As a result of its new e-business aftermarket strategy, Perkins Engines, a UK manufacturer of diesel engines, predicts a 5-10% increase in revenue from spare parts and maintenance services. Dean Palmer reports.
Perkins manufactures 400,000 diesel engines each year for use in agricultural, marine, power generation and materials handling applications. In addition, the company has to support over seven million engines in operation throughout the world. To help support its customer base, Perkins has a worldwide network of 4,000 distributors and service centres, and supplies 35,000 replacement parts to customers each year.
Although Perkins has developed an overall e-business strategy for the next three to five years, the company has focussed its initial effort on the aftermarket side of the business. In the words of George Curry, Perkins director of customer and product support services, “the key to unlocking the motion of the aftermarket business is in the business critical content contained in our spare parts catalogues and accompanying maintenance manuals.”
Essentially, Perkins needed an intelligent e-catalogue solution that would incorporate the spares and maintenance manuals, and its service bulletins. With over 1,000 engine types, these manuals are cumbersome and costly to produce, but even more difficult to keep up-to-date. Curry sums up the original situation at Perkins: “the company was paper-centric, therefore keeping customers aware of engine part modifications was always a problem. This often led to incorrect or obsolete spares orders.”
Originally, the spares and maintenance manuals were provided on paper or CD-ROM. However, Perkins wanted to develop a browser-based catalogue solution that would improve and simplify the parts identification process so that the distributor and OEM could quickly and easily locate the right parts information without having to have knowledge of the data and its structure.
In addition, Perkins needed a solution that would reflect recent improvements in its PDM (Product Data Management) system (implemented 18 months ago), intelligent graphics and XML data. Integration of rich content (e.g. maintenance procedures) with dynamically changing pricing and inventory information was also a prerequisite.
With all this in mind, Perkins selected Enigma’s Partsfinder solution. “Of the shortlist vendors, Enigma presented the best-fit browser-based solution. They also understood our business having worked with other major power generation companies such as Pratt & Whitney and Rolls Royce,” explains Curry.
Partsfinder is an XML-based electronic illustrated parts catalogue, representing the entire range of Perkins engines parts information in an intuitive web interface. A key feature of the software is a “suggest related parts” option. When a user adds a part to the shopping basket, the software applies business rules to suggest related or highly recommended parts. For example, if the customer adds an oil filter to the shopping list, Partsfinder will suggest a related fuel filter and anti-freeze.
Another impressive feature is its ability to ensure that only the correct parts are ordered. Partsfinder can automatically compare the parts lists of old and new assemblies to prevent parts ordering errors, which helps OEMs and distributors better manage their inventory levels. Also, this ensures only new parts are ordered rather than obsolete ones.
Curry is confident that the new solution will solve many of the company’s future problems: “As engine emissions laws tighten, many of our existing mechanically-governed engines in the field will need to be upgraded to electronic governing. With Partsfinder, customers will be able to download electronic governor fitting and maintenance procedures straight from the web.”
The Enigma solution is a B2B (rather than a B2C) solution, with 170 key distributors each receiving a DVD version of Partsfinder to download onto their local web server. Using a web interface from the beginning will make it easier to move to an entirely web-based Partsfinder application when the Perkins distributor network is fully web-enabled.
The benefit now is that Perkins can use the web to deliver updated content to Partsfinder using a web-to-DVD download approach. This means that Perkins can keep customers up-to-date with engine part changes and maintenance procedures without sending them service bulletins, but also ensures that customers (and distributors) order the correct spare parts and not obsolete ones.
Curry explains further: “Partsfinder will increase spare parts ordering accuracy and inventory management efficiency.” On the subject of ROI, Curry predicts that, “Perkins can expect to see a 5-10% increase in aftermarket revenue growth, as well as significant soft benefits such as a more responsive distribution channel, savings in manuals and bulletin printing costs, and less technical support calls to Perkins HQ as a result of a more responsive and better-informed distributor network.”
So what future e-business initiatives are Perkins considering?
Six months ago, the company appointed an e-business projects director, Ian McGrady, formerly of Mars, to push forward its e-business plans. Curry claims that McGrady has brought “a clear focus, strong leadership, fresh ideas and understanding” with him to Perkins. As a result, the company has signed a three-year agreement with Enigma, to help expand its e-business initiatives.
On Perkins’ wish list is the creation of an “electronically controlled engine network” which will allow distributors and OEMs to monitor and diagnose engine parameters using tools downloaded from the Perkins extranet.
In addition, Perkins will start procuring materials over the Internet. Curry explains: “We want to save money by procuring both indirect materials [stationery and office supplies] and direct MRP items.” He continues: “Over the next few months the company will be testing reverse auctions with a view to joining an Internet Trading Exchange.”
On the supply chain side, Perkins already has EDI links with some of its OEMs that integrate with its “home-grown” ERP system. But McGrady also has e-business plans here. “Perkins wants to share information with its supply chain customers, in the form of forecasts and production schedules…we have already held a number of internal workshops with some of our OEMs to discuss these possibilities, with a view to moving to XML-based systems,” says Curry.
Finally, McGrady wants the company to embrace collaborative engineering practices, so that design and manufacturing teams, on both sides of the Atlantic, can work together (on-line) to solve engineering problems, reducing the time-to-market for new engines.
According to Curry though, “the biggest problem so far has been the breaking down of cultural barriers between departments.”
“The company was very paper-centric with data residing in static databases all over the business. To get people to share information in an open environment is not easy – this has to be Perkins’ biggest achievement to date,” claims Curry.
Author: Dean Palmer