Tesla has become a disruptive force in the automotive industry in both its product line and business model. What drives Tesla’s success cannot just be crowned by their innovative vehicles, but also with their unconventional aftermarket support, which moves away from relying on distributors and channel partners, a major milestone for the automotive industry.
How is Tesla monopolizing their Aftermarket Support?
Tesla's core competency is not their vehicles at face value, but the uniqueness of them. As Tesla makes unique vehicles, Tesla aims to keep its business model just as unique. Tesla, in order to truly disrupt the industry, must limit any channels that offer spare parts for their vehicles.
If a normal vehicle was to break down, the owner has a plethora of options to find a new spare part. If the broken vehicle was a Tesla Model 3, the owner has to directly go to Tesla for spare parts. By cutting out any channels, the distribution is purely vertical, from Tesla’s production, retail, and aftermarket support.
By not allowing OEM’s to sell their Tesla specific parts to distributors and market directly to the consumers, Tesla can maximize their profits and brand equity. Major automotive firms will have to adjust not just their product line, but their business and revenue model if they were to compete with Tesla.
How is the Aviation Industry Following Tesla’s lead?
As Tesla dominates the automotive industry, aviation OEMs are taking steps to increase its market share in the aftermarket support. A key player that is signaling this change is Boeing.
Like Tesla, Boeing is aiming to maximize its profits by eliminating the use of brokers or distributors in exchange for creating direct channels to its clients. As the sales of new airplanes decrease and the aftermarket value currently at $62 billion and growing, Boeing has been making strides to grow aftermarket support to their services and ending reliance with distributors. An example of such is the termination of agreements with large suppliers such as Spirit AeroSystems. Boeing’s end goal is to reach sales of $50 billion in just little over 5 to 10 years, and the company is taking monumental steps to achieve its quota.
As Boeing historically has been known to allocate their support to production services, this is a new direction for Boeing as they aim to gain a significant market share in aftermarket support.
What Comes Next?
As OEMs go vertical, problems are derived from the new disruption of the aviation aftermarket support industry. There is no decrease in progress as large OEM’s economies of scale easily outpace traditional smaller brokers, distributors, and MROs.
In order for the existing companies to survive in the new climate, they must look for ways to increase the efficiency of their operations, know their customers better, and quickly react to the changes of the agile market.
Utilizing the right tools can make all the difference.
ERP.aero, within a single cloud-based system, besides having standard ERP modules, provides an irreplaceable set of tools to optimize operations, build and maintain a loyal customer base, and provide data to support informed decision making. Users of ERP.aero are able to use numerous dashboards to assess their operational efficiency, customer and market trends, and take timely corrective actions. Sales and business development professionals utilize CRM capabilities within the same system, without the need to duplicate data into another CRM solution. ERP.aero can integrate with multiple e-marketplaces, making certain users can have quick access to market data and stay ahead of the competition.
Using the right ERP system can ensure your business survives and grows in this rapidly changing environment.
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