Sustainability in After Sales
How can industrial manufacturers make their service offerings both greener and more competitive?
Published: 1 November 2022
As industry clambers to become carbon-free, socially responsible and regulation-compliant, the growth opportunities for equipment and machinery manufacturers are unprecedented. The obvious opportunity lies in driving sales of new, more energy-efficient equipment and machinery, yet we shouldn’t overlook the significant role that after-sales service plays. With the right sustainability-oriented services, OEMs can achieve a major environmental impact while also realizing sustainability gains. This new Deloitte whitepaper Sustainable Service Transformation: How can industrial manufacturers make their service offerings both greener and more competitive? offered five key steps to plan and implement a sustainable service transformation, starting by redefining the future role of service in any manufacturing enterprise, gives manufacturers the insight and best practices they need to plan and implement a sustainable service transformation.
It’s time for industrial manufacturers to make their service operations and offerings greener and more competitive:
What does sustainability have to do with service?
Today’s sustainability to-do lists are enterprise-wide and extremely long, focusing on issues such as designing more energy and resource efficient products, establishing sustainable sourcing programs, limiting ESG exposure across the supply chain and achieving carbon-free manufacturing. Service seems insignificant in comparison and may be overlooked as a result, but a closer look at the equipment and machinery lifecycle paints an entirely different picture.
A whopping 65% of greenhouse gas (GHG) emissions come from commissioning, operation, resale and – finally – disposal. Service can have an enormous sustainability impact as it tackles the lion’s share of indirect emissions across the value chain of a typical machine manufacturer. There are two dimensions to consider in this context:
- External: New sustainability-related services enable customers to use and operate equipment in a more eco-friendly way.
- Internal: By deploying sustainable practices as part of service fulfillment and operations, OEMs can optimize their own supply chain sustainability.
The sustainable service transformation comes with positive top and bottom-line effects as well. Companies should not think of sustainability as a standalone initiative that has nothing to do with generating value – but rather as an opportunity across the organization’s broader value chain.
Figure: Opportunities for sustainable value along the supply chain
Framework for sustainable industry services
Based on insights from our sustainability projects in the machinery sector as well as industry best practices, we have developed a framework that focuses on those areas and levers that will drive long-term service growth, bring emissions and costs down, and even retain access to the valuable expertise of your service technicians.
- Field service: reduce the carbon footprint of the workforce, which will cut costs as well as mean time to repair
- Spare parts management: scale back inventories and transport in order to minimize the associated environmental strain and operational costs
- Equipment operation: optimize equipment efficiency and reduce energy consumption across the entire lifecycle
- Service model: unlock new revenue and differentiation potential by introducing novel service business models with green value propositions
We have identified and detailed a short list of levers for each of these fields of action that will allow companies to reap a wide range of benefits.
Table: Four fields of action in sustainable industry services and associated levers
What’s the best way to kickstart your sustainable service transformation?
Sustainability is a global issue that compels every company to take action. There is no silver-bullet solution, but rather a range of incremental steps that manufacturers can introduce along the value chain beyond their own corporate borders. Industrial manufacturers have enormous potential to design and implement smart ESG solutions for their customers. It is time for you to step up!
It’s 2022 and still most of the companies we deal with have a very limited focus on sustainability. Their efforts tend to prioritize limiting business trips to reduce carbon footprint, adapting to new legislation or allocating new board responsibilities. While these issues are indeed important, we believe that leadership in sustainability will soon become a critical success factor and may even determine a company’s survival.
Leadership in this context is not about pursuing a lot of haphazard, so-called high visibility initiatives. It will require a holistic, full-scale sustainability strategy that not only addresses your company’s own carbon footprint, but also aims to help customers ease their more pressing sustainability concerns. After-sales service can be the ideal first step for industrial manufacturers to do just this – and the time to act is now. Here are the five actions Deloitte recommend to kickstart your transformation journey:
Re-calibrate your service ambitions – determine whether service is an essential part of your sustainability strategy
Verify your sustainability bonafides – find out exactly how sustainable your services and operations really are
Define future services and set actionable priorities – pinpoint which operations need to improve and define which new sustainable services you want to offer
Break them down into initiatives and actions – start to derive initiatives and actions that will address critical areas and move you towards the future sustainable service operation you want
Draw a roadmap and start with step one – Design your roadmap and make it happen – what initiatives do you need to tackle, in what order and with what resources?
Deloitte aim to make sustainability actionable and measurable for your enterprise, for your employees, for your customers and for all of us together as a society. It is time for us to take action and start seeing sustainability as an opportunity!
How Deloitte can help
Setting up sustainable service strategies
Deloitte’s After-Sales and Machinery Sector Team has broad experience in sustainability projects in the machinery sector and beyond. With our leading end-to-end sus¬tainability expertise, we provide support ranging from a quick scan of sustainability service operations up to full-scale sustain-ability transformations.
We recommend a Sustainable Service Lab to start with. Lasting less than a week, this workshop with service leaders is designed to evaluate the maturity of your service organization in terms of sustaina¬bility and to develop a heatmap for critical areas.
Pursuing other sustainability goals
Deloitte’s Sustainability Team and our global Sustainability ThinkTank supports organizations with experts on any topic relating to sustainable development today. We offer a broad range of services from global sustainable strategies to concrete risk assessments.
Applying for public funding
Sustainability projects are often eligible for government grants and subsidies. Our Global Investment & Innovation Incentives unit can help you source additional financ¬ing at the EU, national and regional level.
Our goal is to make sustainability actiona¬ble and measurable for your enterprise, for your employees, for your customers and for all of us together as a society.
It is time for us to take action and start seeing sus¬tainability as an opportunity!