Shaken by the volatility of the supply chain and the economy in general, more and more supply chain managers at original equipment manufacturers (OEMs) are adopting solutions that include intelligence artificial intelligence (AI) and machine learning (ML).
With these tools, executives can look beyond the sales history of their aftermarket products, which may have little relevance to the current situation, and consider more factors.
“If someone is planning inventory or parts pricing based on a spreadsheet, they realize that the state of the art has advanced beyond that,” Nate CordierVice President of Global Solutions Consulting and Value Engineering at Synchron, said PYMNTS. “They realize there is an opportunity there.”
Addition of a forward-looking indicator
Syncron offers solutions that help OEMs optimize spare parts inventory and pricing for a variety of applications, including aerospace, agricultural and medical equipment, in their own and dealership warehouses.
The company uses AI and ML across its entire platform, including in spare parts inventory planning, parts pricing, warranty management, field service and predictive analytics – predicting when a part will fail.
In the inventory planning space, Corder said, people have always made spare parts forecasts by looking at historical sales. The problem with this method is that the scheduler will always be late. When demand increases, they will have availability issues, and when demand decreases, they will have excess inventory.
See also: Data offers a new path to profitability for logistics companies
With AI, on the other hand, forecasts can take into account things like weather, customer buying habits, shipping route volumes, and other factors. For example, if there is a forecast of an exceptional hurricane season, it may affect the demand for certain parts.
“The way people use AI in inventory planning is really to filter out history, but add a forward-looking indicator,” Corder said.
Develop multi-channel pricing
In the realm of pricing, AI can help determine customers’ buying habits and what they are willing to pay. Years ago, manufacturers published a price book that included a list price for everyone in the market.
Today, with AI, they can offer much more targeted pricing. Every OEM has multi-channel pricing, where a part is offered to market four or five different ways and at different prices.
“They’re starting to group customers based on their buying habits and willingness to pay,” Corder said.
In the area of warranty, warranties were previously seen as mere claims handling. Today, thanks to AI, companies are better equipped to audit warranty claims and get a deeper look at claims that come up. This is important because warranty is a huge cost center for OEMs.
Related: B2B payment and billing networks help small suppliers become bigger suppliers
Recognize the potential of after-sales service
At the macro level, Corder said, OEMs were focused only on how to make manufacturing processes more efficient. The after-sales part of the business was more of an afterthought, even though it was a huge profit generator. Today, they see that the advantage is in the service.
“People are really recognizing that the service industry is probably one of those big potential areas where they can really drive the business forward,” Corder said.
Syncron’s solutions are offered as software as a service (SaaS), typically with quarterly upgrades and annual payments. With these frequent updates, Corder said, the company is “delivering on the SaaS promise.”
“We’re constantly working with our customers, reviewing their data with them, and helping them improve,” Corder said. “At the end of the day, we’re making sure they’re getting continued value and really helping them improve their business.”