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Unveiling the power of selling spare-parts as a happy-meal

Lindgren, Alexander LU and Bodin, Victor (2015) In Examensarbeten i Technology Management - Nr 290/2015 FEKP02 20151
Lund University School of Economics and Management, LUSEM
Department of Business Administration
Abstract
Companies selling industrial machines are seeing a shift where profits are moving from new sales, towards retrieving revenue throughout the whole customer life cycle. Instead of selling new machines, the companies in the industry need to look towards what is referred to as “the aftermarket”. The aftermarket is the part of the market where spare-parts and maintenance services are sold to existing customers. This part of the market is growing rapidly, and the competition on capturing market shares of the after-market have been increasing.

Manufacturers of industrial machines need to capture market shares from the aftermarket, which currently is under the pressure of increased competition. Today, spare-parts can be sold either separately,... (More)
Companies selling industrial machines are seeing a shift where profits are moving from new sales, towards retrieving revenue throughout the whole customer life cycle. Instead of selling new machines, the companies in the industry need to look towards what is referred to as “the aftermarket”. The aftermarket is the part of the market where spare-parts and maintenance services are sold to existing customers. This part of the market is growing rapidly, and the competition on capturing market shares of the after-market have been increasing.

Manufacturers of industrial machines need to capture market shares from the aftermarket, which currently is under the pressure of increased competition. Today, spare-parts can be sold either separately, or in combination with maintenance services. However, the first alternative is tedious for the customers, and the other alternative is not applicable for all customer segments. A third alternative, namely putting spare-parts together in bundles or “spare-part-kits” is also possible, but its potential has not been investigated until today.

Investigate how a company can become a more attractive supplier of spare-parts by offering the parts in spare-part-kits.

1. Who are the stakeholders involved in the purchase of spare-parts?
2. Why is the concept of spare-part-kits relevant to suppliers of spare-parts?
3. What should be considered when implementing spare-part-kits?

This thesis uses a holistic perspective to the problem, aiming to investigate how spare-part- kits would affect the organization as a whole. This is done by investigating the different parts of the organization relevant for the study by adopting a systems view to the problem, outlining the work by taking support in the Business Model Canvas.

Spare-part-kits have the potential of increasing customer satisfaction and therefore also the potential of increasing sales of spare-parts. Spare- part-kits can reduce the time spent on ordering, handling and administrating spare-parts, improving communication internally between the stakeholders within the customer company. From a supplier’s point of view could spare-part- kits increase the customers trust towards the supplier and provide the customer with the ability to evaluate the process of ordering spare- parts. (Less)
Popular Abstract
BACKGROUND
Companies that are selling industrial machines are seeing a shift where their profits are moving away from new sales, towards retrieving revenue throughout the whole customer life cycle. Instead of selling new machines, the companies in the industry need to look towards what is referred to as “the aftermarket”. The aftermarket is the part of the market where spare-parts and maintenance services are sold to existing customers. This part of the market is growing rapidly, and the competition on capturing market shares of the after-market have been also been increasing.

PROBLEMATIZATION AND PURPOSE
Manufacturers of industrial machines need to capture market shares from the aftermarket, which, as stated earlier, is currently... (More)
BACKGROUND
Companies that are selling industrial machines are seeing a shift where their profits are moving away from new sales, towards retrieving revenue throughout the whole customer life cycle. Instead of selling new machines, the companies in the industry need to look towards what is referred to as “the aftermarket”. The aftermarket is the part of the market where spare-parts and maintenance services are sold to existing customers. This part of the market is growing rapidly, and the competition on capturing market shares of the after-market have been also been increasing.

PROBLEMATIZATION AND PURPOSE
Manufacturers of industrial machines need to capture market shares from the aftermarket, which, as stated earlier, is currently under the pressure of increased competition. Today, spare-parts can be sold either separately, or in combination with maintenance services. However, the first alternative is tedious for the customers, and the other alternative is not applicable for all customer segments. A third alternative, putting spare-parts together in bundles, “service-kits”, is possible, but its potential has not been investigated until today why the purpose of the thesis is to:
“Investigate how a company can become a more attractive supplier of spare-parts by offering the parts in service-kits”

METHODOLOGY
This thesis uses a holistic perspective to the problem, aiming to investigate how service-kits would affect the organization as a whole. This is done by investigating the different parts of the organization relevant for the study by adopting a systems view to the problem, outlining the work by taking support in the Business Model Canvas (BMC). The BMC is a framework developed by Alexander Osterwalder and Yves Pigneur in 2010 that identifies nine generic building blocks needed to consider when setting up a successful business model.

CONCLUSIONS
Service-kits have the potential to increase customer satisfaction and therefore also the potential of increasing spare-parts business as a whole. Service-kits can reduce the time spent on ordering, handling and administrating spare-parts as well as improve communication internally between the stakeholders within the customer company. This since the kits aggregates a large number of spare-parts into one single convenient package instead of multiple. Looking at the concept from a supplier’s point of view could service-kits help increase the customers trust towards the supplier and provide the customer with an improved ability to evaluate the process of ordering spare-parts. (Less)
Please use this url to cite or link to this publication:
author
Lindgren, Alexander LU and Bodin, Victor
supervisor
organization
course
FEKP02 20151
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Lean consumption, Aftermarket, Customer satisfaction, Servification, Service- kits, Spare-part-kits, Bundling, Spare-parts
publication/series
Examensarbeten i Technology Management - Nr 290/2015
report number
290
ISSN
1651-0100
language
English
id
7762467
date added to LUP
2015-08-19 11:15:47
date last changed
2015-08-19 11:15:47
@misc{7762467,
  abstract     = {Companies selling industrial machines are seeing a shift where profits are moving from new sales, towards retrieving revenue throughout the whole customer life cycle. Instead of selling new machines, the companies in the industry need to look towards what is referred to as “the aftermarket”. The aftermarket is the part of the market where spare-parts and maintenance services are sold to existing customers. This part of the market is growing rapidly, and the competition on capturing market shares of the after-market have been increasing.

Manufacturers of industrial machines need to capture market shares from the aftermarket, which currently is under the pressure of increased competition. Today, spare-parts can be sold either separately, or in combination with maintenance services. However, the first alternative is tedious for the customers, and the other alternative is not applicable for all customer segments. A third alternative, namely putting spare-parts together in bundles or “spare-part-kits” is also possible, but its potential has not been investigated until today.

Investigate how a company can become a more attractive supplier of spare-parts by offering the parts in spare-part-kits.

1. Who are the stakeholders involved in the purchase of spare-parts?
2. Why is the concept of spare-part-kits relevant to suppliers of spare-parts?
3. What should be considered when implementing spare-part-kits?

This thesis uses a holistic perspective to the problem, aiming to investigate how spare-part- kits would affect the organization as a whole. This is done by investigating the different parts of the organization relevant for the study by adopting a systems view to the problem, outlining the work by taking support in the Business Model Canvas.

Spare-part-kits have the potential of increasing customer satisfaction and therefore also the potential of increasing sales of spare-parts. Spare- part-kits can reduce the time spent on ordering, handling and administrating spare-parts, improving communication internally between the stakeholders within the customer company. From a supplier’s point of view could spare-part- kits increase the customers trust towards the supplier and provide the customer with the ability to evaluate the process of ordering spare- parts.},
  author       = {Lindgren, Alexander and Bodin, Victor},
  issn         = {1651-0100},
  keyword      = {Lean consumption,Aftermarket,Customer satisfaction,Servification,Service- kits,Spare-part-kits,Bundling,Spare-parts},
  language     = {eng},
  note         = {Student Paper},
  series       = {Examensarbeten i Technology Management - Nr 290/2015},
  title        = {Unveiling the power of selling spare-parts as a happy-meal},
  year         = {2015},
}