Mark Morley, Industry Marketing DirectorMark Morley, Industry Marketing Director

Improving Visibility into Aftermarket Spare Parts Shipments

Improving Visibility into Aftermarket Spare Parts Shipments

Slide 2 | © 2013 GXS, Inc.

Service Revolution in Manufacturing

“Manufacturers are looking for growth and profits in all corners of the globe, but they often neglect the very large opportunities much closer to home – in their own service business”

“The costs of missing out on the service revolution can be enormous”

“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large”

Henry Ford

Slide 3 | © 2013 GXS, Inc.

Improving the Visibility of Spare Parts Shipments is a Cross Industry Challenge...

Many different companies rely on the efficient delivery of spare parts in order to maximise the uptime of their customers’ products.......

Slide 4 | © 2013 GXS, Inc.

Revenue from Services and Parts

Why Focus on Services?

– Customer Expectations for Mission Critical Processes

– Resistant to Low-Cost Competitive Threats and Economic Downturns

– More Profitable over the Lifecycle of the Product

– New Revenue Stream

Source: Deloitte Research, Global Service and Parts Management Benchmark Survey

Revenue Share of Services and Parts Business in Overall

Sales

Industry Sector Average

Top 90th Percentile

Aerospace & Defence 47% Over 50%

Automotive & Commercial Vehicles

37% Over 50%

Diversified Manufacturing 20% Over 50%

High Tech & Telecom Equipment

19% Over 50%

Life Sciences & Medical Devices 21% Over 50%

In 2001 General Motors made more profit on $9billion of aftermarket parts related sales than they did on $150billion of OEM car related sales....

Source: Accenture

Slide 5 | © 2013 GXS, Inc.

Service Parts Requirements Across Different Industries

Aerospace Defence

30 Years20 Years10 Years5 Years

Typical Service Life Requirement

AutomotiveHigh Tech

• Relatively low value parts supplied as modules allowing quick replacement

• Parts are distributed by both retail stores and specialist service centres

• Typical replacement warranties last 1 year

• Parts typically supplied direct from manufacturer to dealer network

• Parts ordered as and when required to replace faulty parts

• Typical manufacturer warranty lasts 3 years, however some OEMs offer 7 year warranties

• Relatively high value, high quality and high performance parts

• Preventative maintenance programs to maximise product uptime and reliability

• Service package sold as part of initial product sale and often very profitable

• High value parts delivered to frontline operations anywhere around the world

• Typically maintained by defence industry’s own personnel

• Parts are often stockpiled in regional parts depots to ensure availability any time

Slide 6 | © 2013 GXS, Inc.

Typical Visibility Issues Include

• Many trading partners use EDI internally

and then resort to paper when conducting

transportation or government business

• Paper based documents result in

substantial delays in moving freight

• End to end shipment visibility is limited to

numerous proprietary systems, many of

these are not real time and do not cover

all events end to end

• Split shipments, changing modes and

other disruptions are very difficult to

manage

Slide 7 | © 2013 GXS, Inc.

These Issues Lead to...

• Increased costs due to a need to hold

more buffer stocks

• Costs associated with increased

expedites

• Costs associated with follow-up

– Human interventions in normal processing

– Human interventions in problem shipments

• Reduced customer satisfaction due to

increased equipment downtime

waiting for service parts to be

delivered

Slide 8 | © 2013 GXS, Inc.

Improved Visibility Helps to Counter the Counterfeiters....

• The counterfeit parts market has grown to be worth

$16Billion per year

• PSA in France estimate they lose 5-10% of their

revenue to counterfeiting operations

• China is the leading counterfeiting ‘hub’

• Counterfeit parts are normally inferior in both quality

and performance

• Parts are often transported with forged shipping

documents

• Electronic documents and RFID technology, combined

with a global visibility platform can all contribute to

reducing the trade in these parts

Slide 9 | © 2013 GXS, Inc.

Implement Global Supply Chain Visibility

• Due to the global nature of today’s service

supply chains, companies are looking for a

visibility solution which:

– Provides a platform which allows common, web

based view of logistics information

– Has visibility into cross border, logistics and

distribution related information

– Allows for the monitoring of critical supply signals

thus improving inventory visibility, cash flow and

overall supply chain performance

– Provides a means to measure the performance of

key 3PL providers

Slide 10 | © 2013 GXS, Inc.

Service Parts Solution OverviewTrack and Trace for Multi-Modal International Shipments

GXS Managed Services

Service Parts Visibility Solution Dealers / Service Centres

Customs / Border Controls 3PL Carriers

Spare PartsManufacturer

OEMProvides real-time visibility of inventory

levels across the supply

chain

Ability to integrate with

dealer management

systems

Pre-configured connections

to many customs and

border control agencies

Pre-configured connections

to many of the world’s freight transportation

carriers

Slide 11 | © 2013 GXS, Inc.

Thank You

Phones

US: 1-800-334-2255, option 3

EMEA: +44 (0) 1932 776047

GXS web sites

US: www.gxs.com

EMEA: www.gxs.eu