Unlocking value in Parts & Services 

This gap is becoming increasingly problematic. Industry dynamics are shifting rapidly, and manufacturers that continue to treat parts and services as a supporting function risk leaving significant value untapped. In this article, we explore the trends & challenges that shape the parts & service landscape, and how to move towards a business model which truly aligns commercial promise and supply chain capabilities. 

Trends reshaping the parts & services landscape 

Across industrial markets, we see a clear and accelerating shift away from purely product-centric business models. Customers no longer evaluate suppliers solely on machine specifications or purchase price. Instead, they increasingly judge value based on uptime, reliability, responsiveness and total lifecycle cost. 

This shift is visible in several connected trends: 

• Servitisation and solution selling: Manufacturers are moving from selling standalone products towards integrated offerings that combine products, spare parts and services into solutions. In more advanced cases, they even move towards outcome-based models where suppliers take responsibility for performance or availability. 
• Longer customer relationships: Value creation is shifting from one-off transactions to long-term partnerships, where recurring service revenues play a central role.  
• Rising customer expectations: Customers expect tailored service levels, fast response times and consistent experiences across touchpoints, particularly in capital‑intensive industries where downtime is extremely costly. 

Not all companies should progress at the same pace. Maturity ambitions often vary by customer segment, and leading manufacturers consciously decide where to invest and how far to develop their capabilities, rather than pursuing a one‑size‑fits‑all mode. 

The paradox: strong products, weak value capture in services 

Despite this strategic shift, we repeatedly observe the same paradox in manufacturing organisations: they are exceptionally good at producing and selling machines but systematically underperform in monetizing parts and services. 

Common symptoms include: 

• Cost‑plus pricing for spare parts that ignores customer value and willingness to pay. 
• Inconsistent discounting practices, leading to margin leakage and loss of commercial control. 
• Fragmented ownership between sales, customer service and supply chain, resulting in internal tension and suboptimal decisions. 
• High risks of stock‑outs for critical parts alongside excess inventory tying up working capital. 

We see that many companies leave significant money on the table, precisely in that part of the business that should deliver stable, high‑margin revenues over the asset lifecycle.  

Key challenges in scaling parts & services profitably 

The difficulty lies not in recognising the opportunity, but in managing the complexity that comes with the implementation. Based on our experience, the main challenges fall into four categories: 

1. Commercial complexity 
   As product and part portfolios grow, and customer segments diversify, defining clear value propositions, pricing logic and service levels becomes increasingly difficult.  
2. Supply chain pressure 
   Parts and services supply chains must balance responsiveness with efficiency. Long product lifecycles, unpredictable demand and critical uptime requirements create several planning and logistical challenges.  
3. Data overload, insight scarcity 
   Organisations are handling growing volumes of data, yet often struggle to convert this data into actionable insights for planning and decision-making‑.  
4. Organisational fragmentation 
   Commercial teams define service promises, while supply chain teams are left to deliver them with limited involvement upstream. 

From ambition to execution: aligning commercial and supply chain levers 

From our experience, we see that organisations that overcome these challenges take 3 crucial steps towards successWinning organisations excel in three areas: 

• Identifying value: Make clear choices about which customers and use cases justify more advanced service or solution offerings. We often see that the customer and product segmentation are a solid foundation to build upon. 
• Capturing value: Translate it into disciplined pricing, discounting and commercial governance that protects margins. We see that when done right, companies can increase their margin with 4-8%. 
• Delivering value: Ensure planning, inventory and logistics are set up to actually meet the commitments made to customers. When applied effectively, companies can increase service levels while reducing working capital 

Industry leaders recognise that sustainable profitability increasingly depends on how well parts and services are designed, priced, planned and delivered, rather than solely on how well machines are built.

To conclude... 

Parts and services are no longer a secondary consideration for machine manufacturers. They are a strategic growth and profitability lever. The companies that will lead their markets in the coming years are those that treat parts and services as an integrated business, not an afterthought. 

Unlocking this value starts with a clear view of the current maturity, a realistic understanding of structural challenges, and tighter alignment between commercial promises and supply chain capabilities. When approached end to end, parts and services can become a durable source of value. 

 

Reach out to learn how we could support you during this journey. 

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