O-rings â?? Design for aftermarket â?? A Complicated Captive Audience

In
many core industries, global competition has created a scenario
where many mainstream OEM's are literally breaking even on their
production products, and designing customized designs for
components so that they can control a more profitable
aftermarket.

Design
engineers who could easily design standard nuts, bolts, washers,

O-rings, and other
standard

seal systems
are instead being directed to create unique, customized
components for their products so that customers are "slaved" to
the OEM when maintenance is replacements parts are required.
Since the industrial marketplace is becoming more fragmented,
there isn't enough volume of product for manufacturers of
component parts to develop tooling to compete with the OEM for
the aftermarket. This gives the product OEM the leverage to
charge exorbitant prices for their custom aftermarket products
with minimal competition. Industries like automotive systems,
hydraulics, pneumatics, pumps, heavy equipment, and valve systems
are creating unique designs for components as a regular practice,
as the majority of margins are realized in aftermarket sales. In
many cases, OEM's are actually selling production product at
margins as low as 2% in order to command the aftermarket
business!

In
most cases, the OEM customer does not understand why the prices
are so high, and why they cannot simply purchase their spare
parts needs from local, trusted sources. We have all experienced
the "sticker shock" of purchasing replacement ink or toner
cartridges for our printers, and the industrial marketplace is
quickly following suit.

Since
most OEM's are cumbersome to deal with, aftermarket "kit
packagers" have taken over much of the aftermarket business. The
OEM's have pushed the "custom" design components in order to
thwart the kit packagers' ability to cut into their aftermarket
share. Kit packagers normally have to purchase a complete OEM
machine in order to reverse engineer the individual components,
so when they find they cannot source the components with standard
product and available tooling, it raises the threshold for their
costs, and makes it more difficult to compete. To complicate
matters further, OEM's are specifying unique colors, material
specifications, and even specific part number identification on
the surface of the aftermarket part. Although these tactics may
make it more difficult for aftermarket copycats to produce
conforming parts, it also complicates the sourcing for the
OEM.

Twenty-first
century, high tech approaches are also being tested. Much like
software and other high tech products, some OEM's are
experimenting with hologram imbedded images and/or tiny
identification chips to authenticate their aftermarket products.
As the cost associated with this sort of identification continues
to go down, and as production techniques allow for more complex
means of modifying finished products, the battle will
continue.

When
it comes to rubber and plastics seal products and mechanical
components, you need a company with a long history of providing
conformance to customer specification. Find one that is adaptable
to customer requirements, and pragmatic enough to make these
adaptations without undue cost, with engineering support services
that can offer alternative tooling and production methods that
will meet your objectives competitively.