Page 95 - MA - May 2017

of each outcome, but also to evaluate whether  Efficiently manage their cost structure
measures link individuals, departments and the  Develop systems and process that ensure consistent
organization as a whole. Audit also whether the response and quality of delivery
measures are based on desired strategy and linked to  Streamline operations to reduce waste
long-term vision of growing aftermarket revenues.  build cost effective business continuity mechanisms
 Partner administration covers the parts, The starting point for each OEM seeking to enhance
service and support partner policies, SLAs, an affective aftermarket strategy is different. But the
etc. Overpayments to suppliers due to pricing challenges are common: increasing competition,
errors, rebates, and duplicate payments are a quarter by quarter drop in new sales, new technology
significant issue. They can create leakage of up to developments and legislative changes. A comprehensive
1 percent of revenue, reduce cash flow by up to 5 aftermarket audit is a must to assess current state;
percent, and inflate working capital requirements uncover challenges, and an active evaluation of where
by up to 6 percent. their aftermarket future lies.
Being an internal audit, a comprehensive aftermarket
audit can be conducted every 3 years or whenever major References
warranty and parts policy changes are announced. 1. Armistead, C., & Clark, G. (1991).A framework for formulating
Consistent with the guide notes on Internal audit 2009 after-sales support strategy.International Journal of Physical
by ICWAI, aftermarket audit planning, complementing 2. Distribution & Logistics Management, 21(9), 22-29.
Bundschuh, R. G., &Dezvane, T. M. (2003). How to make after-
system auditing with pre-audit of various functions sales services pay off. McKinsey Quarterly, 12(4), 117-127.
and reporting formats for management review can be 3. Cohen, M. A., Agrawal, N., & Agrawal, V. (2006).Winning in the
customized for each company. aftermarket.Harvard Business Review, 84(5), 129-138.
4. Corey, R.E., Cespedes, F.V. and Rangan, V.K. (1989), Going to
Market: Distribution Systems for
Conclusion 5. Industrial Products. Harvard Business School Press, Boston, MA,
Aftermarket services and support do influence pp. 22-59.
customer relationships to a significant level. Effective 6. Gaiardelli P., Saccani N. and Songini L. (2007) “Performance
Customer care, parts management and service can measurement of the after-sales service network- Evidence from
the automotive industry” Computers in Industry, 58 (7), pp.
enhance the effectiveness of aftermarket operations. 698-708.
Dealers and their management of moments of truth 7. Lusch, R.F., Vargo, S.L. and O’Brien, M. (2007), “Competing
are crucial to reinforce the brand experience and service through service: insights from service-dominant logic”, Journal of
quality. An aftermarket audit can not only reveal the 8. Retailing, Vol. 83 No. 1, pp. 5-18.
The Institute of Cost and Works Accountants of India (2009),
cost and service dimensions of current operations, it ‘Guidance Note on Internal Audit’, January, Kolkatta.
can help them to align the employees at all levels to
be aware of their organizational goals and have the
attitudes towards the services. An aftermarket audit aishwarya@browneandmohan.com
can help a company:

Dr. V.S Chauhan, Chairman UGC,
being felicitated by CMA Manas
Kumar Thakur, President of the
Institute on April 21, 2017

www.icmai.in May 2017 l The Management Accountant 95