role in organizations, taking care of everything that needs to be done after the sale of a product or equipment to maintain it, improve it or upgrade it.

As vehicles and various equipment wear out, organizations reach out to the Original Equipment Manufacturer (OEM) aftermarket, which includes a wide range of companies involved in manufacturing, procurement, distribution, retailing and installation of replacement parts to facilitate the services users may need.

Demonstrating how important this sector is, a recent survey by McKinsey and Company has shown that the service business (maintenance and repair of vehicles) generates about 45 percent of total aftermarket revenues, while retail and wholesale of vehicle parts make up the remaining revenues.

Known for being all-encompassing, aftermarket service is so important for OEMs as “it has a significant impact on customer experience, it drives brand loyalty, as well as retention,” explains Nirmal Assudani, enterprise applications and industrial market partner at IBM. “So customers are a lot more loyal if they experience a really good aftermarket service.”

The importance placed on aftermarket service can be seen as OEMs benefit when they can improve their estimated time of arrival, promise a high-confidence ETA of parts to their customers and give greater control in the hands of consumers when it comes to planning their equipment’s availability.

But as many industries are currently experiencing market and workforce constraints, exacerbated by harsh economic conditions and the pandemic, the OEM aftermarket is on a mission to improve user experience, better serve its customers and retain them.

To help achieve this, IBM and Oracle have teamed up for an aftermarket supply chain solution that combats many of the challenges facing this evolving industry in the face of changing customer habits, new regulations and complex supply chains. The solution joins supply chain planning and supply chain execution, financial planning, human capital management and even customer experience – all into a single platform designed to help companies transform their business.

The solution is built on IBM’s Cognitive Enterprise Business Platform for Oracle Cloud and powered with IBM’s intelligent workflows. It comprises a pre-defined, industry-specific design, based on leading practices, and it brings together a target operating model for clients as it benchmarks key performance indicators (KPIs).

One of the big challenges existing within legacy systems used for managing the aftermarket and spare parts sector is that lately “they’ve been a constraint on the business, rather than enabling the business to support new business models,” John Barcus, group vice president of manufacturing industries and emerging technologies at Oracle explains – as dated systems have prevented organizations from transitioning their business to meet customer needs.

With customers being even further challenged in a labour-shortage environment where they can’t source enough skilled employees, Barcus suggests this makes matters worse for the aftermarket landscape and reduces organizations’ expertise, making them more determined to pursue a way to get value quicker.

Showcasing how the solution can help, as one example, Barcus emphasizes that it can make a difference in identifying exactly what part a company needs replacing. “All of us have gone through that struggle, we’re trying to figure out what the part is that we’re trying to replace, what’s the service that’s required, and to be able to do this in a seamless process that makes it easier for our customers, to be able to engage with them as quickly as possible, this is a huge opportunity area,” he says.

As another example, organizations can benefit from the solution in the invoice matching process, with generative AI allowing them to quickly map those use cases with what’s available in the product “and come up with recommendations that save a tremendous amount of time,” Chacko Thomas, Americas Oracle leader at IBM, adds.

In addition to the solution’s capabilities, IBM is helping customers in the aftermarket space understand the gaps they have in their KPIs with its Cognitive Enterprise Business Platform.

Assudani explains that the team helps customers in the initial stage by performing a quick assessment to identify the process maturity levels, their performance levels when it comes to inventory, their current performance levels and how those compare to leading performance globally.

“And this gap between the two helps us quantify the business benefit which our clients can get. This becomes the foundation for creating the business case to launch this transformation journey,” Assudani concludes.

To watch the full live interview with IBM and Oracle on this topic, visit our live channel.

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