With Right to Repair legislation appearing in states around the U.S., manufacturers are taking note and trying to understand the ways these new laws could impact their business. So, what exactly is Right to Repair and what does it mean for manufacturers? In a nutshell, Right to Repair requires manufacturers to sell replacement parts and repair tools straight to both the general public and independent repair companies.
Many manufacturers have spoken out against the laws, stating that if third parties become involved with consumer devices, more hackers and counterfeiters will arise. On the flip side, those who value the Right to Repair laws believe that manufacturers want to maintain their monopoly on the lucrative business of repairing their own products. So far, this legislation has appeared in 19 U.S. states, but could gain steam and quickly become more widespread.
For manufacturers, paying attention to these laws — and how their potential growth can impact the manufacturing landscape – is critical. Below are three areas manufacturers should be monitoring today:
Recently, in a rather unprecedented step, farmers have begun going to great lengths to repair their own equipment. In Nebraska, for instance, some farmers have even started hacking their equipment with firmware developed in Eastern Europe. This helped them avoid long wait times to see a service technician and eliminated the need to travel hundreds of miles to the nearest dealer to have their equipment repaired.
It’s clear that today’s customers expect quick, reliable service on demand and for manufacturers, this means they must optimize their after-sales service organizations. The status quo of reactive, break-fix service models is no longer sufficient, and companies must invest in human capital and new technologies to transform their businesses to become more proactive and focused on maximizing product uptime.
Right to Repair laws have surfaced because end-users feel helpless when it comes to repairing their own equipment, and these same end-users could potentially be diagnosing and making some repairs on their own. This adds a layer of complexity – and competition – to the service parts industry and puts more pressure on optimizing parts distribution and pricing. Because cost and speed are customers’ top priorities, it could push many of them to purchase on the grey market.
The grey market presents significant quality and safety concerns for both manufacturers and end-consumers. While many aftermarket companies buy the rights to manufacture parts from the manufacturer, many do not, and any poor experience with an off-brand part could negatively impact the manufacturer’s brand reputation. For many manufacturers, after-sales service has long been a sub-optimized area of business. In today’s climate, however, companies that are unable to meet service demands will quickly see customers purchasing parts elsewhere. Manufacturers must consider investing in technologies to make the service experience more seamless for the end-customer, as well as equip (or hire) staff that embrace change and have a desire to innovate.
Major ecommerce players and third-party providers are already posing a threat to manufacturers’ service parts revenue. Amazon’s ability to implement same-day delivery is helping them make noise in the U.S. auto parts industry by striking deals with suppliers to directly sell their products. A recent McKinsey report suggested this disruption could put manufacturers’ parts businesses under threat, as 25 percent fewer parts will be purchased through dealers. Additionally, manufacturers can expect pricing pressure, since 50 percent of part buyers will compare more than four websites to find the best prices.
The demand for service parts will increase with Right to Repair laws, which could further threaten manufacturers’ parts business. Optimizing service parts inventory management and pricing is more important than ever and provides a way for manufacturers to create competitive differentiation. The brands that adopt modern technologies that optimize after-sales service operations will be the ones to succeed.
As Right to Repair legislation become more prevalent, manufacturers will have to stay in tune with the intricacies of these laws. It’s clear that today’s customers have more control than ever, and manufacturers across industries will have to continue to adapt. The ones who succeed will be using Right to Repair as an opportunity to improve current business practices, and ultimately will find themselves at the top of the industry moving forward.
Gary Brooks is chief marketing officer at Syncron. With 20 years of marketing experience, Brooks is a revenue-focused B2B marketing executive who believes in qualitative work with quantitative results to deliver breakthrough revenue performance.