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Make or buy – pros and cons of the options in organizing after sales services

The question of what after sales services are needed and how to take care of them should be constantly asked and answered in today’s rapidly changing business environment. In professional electronic and robotic industries the competition is global and severe. Innovative service solutions need to be created and improved on continuous basis.

One key question is, should after sales services be managed completely or partly inhouse, and what options are available for possible outsourcing. The trend is clearly going towards outsourcing as much as possible without losing control. This requires using trusted subcontractors or partners, with a win-win partnership model: sharing of the revenue and risk.

Some services are commonly managed inhouse

Some after sales services are today commonly managed inhouse by the professional sector brand owners.
Good examples of these are the first (NPI) repairs and SW support. Also the customer service and overall management of after sales services are managed inhouse. This enables direct management of the actual business as well as managing the relationships with suppliers and customers.

Services are usually a profitable business: a good after sales experience improves customer satisfaction and loyalty. It also helps to get new business. The information about the product and how it behaves remains inhouse, including customer feedback and product reliability. These help to improve the product.

However, the focus on inhouse after sales services has a clear disadvantage: The core business does not get the resources and focus needed for growth: e.g. R&D, manufacturing processes, new product sales are such strategic focus areas that should not be sacrificed. Furthermore, an outside partner can interpret the product performance information and propose better, “outside box” improvements for the products.

Pros and cons

Outsourcing improves the efficiency of operations

A good partnership improves the efficiency of after sales services. Furthermore, new service concepts and product improvements can be identified and created in order to increase the business volume and profitability. Outsourcing simplifies the management of many regularly needed services, e.g.

  • Volume repairs
  • Normal, standardized service work
  • Installation and de-installation services
  • Warehousing and logistics

However, outsourcing can affect positively also in managing special operations: it may be the most cost efficient way.

The biggest benefit to be gained by outsourcing after sales services is the fact that then the company can use the best inhouse resources and concentration to the core business. Some parts which are not actual core business become more effective when outsourced to a partner who focuses and is a professional in a certain business.

This helps to optimize the after sales service processes, scale up the business and concentrate inhouse resources to specific tasks. Careful selection of the tasks to be outsourced as well as selecting of the partner is needed in order to prevent the risks of outsourcing. Dependency of a partner can be reduced by selecting one that provides technology neutral solutions.

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