Research by Capgemini, in partnership with DHL Exel Supply Chain, reveals that after-market service revenues, as a percentage of total company revenue, are set to rise by 50 percent over the next five years. After-market services include exchange, return and repair logistics for the engineering and manufacturing and hi-tech industries.

On average, manufacturing companies are already harvesting 25 percent of their profits from this area. Putting the after-market service at the heart of the company's product strategy has resulted in considerable investments in optimising the after-market supply chain.

The DHL and Capgemini survey was to find out trends within the after-market industry and identify today's challenges, the perceived spearhead of after-market strategies and the direction engineering and manufacturing (E&M) companies take against the hi-tech industry. The survey covered more than 100 supply chain and service management executives within the engineering and manufacturing, and hi-tech industries. Fortune 500 E&M conglomerates such as ABB and Honeywell took part in the research and the results were benchmarked against leaders in the hi-tech industry.

E&M companies today are already experiencing profit margins between 10 and 50 percent in service management. However, E&M companies are expecting even larger profit margins in the next five years.

Roy Lenders, global vice-president for logistics and fulfilment, Capgemini, said: "The survey provides real forward-looking insight into the service logistics industry landscape. It highlights that service management is becoming a strong revenue stream for most of these large engineering and manufacturing companies.

"The findings reveal that while the hi-tech industry is considered a front runner in service logistics developments, it is still five years behind the engineering and manufacturing industry in terms of globalisation. But the latter are encountering more difficulties in delivering consistent service and in meeting the service level expectations of their customers.

"While hi-tech companies are aiming to provide short response times only where necessary and moving to cost- efficient service modes where possible, E&M companies are facing ever increasing business requirements. Global reach and consistency are a core focus in this industry.

Jacob Verhagen, vice-president, sales and marketing, global service logistics, DHL Exel Supply Chain, said: "The study reveals the extent to which our manufacturing customers are increasingly viewing service management and service logistics as a differentiating factor in setting themselves apart from their competitors. In an increasingly complex operating environment, centralised supply chain management is a hot topic in most of our customers' boardrooms and now is a high priority as a core part of business."