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Would you walk into a pub that served you a warm beer the previous time? Or, go back to this fine dining restaurant with your partner if it was noisy and unclean? One word that can make or break it for the service business is ‘Experience’.
With customer satisfaction being the buzz word in the past years, now the new trending words are ‘Experience Economy’, ‘Customer Delight’, and ‘Good-feel Service’. The trend is very common in the B2C sector which has led to terms like ‘Uberized Service’, ‘Amazon like Delivery’ or ‘Disney like Experience’.
This wave of keeping customers happy and providing them with a great experience has to become a priority on the list of the majority of Field Service Directors today. With the quest to create the perfect value proposition and customer experience comes in the various challenges that these leaders in manufacturing face today.
Recently, I had a fantastic opportunity to moderate a round-table discussion along with Kris Oldland, Editor of Field Service News about the Challenges that Service Leaders Face today and the future technologies in Field Service and Spare Parts at the Spare Parts Summit Summit in Coventry, UK.
One important observation was the interlinking of issues with spare parts and field service. The service leaders faced challenges in obsolesce management, spare parts management, data collection, utilisation and analysis along with field workforce training and planning.
With the advent of digital tools, faster production and time to market, one big challenge for Service Leaders today is obsolescence management as it has become increasingly challenging to predict and prepare for the future. IoT and connected machines have made predictive maintenance easier and helped the service organisations to move into the proactive space than the reactive space. One challenge still remains with break-fix due to user mismanagement, negligence or insufficient training.
Although IoT allows companies to note some cases of misuse and offer training proactively preventing damage to the machines and need for servicing prematurely. The service leaders have accepted that there will always be break-fix with machines whether it is due to an unforeseen circumstance or a user issue. So the goal in these instances is to have enough data to be able to get a technician with the right spare parts to the location and get it fixed immediately.
"One important observation was the interlinking of issues with spare parts and field service..."
This is a shift from the older model of a technician visiting to collect information, making a fault report to get the spare parts and revisiting the customer to fix the issue which is a higher cost for the service company and loss in uptime for the customers. Tracking of spare parts and more specifically ‘Having the rights parts at the right place’ is also an issue being tackled currently by the service leaders.
Some leaders are concerned about the tracking of spare parts as they become ‘lost’ with technicians, in spare part boxes or in inventories. Technologies like RFID readers, GPS tags could play a big role in actively tracking the spare parts to make sure the parts can be delivered to the right place when required.
The manufacturing, service and aftermarket space today is in a fantastic rush for data and today is commonly referred to as the new gold or oil. Kris Oldland had an interesting take on how this gold can be dug out but will still be useless unless refined and put it in the right form. One challenge with data is also getting data from the right source.
Similar to ores to extract gold, if the content of the ore is bad, the gold will be very expensive to extract and the return on investment will be low or negative. Data has a similar proposition today. Companies have started asking, how much data is enough data and which data is good data. With better data processing, artificial intelligence and machine learning making progress, the data analysis and processing woes should be answered more effectively in the near future.
The challenges cannot be addressed with a magic wand or just ignored, but being able to address them is a progressive first step. Collaboration with the customers and getting them involved in the whole process of solving the challenges can also boost progress for the service organisations.
To sum it up according to a Forbes quote,’An experience is not an amorphous construct, it is as real an offering as any service, good or commodity.’
Copperberg’s Thomas Igou reflects on some of their most recent research that outlines how although most companies within the field service sector on a program of digitalisation to leverage emerging technologies to improve the efficiency of their...
Copperberg’s Thomas Igou reflects on some of their most recent research that outlines how although most companies within the field service sector on a program of digitalisation to leverage emerging technologies to improve the efficiency of their service operations both in the office and out in the field, almost half of companies cite adapting current IT infrastructure for Future Digital Strategy as one of their biggest challenges...
Field Service Organisations today would like to move into predictive maintenance, connect the back office to the front and augment knowledge virtually to field technicians through digital devices to boost productivity, increase profitability and stay ahead of the competition.
However, according to the Copperberg Research’s Annual Field Service Report conducted with over 120 FIeld Service DIrectors in 2019, 42% of the respondents listed adapting current IT infrastructure for Future Digital Strategy as one of their biggest problems. There are so many technologies to implement yet having a unified IT infrastructure for these systems and platforms is no easy task, and can make or break a Digital Strategy if the data between systems cannot speak to each other.
With the advent of numerous sensors, faster data capturing and transmission, sorting, processing and making use of all the data can be a big challenge requiring a massive investment in upgrading IT departments. Most companies in the field service domain are just getting started on the digital journey where going fast could be useful, but the important question to ask is if it is worth going faster than your customers? Or, is the best approach to take is one of step by step collaboration with partners, suppliers and customers. According to the survey, the next big challenges according to 30% of the field service directors is deciding on the digital transformation tools along with workforce planning and scheduling (32%). However, the important observation from the survey is one about change management.
To be able to implement the digital tools and keep pace with the industry, change management is crucial, which has to trickle down from the company strategy through the top management to the field service engineers. Michael Porter famously said, ‘’Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different’’.
Industrial organisations are fighting their own internal struggles of moving away from the traditional transactional business model they have been running on since their p77 inception towards a different one more adapted to today’s Experience Economy based on partnerships, value creation, subscriptions, outcomes and productivity. 53% of respondents in the survey claimed that only top management makes the decisions which could be a double-edged sword in today’s dynamic industry.
Strategies have been imperatively flowing top-down in organisations but might offer a challenge to adoption at the bottom level as they will be the ones using the deployed technology. Most leaders today are discussion preventive maintenance and some about building machines that will not break down avoiding maintenance operations and associated costs. 31% of the industry is still stuck in reactive maintenance which is concerning given the plethora of tools, case studies and resources available to move into proactive maintenance are available and have been publicised over years now.
Having the field service workforce motivated to pitch into the companies strategies will lead to motivated technicians. Top management has to involve the technicians when deciding on new digital tools, continuously train them and have the technicians help each other to understand the new technology.
This will help the younger technicians learn from experienced ones and also make the older technicians easily ask the young workforce on adapting to the new technology, bridging the competence gap. In the Survey, 80% of leaders rate their field service workforces adaptation to new tech, helping each other and providing feedback as average with only a very small number rating it as high. Competence Development of Field Workforce tops the list of priorities for field service leaders in the next 5 years.
Jim Baston, of BBA Consulting Group Inc. has a different take: ‘‘It is interesting to note the growing place that technology plays in field service. With remote diagnostics, artificial intelligence and visual reality, as well as embedded intelligence in the serviced equipment, the technical competence of the service person, will become less important. As they rely more on their tools to troubleshoot and repair and less on their experience, it opens up the door for less qualified individuals who will be able to give comparable levels of technical service.’’
In conclusion, to connect all three aspects of digitalisation, strategy and competence management, Adam Neale of Arqiva group states, ’’We will see a significant reduction in the number of highly skilled Field Engineers. We will be more low-skilled with 3rd line support assisting with technology such as Augmented Reality. Without great employee engagement, you will not succeed. Your employees build your customer reputation which can be positive or negative. If they were engaged with what your company does each and every day, then they will deliver high standards.’’
The quantitative survey conducted by Copperberg Research had over 125 respondents reflecting the state of the current field service industry. Field Service Organisations are trying to balance the growing customer expectations and associated challenges that implementing new digital tools are bringing along. The survey brings to light the major challenges the industry faces, the tools that will be important to implement in the next 5 years along with addressing the needs for Field Service Engineers.
The survey is divided into three chapters: Digital, Workforce and Strategy to streamline the needs in these three spheres complimented by insights from industry experts.
You can download the report here.
Skype, the VOIP service released in 2003, the pre-cursor to video-calls over the web is now taken for granted. A true game changer, the application means business meetings can take place in one room with worldwide attendees interacting in real-time; friends and family can keep in touch from both sides of the world. In technological terms, it was disruption on a huge scale. It seemed appropriate then that one of the creators of Skype, Jonas Kjellberg, should present a keynote at this year’s Spare Parts Business Platform.
Delegates packed into the main conference room to hear how the Swedish entrepreneur disrupted and continues to disrupt in pursuit of constant innovation. Billed as part of the event’s Service Mastery Day, Kjellberg’s hour-long presentation urged delegates to bring this culture of disruption to their business framework. Once the cash cow of the service sector, spare parts has perhaps remained stagnant in its outlook and, Kjellberg, suggested disruptive elements such as AI, drones and 3D printing should be welcomed and embraced.
However, political upheaval through Brexit is creating a type of disruption a long way from the technological and business sort that drives innovation. Indeed, as I write this the EU has just agreed an extension to the UK’s departure, pushing the exit day back to 31 October. A major thread of negotiation and debate is the movement of goods in the EU and any tariffs imposed will inevitably have an affect on the supply chain. In a fascinating presentation towards the end of the first day, Lars Karlsson, CEO and Managing Director at KGH Global Consulting and an expert in customs warned delegates about the impact that the UK’s withdrawal could have on logistics. Karlsson, who was commissioned by the European Parliament Constitutional Committee to suggest possible border-solutions post-Brexit shared his thoughts on the impact of import and export between the EU and UK. Of course, while businesses are doing everything they can to prepare for all Brexit outcomes, until politicians come to an agreement we can still only speculate on what sort of mark Brexit will leave.
"Once the cash cow of the service sector, spare parts has perhaps remained stagnant in its outlook..."
One future trend that could impact positively on the supply chain is 3D printing and on day two of the conference, Atanu Chaudhuri from Aalborg University – and recent guest on the Field Service Podcast – presented case studies from two Danish manufacturers to delegates on selecting suitable spare parts for 3D printing (or additive manufacturing to give it its other term). Adopted within the medical, automotive and aerospace sectors additive manufacturing is yet to truly take-off in service, due in-part to the lack of a solid business case being waved in front of a perhaps cynical industry. However, as part of Atanu’s presentation, Mads Blaabjerg Uhre from Nilfisk, a supplier of professional cleaning equipment, and an advocate of 3D printing took part in a far-reaching Q&A on the subject, which may have persuaded some of those in the audience to re-consider their view on the subject.
Elsewhere on day two, sessions straddled warehouse management, digitization and stock optimisation. On the latter, Andrea Capello, Head of Parts BU at Ariston Thermo, a producer of thermic comfort products for commercial and industrial use, was able to share some of the guidelines that he uses to check stock-level by cluster and some of the tools used in this process. He outlined the importance of having a clear understanding of stock-balance, including inventory and location and affirmed that only then can you be fast and responsive to the customer.
Delegates left the two-day event enriched with new ideas, contacts and an accurate overview of where they and their business sit in the spare parts world. Thomas Igou, Editorial Director at Copperberg, the organisers behind the event, said this year’s conference had been a success and he looked forward to the next gathering. “With over 150 participants from all corners of Europe,” he said, “and across the manufacturing sector, 12 partners including the leading solutions providers in the sector, and high profile speakers that included the co-founder of Skype, the event was two intense days of knowledge sharing. I look forward to the next edition in February 2020, this time in Germany.”
A year is a long time in field service and 2020’s Spare Parts Business Platform, I’m sure, will reflect the trends of a dynamic and constantly moving industry.
This April, Copperberg is returning to the Warwick Conference Centre for its 4th Annual Field Service Summit and 2nd Annual Spare Parts Summit, bringing over the course of two days 200+ service and parts leaders from the UK manufacturing industry. Chaired by Andy Neely of the Cambridge Service Alliance, both days will be filled with intense group discussions and inspiring keynotes.
First up on 3 April, The Field Service Summit will focus on how to move from a service culture to an experience economy.
The right customer experience directly translates to economic gains and differentiation as premium service. With the growing number of connected devices, easier integration of new sensors and the rise of automation in the field, customers now demand a more memorable experience. The experiences consist of being able to make the customer participate, connect and build a relationship with the service, assuring loyalty in the long term. To be able to shift from a service culture to one based on capabilities and outcomes demands organisations need to go the extra mile in providing prompt, accurate and reliable solutions in the short customer attention span.
This shift requires developing internal competencies and changing leadership style while finding seamless solutions, to make field service memorable customer experiences.
At the 3rd Annual Field Service Summit UK in April 2018, more than 120 field Service Directors gathered to learn how to use the latest advances in software technologies to improve their connection points with their customers and maximise their service operations’ financial performance.
In 2019, The Field Service Summit returns with an even more engaging value proposition: entering the era of the Experience Economy with an outcome based service strategy.
Memorable keynotes will include Rajat Kakar, Vice President, Head of Product Related Services at Fujitsu on Preparing your CEO for the Unprecedented Service Digital Disruption. Other keynotes will include Airstream, IFS, SightCall, Salesforce, ebecs, clicksoftware, and regular Field Service News contributor, Bill Pollock from Strategies for Growth.
The highpoint of the event, though, will be the idea blitzes: 16 group discussions on distinct and dedicated topics within field service management that will run four times throughout the day, for intense discussions.
Then on 4 April, the 2nd Annual Spare Parts Summit will take place, focusing on putting availability at the core of a manufacturer’s strategy.
Spare Parts is the money-maker of a service division; however, in a time of great uncertainty, where the boundaries of competition are crushed wide open by tech giants and technological breakthroughs, and where global trade agreements are under constant threat by protectionist governments, the need for change and innovation is more important than ever.
"Spare Parts is the money-maker of a service division..."
The 2nd Annual Spare Parts Summit will guide you through the most modern tools and strategies to ensure that your customers’ expectations, availability, is ensured. The event will offer engaging peer discussions to discuss how to not only digitize service offerings for the benefit of customers and profit margins but how digitalisation will impact spare parts businesses and the industry as a whole.
The event will also look at pricing strategy as a key to business growth, and how to be coherent in pricing approaches in an omnichannel environment where ecommerce becomes a vital tool to lock in customers and fend off competition.
Finally, the event will also showcase innovations in warehouse management, supply chain optimization, and how to use IoT for parts failure predictions in order to ensure that manufacturers always deliver the right part at the right time.
Some keynotes to look out for: the Increasing Influence of Ecommerce in The Industrial Aftermarket by Carl Daintree from Sandvik. In this session, Carl will highlight Consumer/Customer behaviour analysis, and their new expectations regarding a seamless online experience with 24/7 access to information as well as why manufacturers are now working towards utilising Ecommerce as their primary sales channel, and exploring the benefits of this strategy.
Another keynote to look forward to: When reality trumps value-based pricing of spare parts - Moving beyond from Price Setting to Price Getting by Matias Mäkelä, Pricing Manager at Kalmar Services.
The session will focus on how even state-of-the-art product segmentation, carefully built value-based price structures maintained by modern pricing tool do not always guarantee the optimal result in final net prices. Matias will share his hands-on experiences on tackling margin erosion due to various indirect factors affecting net price getting.
With over 200+ service and parts leader in attendance over two days, the Warwick Conference Centre will once again be host to the UK’s largest business conference for service leaders in the UK, with a unique format putting delegates at the forefront of the program with the idea blitzes.
You can register for the Field Service Summit here and the Spare Parts Summit here.
The survey gathered comment from over 125 Field Service Directors from global manufacturing firms, and revealed visual-based technologies including VR, AR, Visual Assistance and Video Calling could address the growing disparity between mature field service engineers and less experienced workers.
Commenting, Field Service News contributor and BBA Consulting President Jim Baston said: ‘‘As they [experienced engineers] rely more on their tools to troubleshoot and repair and less on their experience, it opens up the door for less qualified individuals who will be able to give comparable levels of technical service.’’
The survey also identified the need for an open digital eco-system between partners, suppliers and customers to encourage collaboration.
You can download the report's findings here.
This year's Aftermarket Business Platform was once again a hive of information as senior leaders from across the European continent and beyond came together to share their insight, learn from their peers and see first hand the technology that is...
This year's Aftermarket Business Platform was once again a hive of information as senior leaders from across the European continent and beyond came together to share their insight, learn from their peers and see first hand the technology that is shaping the sector.
The conference was packed with the leading thinkers within the industry from both the practitioner and solution provider side and in this second in a series of articles with those key speakers Coppperberg's Mark McCord joins reflects on his discussion with Thomas Radau of German firm Titan following his presentation...
The schedule for Aftermarket 2019 is already being put together and it promises to be a key date in the calendar once again. This is an event that almost always sells out so head over to aftermarketeurope.com now and secure your place at this important industry event...
In a distinguished career in engineering services, Thomas Radau has seen a lot of change. The biggest, however, has been industry’s attitude towards the customer.
No longer just the endpoint in a supply and process chain, manufacturers increasingly see customers as long-term partners.
“There’s been a revolution in thought,” says Radau, service manager for German packaging and strap-making firm Titan.
“In the past, the customer was paid lip service to and customer-focus was more an attitude than a practice. But now it’s key to our business.”
It’s no longer enough simply to offer customers a product, Radau says.
"You have to be very focused to say ‘am I understanding you correctly, this is the problem, that’s where I can help you..."
“You have to be very focused to say ‘am I understanding you correctly, this is the problem, that’s where I can help you’.”
Radau began his career as a service technician and electronics expert and was posted in various locations around the world. He gained an up-close understanding of the importance of aftermarket service provision while working within the compressed air and gas purification industry, where the smooth running of equipment and minimisation of downtime are critical.
He later moved to DEUTZ, a manufacturer of industrial diesel engines before joining Titan in 2015.
In an engrossing presentation at Aftermarket 2018, Radau stressed the importance of customer focus by personalising his customer base to an idealised character called “Paul”.
“You have to think forward, and ask how do I help Paul meet his projects,” Radau told the delegates in Berlin. “If what we do doesn’t add value to Paul, then it’s useless.”
In an increasingly competitive world, it’s important for companies to put aftermarket services at the forefront because that wins customer loyalty and satisfaction, Radua argues.
“It’s now more difficult to sell things because everybody wants to sell products – it’s difficult to get customers’ attention,” Radau adds. “We must now do things where in the past the customer had to do it themselves.”
While Radau jokes that aftermarket service is like a social service, he believes he is in the business of making life better for his customers.
“We release them from the monkey work – that’s what the product as a service is all about,” he says animatedly. “It’s a lifestyle pitch.”
“In today’s life – everybody has more and more responsibility and everybody is more and more involved in lots of things, so if we are able to ease their lives and save them time and energy, they’re able to do their work better and easier.”
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Nov 20, 2018 • Features • Logistics • 3D printing • Aftermarket • Artificial intelligence • copperberg • Inventory Management • Parts Logistics • parts management • field service • field service technology • Service Management • Spare Parts • eCommerce • Parts Pricing • Spare Parts Conference
In an age of servitization and advanced services, spare parts management has become something of a difficult beast to fully grasp for many companies who are offer aftermarket services.
In an age of servitization and advanced services, spare parts management has become something of a difficult beast to fully grasp for many companies who are offer aftermarket services.
For example, in a world of guaranteed up-times, the cost of failure to keep an asset running can often far outweigh the lost revenue from the sale of the replacement part needed to get the asset back up and running and fully functional again.
Yet, the path to servitization is not an easy one to tread - so is it worth cannibalising what for many service companies is a reliable, consistent and strong revenue stream in its pursuit?
Whichever route companies ultimately turn to, one thing is certain, spare parts management is going to be a crucial aspect within the service delivery sector and as with mobile workforce management, there are a number of technologies and innovations that are emerging that could change the way we approach parts management in the future.
Therefore it was with great interest that we took a look at the insights from a recent research project undertaken by Copperberg. The research was conducted online across the last month primarily to Copperberg’s own audience of conference delegates.
In total the there were 65 responses to the survey and these representatives were all professionals within the sector ranging in seniority from parts managers through to Managing Directors - although the main body of respondents were at the division head/director level on a national scale.
The majority of respondents were from Europe although other regions, including China, were represented. The respondents were largely from manufacturing verticals, which would be anticipated given Copperberg’s flagship event the Aftermarket Business Platform is also a manufacturing dominated event. However, there were a number verticals within the manufacturing sector represented including heavy machinery, medical and automotive.
So let us take a brief look at what trends the research revealed...
Want to know more? Click here to Visit Copperberg's website to register for an exclusive white paper based on this research!
Inventory Management sits at the heart of good parts management as without the ability to track components and parts at any given time as they move from depot to the field (and potentially back again depending on a companies approach to repair and reverse logistics) everything else within in the equation becomes open to inaccuracies and subject to guesswork.
Indeed, the importance of inventory management appears to be hugely important within the organisations represented within Copperberg’s research with 91% of the respondents ranking it as being either four, five or six on a scale on to six with six being very important. In fact, almost half of the respondents (43%) listed Inventory Management as very important (6) - further emphasising the significance of inventory management in the context of spare parts management.
So it is absolutely shown to be clear in the research that the focus on inventory management remains one of utmost importance for the vast majority of companies.
Parts Pricing and eCommerce:
Parts pricing is also another area that was unanimously outlined as being important to the survey respondents.
This is particularly interesting as the fact that so many companies still view parts pricing as being highly important to them could be viewed as an indicator that the revenue streams that come from spare parts sales is still very much a critical part of the aftermarket landscape.
In fact, 86% of respondents stated that they felt parts pricing was at least a four on the same scale as listed above, however, here it was just under a third of respondents (32%) that felt this issue was very important.
eCommerce is of course another area that is heavily linked with parts pricing and there are indeed some correlations between the two areas, yet in terms of responses, eCommerce remains somewhat less of a priority than pricing.
With regards to eCommerce, exactly two-thirds of the respondents (66%) listed it as a four, five or six with only 16% seeing it as being very important (6).
This is quite an interesting difference between the two as we might have anticipated these results being more closely aligned.
One assumption, however, may be that with regards to eCommerce the solutions have now matured and so most manufacturers in 2018 may have at least some form of eCommerce solution in place - perhaps this explains why it is viewed as less of a priority?
This is certainly though an area for further discussion - something that will be surely had at the Copperberg Spare Parts Business Platforms which are running in Q1 next year.
Digitalisation is the key buzzword of the last few years although given that it encompasses a number of important shifts within the current evolution of business processes this is perhaps to be expected and there is no denying the importance of digitalisation within the field service sector and it is also a major consideration within the closely related function of parts management as the research reveals.
Digitalisation was ranked was 71% of the respondents to the Copperberg survey as being listed as either a four, five or six on their scale of importance, with 22% of respondents listing it as a six i.e. very important.
This places digitalisation as being deemed to be not quite as important to the respondent base as Inventory Management and Parts Pricing but more important than eCommerce.
What is interesting to note here is that these two very specific niche challenges seem to be in some-ways the eternal, perennial headaches of the sector, whilst broader, business-wide concerns such as digitalisation are possibly more likely to appear as an issue to overcome in the short-term which in themselves could lead to improvements in other areas - such as improved inventory management for example.
Which leads us neatly into...
3D Printing & Artificial Intelligence:
Two perfect examples of exciting new technologies that are emerging would be 3D Printing and Artificial Intelligence (AI) - with one set to play a hugely significant role in the niche of spare parts management, whilst the other will play a broad role in almost all sectors, including spare parts management.
So how do the industry experts who made up the Copperberg respondent base see each of these exciting technologies impacting the spare parts management sector?
With regards to AI just over a third of respondents (35% ) thought it would be important to some degree (again listing it as either a four, five or six).
However, less than a tenth of the respondents (9%) felt that AI was currently very important for them.
In terms of 3D printing, surprisingly the numbers were even lower.
In fact, less than a third of companies listed 3D Printing at a four or higher and only 8% of respondents felt that 3D Printing was very important in the sector currently.
One area, however, that was overwhelmingly listed as being important within the field of spare parts management across the next 12 months was that of parts logistics.
94% of respondents listed parts logistics as being at least a four in the scale of importance with over a third (35%) going on to state that they felt parts logistics was important enough to warrant being listed as a six.
This makes parts logistics one of the most important areas in the spare parts sector across the next twelve months according to this respondent base, although Inventory Management is very important to more companies.
The results of the survey bring us some interesting conclusions - particularly when we stand them alongside the trends we are seeing from within the field service sector.
Of course, field service and parts management are two leaves on the same branch with deeply symbiotic relationships between the two.
Yet, from this research at least, it does seem that many of the forward-looking discussions we have been having within the field service sector, particularly around emerging technologies such as AI, IoT and Augmented Reality as well as the wider topic of servitization as a strategy for business growth - may be further down the line than their equivalent discussions with our spare parts colleagues - and in some companies that may be significantly so.
Perhaps, part of the reason for this is that parts management is a highly complex beast with a huge amount of moving parts (literally) and even if solutions such as inventory management systems have been put in place it may take time for the benefits there to be truly felt.
However, the simple fact is that no matter how efficient field service management is - it all falls out of the window if parts management is poor - and this is perhaps the greatest learning from the research - that the focus of professionals within the parts management sector currently remains on efficiencies - and for that, we in field service should be hugely grateful.
Want to know more? Click here to Visit Copperberg's website to register for an exclusive white paper based on this research!
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Sep 27, 2018 • Features • Management • Aftermarket • copperberg • field service • field service management • Service Management • Servitization • Carl-Henrik Sjölund • Outcome-based service • SECO TOOLS • through life cycle service
Every year, the team at Copperberg AB, producers of the forthcoming Aftermarket Business Platform gather the brightest service leaders from the largest manufacturing companies and from all corners of Europe to dissect the ongoing service...
Every year, the team at Copperberg AB, producers of the forthcoming Aftermarket Business Platform gather the brightest service leaders from the largest manufacturing companies and from all corners of Europe to dissect the ongoing service transformation and share the key to a successful servitization journey.
It is a networking experience which has proven to be critical for defining new business models that can allow field service companies to respond to changing customer expectations, which are moving from ownership to outcome-based solutions.
One such service leader is Carl-Henrik Sjölund, Global Consultancy Service Director at SECO TOOLS, whom Copperberg recently interviewed for a new eBook in order to put together an eBook on Servitization that shares some practical steps towards a successful servitization journey.
Here, we take a look at some of that advice...
Want to know more? Register to access Copperberg's Servitization eBook @ http://fs-ne.ws/CAjc30lXctz
10 steps to servitization success...
Within the eBook Sjölund outlines what he sees as 10 key steps that field service companies should consider when approaching shifting to a servitized business model.
- Define the customer process where your product is in use
- Define the components in the close world around your product
- Define the challenges for efficient use, and cost of inefficient use
- If necessary, define your own core competence (know-how, not product)
- Match the customers’ challenges with the biggest cost of “inefficient use of components” with your best core competence to “fix it"
- Check customer interest of your new service by using real proof of concept. Could be fake landing pages for services where people can click for interest to buy, subscribe or just know more.
- If you find good interest for your new service, make a business case for profitability and start
- Build a service organization by parallel “selling and recruiting”
- Use Aftermarket Business Platform to communicate your strategy and you get many interested system suppliers that can help you to enable and control the business
- Enjoy the success!
Hindsight with 20/20 vision:
Reflecting back on his own journey, one of the core challenges in making a transition to a business strategy he had experienced was the difference between the traditional sales approach found in product-focused sales compared to the more nuanced approach required to sell complicated, yet highly profitable outcome-based service-centric contracts. As Sjölund commented:
"The journey was more or less OK except that we had too much trust in the existing product sales organization to sell the new services."
"They just didn’t understand it, he added. "Instead we found a few of our own salespeople for service sales with different backgrounds to understand the complete customer journey (challenge) and communicate with the highest management level about this. It’s important to bring people from the product service organization along to learn and pick the best.
The major trends of Servitization:
The eBook also draws on the wider pool of senior Service Professionals that attend the Aftermarket Business Platform and as such outlines some of the key trends that are becoming prevalent amongst Manufacturers across Europe.
- Manufacturing companies are faced with smaller and smaller batch sizes because of faster and faster development cycles.
- This leads to challenges to estimate costs earlier, prepare for the unknown and have very fast set-up of machine. Added to that, the need to produce good parts directly when there are orders means there is no time for optimization.
- Companies lack staff with the right skills and working methods for this.
- Many suppliers are promising industry 4.0 ready-to-use solutions without success support and this leads to bad experiences.
The technology of Servitization:
Of course, as we have discussed many times here at fieldservicenews.com technology is a major factor in enabling the growth of servitized business strategies and models.
However, for Sjölund, the sheer volume of innovative technology that is empowering field service organisations to push ever further the boundaries of service excellence, a path that logically leads towards servitization, can be something of a double-edged sword.
"Technology is part of the problem: what is good and what to do?" He asks. "We already tried out a lot of technology (AI, Robotics, 3D Printing, AR/VR) to know what is usable and what is not."
"Most important change according to my experience so far is the use of big data mining to predict the future and access virtual good advices combined with virtual collaboration between users for “reality checks” and confirmation between professionals," Sjölund continues.
"This needs, however, data generating systems (IoT) in the workshop and well managed virtual communities. This is today not yet spread and partly not even available."
Want to know more? Register to access Copperberg's Servitization eBook @ http://fs-ne.ws/CAjc30lXctz
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As a cash cow of the service division, how prepared is your spare parts business to embrace increasing pressure from customer expectations, changing trade agreements, and intra-connected new technologies? How will these and more affect your...
As a cash cow of the service division, how prepared is your spare parts business to embrace increasing pressure from customer expectations, changing trade agreements, and intra-connected new technologies? How will these and more affect your parts pricing strategies, logistics network, and warehousing management?
If you can take this 3-minute survey to help us build an accurate picture of current industry sentiment and the key trends in this area it would be hugely appreciated. Please take a few minutes to take @ https://www.surveymonkey.com/r/parts2019
Upon closure of the survey, we will be working alongside Coppeberg who produce the excellent Spare Parts Business Forums both within the UK and Europe to create an ebook of the survey results, with expert commentary from industry insiders, as a benchmarking tool for you to evaluate the direction of your spare parts business - so take part now and keep your eyes out for this exciting forthcoming report!
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Ahead of the forthcoming inaugural Spare Parts Summit being held in Warwick, UK on April 12th, Field Service News Editor-in-Chief, Kris Oldland talks to Thomas Igou, Content Director, Copperberg about the impact the growing trend of servitization...
Ahead of the forthcoming inaugural Spare Parts Summit being held in Warwick, UK on April 12th, Field Service News Editor-in-Chief, Kris Oldland talks to Thomas Igou, Content Director, Copperberg about the impact the growing trend of servitization will have upon the spare parts sector...
In his role as Content Director with conference producer Copperberg, Thomas Igou has been at the heart of conversations in both the Field Service and Spare Parts sectors for many years now. So who better to assess how the continued trend of servitization is impacting on both sectors?
With Copperberg launching a new UK focused version of their highly respected European Spare Parts Forum I was keen to get his view of what the key issues facing those working in the Spare Parts sector were and if the introduction of outcome-based contracts would require a rethink of how manufacturers align there field service and spare parts operations.
“There are three main themes on the macro level looking at how digital transformation is impacting organisations and more importantly the service business,” explains Igou.
Most manufacturers today are going through some form of servitization process moving from a purely transactional business to a more servitized model“Most manufacturers today are going through some form of servitization process moving from a purely transactional business to a more servitized model. That creates both great opportunities but also some sizeable challenges from a spare parts perspective and then to add to those challenges there are a number of other disruptive factors in the market at the moment as well.”
“eCommerce, AI, 3D printing and so on are all necessitating transformation in the spare parts sector, which has tended to be the cash cow within a service businesses because of the purely transactional nature of the business - the customer needs the spare part, he orders it, pays for it, gets it delivered.”
“Whereas on the flip side, when you look at field service it’s actually the opposite - field service directors are looking at how to move from being a cost centre to being a profit centre, and servitization plays a role in facilitating that shift. “
“However, the impact that is being seen in spare parts operations as companies move towards an outcome-based model, is that companies actually, start to cannibalise some of their spare parts revenue - because instead of being purely transactional, spare parts orders and deliveries start being included in SLAs, so actually, you will make less money from the sale of spare parts.”
“Essentially, it is something of a contradictory development because companies have to take away from one side to add value to the other.”
As Igou mentions for the spare parts executive there are additional external challenges to be contended with as well as the internal questions being raised by outcome-based contracts. Not least of these is eCommerce.
“eCommerce is another very significant topic of conversation at the moment, especially regarding competition from China where quality is getting better and better but as Chinese organisations have access to much cheaper raw materials they are able to be far more price competitive compared to European or North American organisations,” Igou explains.
“And that is before we even get to challenges centred around pirated parts - there are even growing fears around how companies like Amazon or Google could enter the sector and take a large share of the market revenue quite easily as they have done in other industries and sectors.”
Indeed, the Spare Parts sector is perhaps facing some of its most testing times ahead, but there remain plenty of opportunities also - many of which lie in tightening up efficiencies in two of the sectors mainstay topics - pricing and logistics.
The main aim with the spare parts sector is tackling how to deliver the right part, at the right time and at the right price“The main aim with the spare parts sector is tackling how to deliver the right part, at the right time and at the right price,” Igou explains.
“Most companies are now trying to move away from the cost plus model (i.e. how much does it cost to produce the part and then adding the profit on top) towards a more value-based approach, or if a company is entering a new market, they may prefer a market-based pricing strategy. Here, of course, eCommerce is again having an impact because prices are becoming more transparent - anyone can go on eBay or the internet and see on your website how much it costs to buy a part from China compared to say Egypt and then compared to the US or Europe.”
“If you have price differences it can be awfully bad for businesses so companies are facing a need to standardise prices across the board.” “In terms of logistics, the big discussion remains centred around whether companies should have a centralised warehouse management solution (where you have one big warehouse holding all of the stock and service all of Europe) or whether they opt for a decentralised strategy, operating multiple smaller warehouses which are closer to their customers, but which cannot stock as much inventory per warehouse.”
“In addition to that, there is a new consideration emerging,” Igou adds.
”We had a great session at this year’s European Spare Parts Forum from Schneider Electric about segmenting logistics depending on customer segments. Schneider found that customers in each of the differing sectors they service have different behaviours and expectations. For example, in one industry it may be that their customers need a very rapid solution and the key issue for that industry may be availability, so their logistics channel needs to be very good and very flexible and agile.”
“Whereas, another customer segment might be more demanding of uptime or more price sensitive etc, so segmenting your service supply chain based on your customer segment and the specific needs of that sector is another consideration that is beginning to enter the conversation.”
Of course, as Igou mentions, as companies move towards outcome-based solutions there is a danger of spare parts revenue being cannibalised as part of the wider service offering.
So where does he see the future of Spare Parts Management - will it ultimately become swallowed up as a subdivision of field service operations perhaps?
“It’s a great question and one I’ve been giving quite a bit of thought to,” replies Igou when I put this to him.
Whilst yes, servitization will mean some cannibalisation of the spare parts revenue, I don’t see that it’s going to destroy the spare parts business“With some of the larger organisations that were involved at our Aftermarket Conference at the end of October last year, we saw that even with companies such as SKF and GE Healthcare, i.e. major multi-national companies who have been working towards outcome-based services for some time now, still only about a third of their customers are on outcome based contracts and these are the organisations that are really at the forefront of this shift.”
“So whilst yes, servitization will mean some cannibalisation of the spare parts revenue, I don’t see that it’s going to destroy the spare parts business. There are always going to be some customers who won’t want these long term contracts and who will be happy to continue on a more transactional type of arrangement.”
“So I think the Spare Parts business will always have that transactional element and it will always be a profit centre. There will however, perhaps be a need for establishing some different internal relationships and some different processes may need to be considered moving forwards.”
The inaugural UK Spare Parts Summit will run on the 11th of April and will mirror the highly interactive peer-to-peer format of Copperberg’s UK focused field service event The Field Service Summit.
For more information on this event visit and last minute for registration opportunities visit: www.sparepartssummit.co.uk
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