Service Matters from MCA Solutions

Bob Bowman of Supply Chain Brain recently did a great write-up of his interview with MCA's CEO Robert Salvucci to discuss our executive survey on how service businesses are faring in the recession.  (See Morris Cohen's blog entry, "Will Aftermarket Service Save the Manufacturing Industry?")

Bob reported on the importance of service revenue for companies who are seeing a decline in new equipment sales.  As was noted, extremely cyclical industries such as semiconductor equipment have seen the most impact, with service accounting for over 50% of sales for some companies, and other industries, such as medical equipment, have been affected but not as severely.

In a related article in GSA (Global Semiconductor Alliance) Forum, titled "Semiconductor Equipment Service Supply Chain - Anticipating the Upturn," John Nunes of MCA reports on data that shows that the semiconductor industry may be seeing an upturn, and provides some suggestions on how service businesses should be preparing for it.

Based on interviews with semiconductor equipment service executives and leading companies in other industries, John defines four focus areas that will help equipment manufacturers position their service supply chain for short-term flexibility and build capabilities for long-term aftermarket revenue growth as the semiconductor business moves into an upturn.

• Use leading indicators and causal-based forecasting tools to react to changes in business.
• Assess the service supply chain to understand risks and develop contingency plans.
• Develop new service products that are suited to the changing business cycle.
• Develop performance-based contracts as a way to redefine your relationship with both customers and suppliers.

While focused on the semiconductor equipment industry, the advice is applicable to any service business that has to be able to respond quickly to changes in the market.