OEMs Outsource Post-Sales Service for Wider Reach and Margins

Aberdeen: 57% of companies currently outsource or plan to outsource field service labor.

Any original equipment manufacturers (OEMs) seeking to cut post-sales service costs, expand their service coverage, and bolster profitability are outsourcing portions of their service chain operations.

Fully 57% of polled companies reported that they currently or plan to outsource field service labor, ranking first among all outsourced service functions. But only about 30% of service chain operations – comprised of such components as service parts planning and logistics network management – will be outsourced over the next 18 months.

This wait-and-see attitude demonstrates the diligence with which OEMs approach outsourcing service in the first place and the similar care they take when expanding the roster of service functions eligible for outsourcing in the foreseeable future,.

Aberdeen’s report identifies the following trends in service chain outsourcing:

• Forty percent of OEMs that outsource some aspect of their service operations reported cost savings of more than 10%, and the rest reported savings of up to 10%.

• Seventy-eight percent of best-in-class companies reported that technology would be a critical enabler of better service network management.

• Almost one-third of surveyed companies indicate they plan to make use of third party logistics providers (3PLs) for services such as service parts management, reverse logistics, and depot management.

• The telecommunications and utilities sectors are at the head of the class when it comes to outsourcing service, with 83% reporting that they outsource some aspect.

The Service Network Optimization Benchmark Report Publ 20060406