The Service Value ChainDriving High Performance inService and Spare PartsRobert Giacobbe, Cameron Plummer,Kristine Renker ...
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ContentsIntroduction	                                     04Traditional operating models cannot	              06keep pace ...
IntroductionAfter-sale service and spare           service investments provide.            By emphasizing these things,par...
Service Value Chain CharacteristicsIntegrates all functions that affect acompany’s ability to provide service to itscustom...
1. Traditional operating models cannot keep pacewith today’s needsBusinesses are always looking for       management progr...
Discontinuous processes               delivery functions seeking to           Fortunately, it is feasible toSiloed functio...
2. A New Operating Model: The Service Value ChainService Value Chains are about              • 10 percent to 20 percent   ...
Developing synergies between Sales & ContractManagement and the Service Value ChainSell products and reliability instead o...
Developing synergies between Customer Service &Support and the Service Value ChainLink customer-segmentation approaches to...
require, and that generally varies     how simulation or modelingby airline. Some customers opt for     can create the rig...
Developing synergies between Engineering and theService Value ChainUse more standard components and commonparts.Emphasize ...
impacts of complexity reduction        system works in the curves”).           the supplier-chargeback processon spare par...
3. Core Attributes of a Service Value ChainA Service Value Chain avoids           Centralized Operations                Pa...
chain. With that distinction,          Service/maintenance                     For example, although leaneroften times the...
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Outsourcing and the Service Value ChainOutsourcing is not automatically a characteristic of anyparticular business model. ...
4. High Performance and the Service Value ChainOf all the Service Value Chain        Those benefits are notcharacteristics...
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About Accenture                          About Accenture Supply Chain            to help organizations transform          ...
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Accenture service value chain driving high performance in service and spare parts

  1. 1. The Service Value ChainDriving High Performance inService and Spare PartsRobert Giacobbe, Cameron Plummer,Kristine Renker and Andre P. Skerlavaj
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  3. 3. ContentsIntroduction 04Traditional operating models cannot 06keep pace with today’s needsA New Operating Model: The Service Value Chain 08Core Attributes of a Service Value Chain 14High Performance and the Service Value Chain 18About the Authors 18 3
  4. 4. IntroductionAfter-sale service and spare service investments provide. By emphasizing these things,parts operations are often vital. In either case, cost-effectively Service Value Chains have becomeHowever, after-sale service meeting customers’ service increasingly vital as well asand spare parts operations that requirements and mitigating the profitable. In fact, companies thatreally add value—that enhance impact of surprise availability build Service Value Chains oftencustomer satisfaction, contribute problems are key. find that 50 percent or more ofsignificantly to companies’ revenue their profits end up coming fromand profit goals, and promote A significant after-sale service and support.rigorous cost efficiency—are rare. This Accenture Point of ViewMore common are operations opportunity exists for explains how such successes canwith traditional characteristics: companies to extract be attained. We first examine thelabor intensive, reactive, costly drawbacks of traditional after-saleand minimally strategic. Given this greater value from service and spare parts operatingreality, a significant opportunity their after-sale models (Section 1). From there weexists for companies to extract service and spare-parts- explain how Service Value Chainsgreater value from their after- integrate with Sales & Contractsale service and spare-parts- management operations. Management, Customer Service &management operations. And a Support, and Engineering (Sectionpowerful way to accomplish this Third is a stringent emphasis 2). We then identify four primaryis with a “Service Value Chain”: on the total lifetime value of a attributes of a Service Valuea bidirectional, cross-functional company’s service assets—for Chain approach—how companiesapproach that can enhance cost example, by directly helping to use Service Value Chains to “out-efficiency, maximize capital manage service costs or, even structure” and “out-execute”utilization, increase profitability more importantly, by creating competitors (Section 3). Lastly,and even improve brand image. revenue streams associated with we briefly reiterate the potential repair, replacement and warranty benefits for companies thatPerhaps the most important management. The potential in venture down this pathcharacteristic of a Service Value this area is significant: A recent (Section 4).Chain is its clear integration study found that very little servicewith all functions that influence revenue is captured by an OEM.a company’s ability to provide Third party service providers, Companies that buildservice to its customers. The most suppliers and repair shops are Service Value Chainsrelevant of these functions are believed to own about 75 percentSales & Contract Management, of the service and parts market. often find that 50Customer Service & Support, percent or more of theirand Engineering. Lastly, Service Value Chains are structurally different from profits end up comingA second characteristic of their organizations’ forward- from after-sale servicethe Service Value Chain is its focused “product value chains.”tight focus on the quantifiable A key reason is the complexity of and support.value that a service business forecasting service demands andprovides. For an asset owner/ rationalizing service operations—operator, demonstrable service from field personnel and back-value might manifest itself as office operations to service deliveryhigh asset reliability relative to operations in repair depots andthe organization’s investment. parts warehouses. Moreover, toA for-profit aftermarket service keep inventories low, utilizationcompany, on the other hand, rates high and customers happy,might think of service value as a Service Value Chain must excel1) the extent to which its service at spare-parts forecasting, reversebusiness contributes to a profitable logistics, repair depot operations,customer relationship or 2) what inventory hub management,level of return the company’s and technician scheduling and deployment.4
  5. 5. Service Value Chain CharacteristicsIntegrates all functions that affect acompany’s ability to provide service to itscustomers—particularly Sales & ContractManagement, Customer Service & Support,and Engineering.Emphasizes the quantifiable value that anafter-sale service business provides.Focuses on the total lifetime value of acompany’s service-oriented assets.An approach that is structurally differentfrom most organizations’ forward-focused“product value chains.” 5
  6. 6. 1. Traditional operating models cannot keep pacewith today’s needsBusinesses are always looking for management programs as key to Unaligned missionsnew ways to increase revenue, the overall customer experience.1 Discrete organizational structuresboost margins and increase run counter to the need for a Companies often lack a formal,capital effectiveness. All of these common company-wide view service-centric process because theobjectives can be addressed by of spare-parts and service corporate operating models aroundimproving the after-sale service management. The frequent result which their supply chains wereand spare parts operating model. is that service levels across built are generally product orientedHowever, service and spare parts business units end up being rather than service oriented.businesses mostly tend to be wildly uneven. Most areas become These operations simply weresilo-oriented afterthoughts (Figure over- or under-serviced, but few not designed to handle reverse1)—even among companies that are well-aligned with customer supply chain flows or to smoothlytake their commitment to customer needs. For example, with too accommodate parts inventoriesservice very seriously. Some of little cross-functional contact, and the logistics associated withthose committed companies are Procurement may simply aggregate repairs and returns. This is anotherable to maintain high service part-order requests—again reason why a Service Value Chainquality; it just costs them more resulting in excess volume. Further initiative is often so valuable.money. Still, an Accenture survey upstream, Engineering may designrevealed that service management Other flaws in a company’s parts in response to demandshas yet to achieve “mission- operating structure may also from other internal departments,critical” status at a majority of contribute to sub-par or overly but without the serviceabilitycompanies. Only 42 percent of expensive service: perspective that comes fromrespondents view formal service field service technicians or maintenance personnel.Figure 1: The traditional operating model for service management.Sales and Contract ManagementCorporate ManagementProduct Value Chain Service Sourcing and Forecasting Manufacturing/ Warehousing Customer Point Procurement and Planning Process and of Use/Delivery Distribution Service Event Management Sourcing and Procurement Spare Parts Planning Repair Reverse Logistics Warranty ManagementProduct Design and Product Lifecycle Management (Engineering)Master Data ManagementFinance, HR and IT Accountability Performance Management MasterData/ mgt Reporting6
  7. 7. Discontinuous processes delivery functions seeking to Fortunately, it is feasible toSiloed functions can result in coordinate the availability of parts, transition from a model thatconstrained views of demand tools and skilled repair technicians. positions service managementcharacteristics, organizational as an appendage to a model in Underpowered legacy systemspreparedness and customer which proactive service themes Companies need specializedexpectations or customer and actions are infused across the software and systems to ensurerelevancy. Supply chain planners, supply chain. As demonstrated service efficiency and service-for instance, need cross-functional in the next section, the most parts transparency. However,information and cooperation important challenge is developing many legacy systems are not upto effectively forecast spare- an integrated service model and to the task because they werepart needs, track and optimize deeper relationships with other designed primarily to supportinventory, coordinate parts core functions. enterprise operations, productorders with repair orders, and sales and production-orientedmanage vendors and purchase supply chains. They do not excelorders. Another example is at service-demand analytics,product lifecycle managers who service-part safety stockmust use field data to establish management, variations associatedserviceability requirements, with sporadic demand, servicedevelop comprehensive product- partner management, integratedfailure information and link that scheduling and dispatch fordata to parts planning and product technicians, and the deploymentdevelopment. This information of tools.is an important input for service 7
  8. 8. 2. A New Operating Model: The Service Value ChainService Value Chains are about • 10 percent to 20 percent A Service Value Chainintegration and collaboration: increases in service revenue.making service and parts means making service • 10 percent to 20 percentoperations an integral, life-cycle- improvements in customer and parts operations anwide consideration—from productdesign, to sourcing and procuring satisfaction. integral, life-cycle-wideparts and components, through • 15 percent to 30 percent consideration—fromcustomer use and after-sale reductions in service costs. product design, tosupport, and on to end-of-life • 25 percent to 40 percent jumpsdisposition (Figure 2). However, in working capital utilization. sourcing and procuringService Value Chains are also • 15 percent to 30 percent parts and components,about making service management increases in technician efficiency.performance quantifiably better. through customer useOne of the most frustrating Reengineering the relationship and after-sale support,things about traditional service between service managementmanagement approaches and and three operating functions– and on to end-of-structures is that value is hard to Sales & Contract Management, life disposition.assess. This is why Service Value Customer Service & Support, andChain approaches emphasize Engineering—is key to capturingthe capture of measurable these benefits.improvements, such as:Figure 2: How the Service Value Chain fits and operates. Sales and Contract Management Corporate Management Accountability Performance Management Product Value Chain Sourcing Forecasting Manufacturing/ Warehousing Customer Return/ and and Process/ and Point of Use/ Repair Procurement Planning Repair Distribution Delivery Recycle Integrated Objective: Total Lifetime Value Customer Service and Support Service Value Chain Product Design and Product Lifecycle Management (Engineering) Master Data Management Finance, HR and IT Finance, HR and IT8
  9. 9. Developing synergies between Sales & ContractManagement and the Service Value ChainSell products and reliability instead ofproducts and repair.Take a life-cycle view of service and spareparts costs and pricing.Consider performance-based contracting ormanaged services.Optimize profits through strategicparts pricing.Integration with Sales & • Managed services are basically services and the provision of sparesContract Management ongoing, customer-centric service and parts. The MoD maintains commitments. For example, a responsibility for integrating theFrom a customer’s perspective, global forklift manufacturer might various service contracts andtoday’s products and the after- provide a fleet of vehicles to a meeting the aircraft-availabilitysale services associated with retail chain. A managed service requirements of its end customer,those products are not succinctly relationship is then constructed the Royal Air Force.connected. Not only is the to focus the two sides on the • Strategic parts pricing impliesrelationship confusing, it is specific needs of each retail a service-oriented, product-potentially detrimental to the operation and distribution center life-cycle view that is geared toseller’s goal of maximum margin, (e.g., transport capacity defined maximizing profitability ratherprofitability and customer loyalty. by tonnages and pallet volume, as than cutting costs. Consider aA better and simpler approach well as working hours). Guided by heavy equipment manufacturermight be designing products for these commitments, the forklift that implemented a new pricingmaximum reliability and taking a company equips its fleet, maintains approach after it ran out of cost-lifetime view of service and spare the trucks, charges batteries for cutting options. The companyparts costs and pricing. This is electric trucks, and so forth. repositioned several productswhere linkages between a Serviceand Spare Parts organization and • Performance-based (“power based on the price elasticity of keySales & Contract Management by the hour”) contracting can market segments. It also identifiedcome in, and three capabilities are spur manufacturers to build more a clear threshold beyond whichparticularly key: reliable products, while shifting it would save more in terms of the responsibility for maintenance warranty reimbursements at a and reliability to the OEM. For lower price than it would gain in example, BAE Systems’ relationship profit from a higher price. Lastly, with the UK’s Ministry of Defense the manufacturer instituted a (MoD) typically involves contracts “product life cycle view” for for discrete maintenance, repair pricing decisions—emphasizing 9
  10. 10. Developing synergies between Customer Service &Support and the Service Value ChainLink customer-segmentation approaches tocustomer service offerings.Develop a portfolio of value-oriented serviceproducts.Use simulation and modeling to create theright mix of service products.Align pricing of service-relatedproducts with delivered and perceivedcustomer value.Avoid complexity by bundling andmodularizing service products.Compile and leverage all available customerand service data.price leadership and product value, Integration with Customer SKUs. Across the entire sample, 10rather than following competitors’ Service & Support percent of service calls were citedleads. This new approach helped as unresolved due to lack of parts,produce a two-percentage-point The mission here is to align service tooling or information. Severalincrease in gross margin within operations to the expectations implications can be drawn froma year. of specific customer segments. this research: Segmentation is not a new • Valuable customers are oftenA better and simpler concept but it is not often alienated by unsatisfactory service. applied to after-sale service andapproach might be spare parts management. Linking • Stratifying customers’ service needs could provide new revenue-designing products for the Service Value Chain to an enhancement opportunities. organization’s customer-servicemaximum reliability and efforts addresses this shortcoming • Better, more efficient servicetaking a lifetime view by tying segmentation approaches could result from a clearer to service areas such as customer understanding of each customerof service and spare interface management, call segment’s ongoing needs.parts costs and pricing. center operations, self help and The Accenture survey identified documentation support.This is where linkages several companies that excel in service management. These leadersbetween a Service and Findings from a recent Accenture tend to be particularly good at service management surveySpare Parts organization demonstrate how valuable the tailoring service programs for each customer or customer segment.and Sales & Contract connection can be. Researchers Take General Electric’s Aviation found that only 80 percent ofManagement responding companies consistently Division, which has a program called Intelligent Workscopes. GEcome in. fix problems the first time. Eighty must tune engine performance percent was also the fill rate for based on what aircraft customers respondents’ customer-facing10
  11. 11. require, and that generally varies how simulation or modelingby airline. Some customers opt for can create the right mix ofbetter short-term performance, appropriately priced services.others for fuel savings, and still These organizations leverage allothers for longer-term durability. available customer and serviceIntelligent Workscopes factor data (e.g., maintenance recordsin such customer needs before and service inquiries) and developengines go into the shop. They proactive service and partsalso consider how much customers strategies that are consistentwish to spend on maintenance. GE with their business strategies.Aviation maintenance personnel As a result, they consistentlyare consequently able to plan meet customers’ deliveryand execute more cost effectively requirements, as well as otherand to stock the right (and right performance expectations.amount of) parts.Organizations focused on Service managementafter-sale customer relationships leaders excel atalso do other things well.Because they have worked to tying segmentationunderstand and financially approaches to servicequantify customers’ parts andservice requirements, leaders are areas such as customerable to construct profitable service interface management,products such as preventive-maintenance or machine-overhaul call center operations,packages. Those same companies self help andalso are likely to understand documentation support. 11
  12. 12. Developing synergies between Engineering and theService Value ChainUse more standard components and commonparts.Emphasize interoperability.Increase information capture and knowledgetransfer.Deploy more feedback systems and alarms.Reduce product complexity.Work with suppliers on design-for-serviceability programs.Integration with Engineering mining company in China. One As Asus learned, an environmentIn most organizations, Engineering of that company’s business units of fewer SKUs offers advantagesand Service are not tightly coupled. designed a conveyor belt that that go beyond less complexityYet there are many good reasons was different from the company and lower costs. Companies maywhy they ought to be. For example, standard. Since belts must be also have an easier time workingwhen Engineering and Service do replaced frequently, significant with suppliers on design-for-not communicate well, the latter added costs were associated serviceability programs. Moreover,group may be unable to accurately with design; replacement; SKU supplier-focused incentivesforecast asset outages and product management and storage; may transcend volume andfailures. Likely results include bad installation equipment and price to include engineeringfirst-time-fix ratios, long service- processes; and the need for a designs that help companiesorder lead times, and large spare special supplier. This complexity improve maintenance.parts inventories. drove increased cost to serve. If a piece of equipment is partThe best way to avoid the above One company that excels at of a larger machine or operation,scenarios is with tighter coupling standardization is Asus, a tighter service linkages withbetween Service and Engineering Taiwanese computer and gaming Engineering help increaseorganizations. And one of the hardware manufacturer. Its vast interoperability levels, therebybest places to start is with a product portfolio means it has ensuring that an existingcomplexity-reduction initiative. an enormous number of parts technology or platform does notExtensive product lines and that require detailed planning, become redundant each timegovernment-mandated service- forecasting and replenishment. a new version is released. Thelife commitments in certain Moreover, different categories have missions of complexity reductioncountries and industries mean that different demand characteristics. and standardization may beproduct manufacturers must often This created a compelling case for further enhanced by includingmaintain many part iterations. This a design standardization program maintenance/service engineerscan create tremendous complexity, that led to fewer unique parts and in all product- and system-which is what happened to a large greater SKU rationalization. design activities. The potential12
  13. 13. impacts of complexity reduction system works in the curves”). the supplier-chargeback processon spare parts inventories, field Same for a repair facility (“This for products under warranty.technician efficiency and warranty engine chassis is designed in a way Improved failure analysis can helpmanagement costs are significant. that makes it extremely difficult companies identify root causes to extract the battery. Easier which may, in turn, produceAnother good way to connect disassembly might make it possible significant chargebacks. However,Service Management and for repairs to be done very few companies currently haveEngineering is with a closed- on site”). formal chargeback processes inloop feedback process. place, mainly because they lackIncreasing information capture Closed-loop feedback information the necessary data.and knowledge transfer at can be supported by early alarmsevery service chain node that provide rapid sensitization In net, a tight relationshiphelps Engineering maximize and help to quickly eliminate between Service Managementserviceability, while giving Service design defects. Some years ago, and Engineering has numerousManagement an opportunity to Sony faced problems with volatile benefits:simplify Engineering’s design tasks. laptop batteries. The company • If a part is designed forFor example, in the aftermarket responded by compressing the serviceability, then repairsservice space, organizations should detection time for part failure. This during scheduled or unscheduledbe able to capture transactional meant enormous savings in reverse downtimes can run smoother andfeedback from technicians and logistics, warranty expenses, faster, with necessary spares andloop that information back to technician labor and even potential labor available when needed.Engineering. Technicians may liabilities. Implementation of • Future design efforts canprovide enlightening insights into automatic feedback loops is key to leverage warranty and repairquality (“This new service board adding the Value in “Service information to build moredoesn’t work as well as the earlier Value Chain.” reliable products.one”) or design (“This fastenerdoesn’t move easily, perhaps Another benefit of improved • Warranty risk and costsbecause of the way the interlock integration between Service and are reduced. Engineering is a tighter focus on 13
  14. 14. 3. Core Attributes of a Service Value ChainA Service Value Chain avoids Centralized Operations Partner Networksvertical silos, encourages an Companies’ service and parts- As part of the Service Value Chainintegrated product and service management objectives benefit network, “collaboration by design”perspective, promotes a distinctive significantly from a centralized is fundamental for the relationsservice strategy, encourages high-level enterprise view which with Service Partners. One keyenterprise-wide integration, aligns specific service objectives reason is the innate benefit ofenhances end-to-end visibility, with the overall business strategy. pan-enterprise visibility into alland tightens companies’ focus on Highly decentralized organizations, Service Assets such as availablethe achievement of lower total on the other hand, often parts inventories, associatedcost of ownership. And as we have experience varying or inconsistent service provider techniciansdiscussed, the Service Value Chain behaviors and accountabilities, or integrated repair partnerdraws much of its power and profit which makes it harder for capacities. Another benefit ispotential from its integration service and parts organizations the potential to remove logisticswith other business functions. to maximize their contributions costs by tight direct integration ofSupporting this commitment to to business profitability and Service Partners, e.g. by enablingcross-functional integration, here competitive advantage. The direct shipments of parts to aare four key attributes of a Service improvement potential of service repair depot or a service technicianValue Chain—what it takes from a planning and management truck, rather than routing assetsservice standpoint to out-structure capabilities is particularly great through a complex distributionand out–execute competitors. with centralization. Key examples channel. A third reason is rapid include network strategy and resolution of conflicts along the segmentation, inventory planning, Service Value Chain throughA Service Value and asset-base management. streamlined decision-makingChain avoids vertical and auditing procedures in the Companies with Service Value acquisition and deployment of thesilos, encourages Chains often (but not always) have Service Assets.an integrated an easier time dealing with the reverse supply chain requirements This strong collaboration amongproduct and service associated with service and spare partners should also be theperspective, promotes parts management. In addition, basis of strategic sourcing along this may also be key to increasing the network: closely workinga distinctive spares/ global parts “transparency.” and improving the end-to-endservice strategy, and value chain jointly with Service With standardized processes, Partners helps to identify, selectencourages enterprise- companies are able to establish and shape mutually beneficialwide integration, end- more robust parts and service value propositions. In short, interactions across functions.to-end visibility and If procurement entities do not understanding the capabilities of partners and leveraging theirapproaches geared work cross-functionally they will strengths can result in better, invariably focus more on costto ascertaining and metrics, which can increase a cheaper service.achieving lower total component’s or product’s total Specialized Skills and Advanced cost of ownership. For example, Technologycost of ownership. Procurement may be able to work Leaders in service management more effectively with operations often are distinguished by their and maintenance people to create deployment of unique tools, strategies that reflect how spare systems, skills and personnel— parts and equipment are actually including a senior decision maker used and maintained. who is distinct from the executive responsible for the product value14
  15. 15. chain. With that distinction, Service/maintenance For example, although leaneroften times these companies inventories are always desirable,may also have developed a forecasting is very the preferred company-wide goalseparate P&L for their parts and different from regular of exceptional service may requireservice businesses. As a result raising inventories. Similarly, ato the increased importance product, production or company-wide focus on lead timesof service, a dedicated talent wholesale forecasting. may also mean higher costs unlessmanagement strategy is required. most spares are procured locally. It involves randomized However, none of the above goalsThese same companies also are demand forecasting, inherently reflect a company’slikely to depend less on ERP to overall priorities, which is whyhandle parts and service, since ERP which cannot be done organizations need to formulatesystems often struggle in areas with traditional ERP- enterprise-wide parts and servicesuch as forecasting, managing objectives, and then prioritizedistributed inventories and aligning based time-series performance metrics across allresources with specific service forecasting. nodes in the service chain.or maintenance events. After all,service/maintenance forecasting An Integrated Approach tois very different from regular Performance Management To fully balanceproduct, production or wholesale In traditional supply chains, costs against serviceforecasting. Among other things, accountability and performance areit involves randomized demand measured vertically—within siloed levels, organizationsforecasting, which cannot be done functions. This is rarely optimal for need to establishwith traditional ERP-based time- any company, but it is particularlyseries forecasting. Dedicated problematic in after-sale service performance metricstechnology investment is needed and parts management. that work across theto compliment typical ERP tocomply with service specific To fully balance costs against Service Value Chain.requirements. service levels, organizations need to establish performance metricsService businesses are also likely that work across supply chainto require extensive mobile functions and reflect the valuetechnology. Utility companies, for stream’s collective contributions.example, maintain parts depots Imbued in a Service Value Chain,that are in remote locations or this horizontal alignment maydisconnected from the regular emphasize goals that are notwarehouse network. These the same as those associatedorganizations need mobile devices with specific vertical modes. Forto maintain and check inventories example, Sourcing & Procurement’sin those locations. Using remote specific priorities may rangediagnostic capabilities to monitor from lead times and contractperformance and predict and plan compliance to purchase orderfor outages can take this industry’s fill rate, supplier concentrationservice planning to the next level and average purchase orderof sophistication. value. Supplier contributions in the form of cost reductions or service innovations also may be noteworthy. Performance metrics for distribution could be speed of service or delivery accuracy. 15
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  17. 17. Outsourcing and the Service Value ChainOutsourcing is not automatically a characteristic of anyparticular business model. However, organizations may wish tocombine a Service Value Chain initiative with the transfer ofparts and service management to a third party.By drawing on the skills and resources of a third party,companies can often sidestep the need for large investmentsin physical assets; as well as human and technology resources.Third parties can generally amortize those investments acrossmultiple customers. A good service-outsourcing example isLockheed-Martin which has outsourced the global serviceand support of its manufacturing equipment. The agreementencompasses interactive diagnostic help, preventivemaintenance, field service, training, replacement, and spareparts and productivity improvements. Savings were realizedin areas ranging from greater operational and maintenanceefficiencies to purchasing/management cost reductions.Spares and inventory management is a good example ofa potentially fruitful outsourcing opportunity. Accentureexperience suggests that companies can achieve reductionsof 10 percent to 20 percent in operating costs by optimizingand outsourcing spares and inventory management activities.Many companies that manage a high volume of parts andinventories—e.g., those in consumer electronics, industrialequipment, medical equipment, automotive manufacturingand various other industrial sectors—are seeking ways toremove after-sale-service assets from their books so they canconcentrate resources on other activities.It should also be noted that outsourced service relationshipsnaturally adhere to many of the Service Value Chain attributes—particularly centralized operations and oversight (which addscoordination and visibility), specialized skills and advancedtechnology (which increases utilization of leading-edge tools),and astute attention to performance management (which drivesservice level agreements and enables tighter, clearer metrics forgauging and capturing opportunities). 17
  18. 18. 4. High Performance and the Service Value ChainOf all the Service Value Chain Those benefits are notcharacteristics noted in this insignificant. Accenture experienceAccenture Point of View, the has shown that high performersmost important may be the fact in service management havethat Service Value Chains are built Service Value Chainsfully aligned with—but not simple that consistently increaseextensions of—companies’ regular service revenue, raise customervalue chain models. However, satisfaction, reduce service costs,Service Value Chains are infused improve working capital utilization,with an end-to-end value chain enhance technician efficiency andorientation: They incorporate the even strengthen brand image.knowledge and perspectives of keyfunctions across the enterprise, And what sorts of companiesand the benefits they produce are optimal candidates for theare company-wide, rather than development of a Service Valuefunction-focused. Chain? Broadly speaking, a close investigation might be advisable for any company seeking to elevate the quality and profitability of its after-sale service and parts- management operations.About the AuthorsRobert Giacobbe is a senior Tech in Asia Pacific. He also and aerospace defense andexecutive in Accenture Supply leads the Service Supply Chain consumer goods. Based inChain Management Consulting. He Transformation activities across Chicago, she can be reached atpractices exclusively in the areas industries for Asia Pacific. kristine.m.renker@accenture.com.of service chain optimization and Cameron’s client experiences André Skerlavaj is a seniorfocuses on customer strategy, include optimizing the service manager in Accenture Supplyservice resource planning, supply chain and integrating with Chain Management Consultingmaintenance/repair, field customer contact capabilities to and leads Accenture’s Serviceenablement, returns/warranty and drive OPEX, CAPEX and customer Management group in Austria,spares optimization work. He has satisfaction improvements. Switzerland and Germany. Heextensive experience in leading his Cameron holds an engineering has extensive experience inclients through service business degree with honors from Arizona the automotive and industrialtransformation programs, from State University and is based in equipment industries, focusing onstrategy formulation to solution Beijing. He can be reached at after sales and service businesses.deployment. He has worked across cameron.plummer@accenture.com He is recognized for his broadthe heavy equipment, energy Kristine Renker is a senior range of service managementand high-tech industries. Based manager in Accenture Supply expertise ranging from servicein Atlanta, he can be reached at Chain Management Consulting. strategy, process optimization torobert.giacobbe@accenture.com. She is the research and the technical conceptualizationCameron Plummer is a senior development lead for global and implementation of theexecutive in Accenture Supply supply chain focusing on service service solution—in fieldChain Management Consulting management and manufacturing service operations, spare partsand leads Accenture’s Customer practices. She has industry management and MRO. Based inService and Support Program and consulting experience in Frankfurt, he can be reached atfor Communications & High automotive, industrial equipment andre.p.skerlavaj@accenture.com.18
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  20. 20. About Accenture About Accenture Supply Chain to help organizations transform Management their supply chain capabilities. We collaborate with clients to implementAccenture is a global management Accenture Supply Chain Management innovative consulting, technology andconsulting, technology services consulting services help clients outsourcing solutions, and enhanceand outsourcing company, with across a broad range of industries the skills and capabilities of the supplyapproximately 211,000 people serving to develop dynamic supply chains chain workforce. For more information,clients in more than 120 countries. by aligning operating models visit www.accenture.com/supplychain. to support business strategies,Combining unparalleled experience, optimizing global operations, andcomprehensive capabilities across enabling profitable product launches.all industries and business functions, Committed to helping clients achieveand extensive research on the world’s high performance through supplymost successful companies, Accenture chain mastery, we combine globalcollaborates with clients to help them industry expertise and skills inbecome high-performance businesses supply chain strategy, sourcing andand governments. The company procurement, supply chain planning,generated net revenues of US$21.6 manufacturing, product design,billion for the fiscal year ended fulfillment, and service managementAug. 31, 2010. Its home page iswww.accenture.com.Copyright © 2011 Accenture ReferencesAll rights reserved. 1. “Accenture Research and InsightsAccenture, its logo, and into Service Management Mastery,”High Performance Delivered © 2009 Accenture.are trademarks of Accenture. 2. “Maintenance Outsourcing As a Global Strategy,” © Industry Week, May 1, 2009

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