yanina yakovleva, ferronordic presesntation at aftermarket 2012
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STRUCTURING AND RUNING A SUCCESFUL AFTERMARKET IN RUSSIA
ЭКСКЛЮЗИВНЫЙ ДИЛЕР VOLVO CONSTRUCTION EQUIPMENT
YANINA YAKOVLEVA OCTOBER 25TH 2012
Agenda
I. Ferronordic Machines – introducing the company
II. Challenges of working on the Russian market
III. Structuring and running a successful aftermarket in Russia
I. Ferronordic Machines
• The biggest dealer of Volvo CE machinery in terms of territory in the world
• Selling and servicing Volvo CE machines on the Russian market since 2010
• Successor of the Volvo CE owned dealership in Russia
Khabarovsk
Krasnoyarsk
Ekaterinburg
St .Petersburg
Moscow
Krasnodar
Murmansk
Petrozavodsk
Arkhangelsk
N.Novgorod
4
Number of FNM outlets is planned to grow substantially
Network development map – August 2012
Vladivostok
Kazan’
Vologda
Voronezh
Chelyabinsk
Tver’
Perm’
Norilsk
Novosibirsk Stavropol
Surgut
Rostov na Donu
Sovetski
Velsk
(62) FNM year to date 2012 (9) SSK locations
V.Novgorod
Tyumen
Sochi
Tula
Yaroslavl
Volsk
Saratov
Saransk
Kaliningrad
Pitkyaranta
Lipetsk
Ryazan
Belgorod
Smolensk
Sikhtifkar
Koriazhma
Buinaksk
Pskov
Armavir
Currently: 62
2015: ~100
Ufa
Novokuznetsk
Bratsk
Irkutsk Chita
Abakan
Kemerovo
Neryungri
Novy Urengoy
Uhta
Samara
Kaluga
Volgograd
Yakutsk
Blagoveshensk Satka
Cherepovets
Cheboksary
Vladimir
Penza
Ferronordic Machines business
• New & used equipment
• Trade-in & rental
• Additional equipment, attachments
Ferronordic machines
sales
• Spare parts
• Service sales
• Soft products
Ferronordic machines services
Our product range
Wheel loaders VOLVO
Excavators VOLVO
Backhoe loaders VOLVO
Skid Steer Loaders VOLVO
Articulated haulers VOLVO
Motor graders
Road Construction VOLVO
Pipe layers
Ferronordic Machines Results since 2010
Number of employees
165
562
78
200
0
100
200
300
400
500
600
700
800
900
2010 2012
Mechanics
Employees
Number of locations and service vans
14
62 78
151
0
20
40
60
80
100
120
140
160
2010 2012
Locations
Service vans
Machine population growth
5200
7500
0
1000
2000
3000
4000
5000
6000
7000
8000
2010 2012
Nu
mb
er
of
un
its
Years
Machine population
Parts stock and turnover
12
57
3
13
0
10
20
30
40
50
60
2010 2012
Mill
ion
, EU
R
Years
Parts stock
Parts turnover
II. Challenges of working on the Russian market
What do we need to know about Russian market?
Territory and Infrastructure
• Country’s vast
territory
• Infrastructural issues
Business practices
• Accounting and business practices are cumbersome and requiring a lot of paperwork
• Be prepared to have more headcount and more working capital
People • Not enough professionally
trained people
• People are passionate about what they do and are fast learners
• Inefficient management styles are widely spread
More points to remember
• Instability
• Battlefield for big and small players from all over the world
• Opportunities to grasp market share
• Service culture being formed
• Traditions were continuously broken
Russia is not as scary as it may seem
III. Structuring and running a successful aftermarket in Russia
What is a successful aftermarket?
1.Profitable
2.Sustainable
3.Efficient
4.Flexible
1. Profitable aftermarket
• Commercial aftermarket not technical support
• The right products for the right customers at the right price at the right time
• Stable revenue and profit
1.2. Technical vs. commercial Technical aftermarket
Commercial aftermarket
Customer support
Profit generating business unit
Can be done from hub
Should be closer to customer
Limited number of people A developed organization is needed
No sales skills required Strong sales skills and commercial process within the team
Technical knowledge and expertise
Commercialized service products
1.3.Commercial process in aftermarket
• Aftermarket sales representatives- our sales force
• All other employees are involved in the commercial process
• Customer loyalty programs
• Marketing campaigns
• Customer events in aftermarket
• Soft products to meet the customer needs
1.4. Sales force in aftermarket
• Aftermarket sales representatives (ASR)– key person in the process
• ASR has a number of tools and standard product offers
• ASR is a guide and coach to all other roles in the region as far as commercial aftermarket is concerned
1.5. Products and tools
• Customer loyalty programs
• Marketing campaigns
• Customer events in aftermarket
• Soft products to meet the customer needs
1.6. Customer loyalty program
The program allowed us to achieve the following results:
• Create transparent customer discounts based on purchase volumes
• Promote our own service sales
• Effectively launch service contracts
• Build stronger partner relations with customers
Date
Date
Customer partnership status - additional incentive for customers
At the end of each we evaluate sales per customer vs potential and acknowledge the best customers with one of the following statuses According to their volumes:
• Level 4 Customer • Level 3 Partnership status Silver • Level 2 Partnership status Gold • Level 1 Partnership status Platinum
Benefits for customers with status will include : •Discounts for new machines purchase •Discounts for new attachments •Discounts for trainings •Care Track installation benefits •Participation in Volvo Construction Club •Status is valid for 1 year
Cap
ital
1.7. Aftermarket marketing campaigns
1.8. Listen to your customer
• Not only when you are selling something
• Organize aftermarket customer events
• Engage customers in soft product development
• Build traditions and framework for continuous communication
1.9. Aftermarket customer events
1.10. Common culture
Ferronordic Machines
Customer
1.11.Know your customers
• Profiling
• Business cycles and buying patterns
• Decision making
• Business models
1.12. Contribute to success of your customers
• Help your customers achieve their business
goals
• Minimize machine downtime
• Help them come up with new technology
• Customer expertise development
1.13.Customer operator training • Custom made operator trainings
• Launch of the ECO operator program
• Simulators
1.14.Caretrack Volvo telemetric system Allows tracking of machine condition Maintenance and repair planning Resource planning
Easier management of maintenance contracts Population control Spare parts stock planning
2.Sustainable aftermarket
• Organizational structure
• People
• Dealer infrastructure development
2.1.Structure your organization
• Uniform organizational chart across regions
• Clear job descriptions and roles
• Clear motivation (bonus) system linked to job description and role
• Clear KPI’s in line with bonus system
• Responsibility and authority balance
2.2. Standardized organizational structure
Region
Location Location Location
2.3. Invest in your people
• Schools for mechanics
• Train the trainer programs
• Training center
• Mentors and personal development plans
• Succession planning
2.4. Training center
Each mechanic on average receives up to 200 hours of training per year
Trained mechanics are the best asset of a service company
2.5.Invest into your infrastructure
• Parts warehouses = availability
• Service vans and tools
• Workshops
• Mobile service points
• Customer site set ups
2.7. Service vans
2.8. Warehouse layout
3.Efficient aftermarket • Tracking performance against KPI and
communicating it to the team
• Resource planning based on population
• IT systems (dealer management system, stock replenishment system, CRM, ordering systems, online portal)
3.1.Key Performance Indicators
Labor sales
• Sales Volume
• Margin
• Hours per mechanic
• Average price of 1 hour
• Utilization ratio
• Efficiency ratio
• Productivity ratio
• Absorption rate
• Machines per mechanic
Parts
• Parts sales volume
• Margin
• Parts through workshop and over the counter
• Stock value
• Stock turn per year
• Product mix by groups
• Backorder ratio
• Availability index
3.2. New Tools in efficiency tracking • Labor utilization tracking module, 1C based
4.Flexible aftermarket
• Uniform approach to all regions
• Different location modeling options (from regional hub to home based mechanics)
• Mobile service
• 7 days a week service 2 shifts
• 24 hours emergency call service
• Customer location set ups available
Different set ups
Picture of rented place Picture of container set-up Purpose built facility
1-2 year
10 lessons learned by us
1. Go for commercial approach 2. Structure your business model and organization 3. Invest in people (mechanics, line managers) 4. Know your customers and listen to them 5. Contribute to success of your customers 6. Invest into infrastructure 7. Be “around the corner” 8. Engage people 9. Be consistent and plan long term 10. Enjoy what you do!
We enjoy what we do!
And come we up with creative solutions!
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