Reverse Logistics

Aftermarket service revenues as a percentage of total company revenue are due to rise by 50 percent over the next five years, according to recent research by Capgemini and DHL Exel Supply Chain. That’s good news for manufacturers, who face uncertainties in their traditional lines of business, yet are already deriving 25 percent of profits from the aftermarket sector. In response, many are elevating the status of aftermarket services within their overall product strategies, Capgemini and DHL Exel said.

Services covered by the study include exchange, return and repair logistics for engineering, manufacturing and high-tech industries. Capgemini surveyed more than 100 supply chain and manufacturing executives in those sectors. For the large majority of engineering and manufacturing (E&M) companies, service management is yielding profit margins of between 10 and 50 percent. They expect even better results in the next five years. Service management “is becoming a strong revenue stream for most of these large engineering and manufacturing companies, particularly on a global scale,” said Roy Lenders, Capgemini’s global vice president for logistics and fulfillment. The high-tech industry, however, is five years behind the E&M sector in terms of globalization. Companies in the latter category are facing more stringent business requirements, with customers demanding product consistency and a global reach. According to Jacob Verhagen, vice president of sales and marketing for global service logistics with DHL Exel Supply Chain, manufacturers are increasingly viewing service management and service logistics “as a differentiating factor in setting themselves apart from their competitors.”

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