Slide share British Quality Foundation UK - Customer Relationship ExcellenceDr. Ted Marra
Here is 'an oldie but goodie' I wrote for the British Quality Foundation in London - keeper of the EFQM Business Excellence framework. You will be able to see how things have evolved by comparing to recent materials on this subject - but still lots of nuggets! Enjoy
The pervasiveness of digital technologies is reshaping aftermarket. e-tailing is gnawing away the market for spare parts as more people are buying online, social media is influencing the consumption of aftermarket services and customers are demanding deeper 24*7 experiences. In this article Browne & Mohan consultants showcase the drivers of digital transformation and adoption for aftermarket.
Stratgic imitation-Road to business growthBrowne & Mohan
Strategic imitation is a low cost, low risk strategy many companies adopt to challenge pioneers and often succeed in gaining higher market share and growth than pioneers. In this paper we describe elements that strategic imitators must pursue to succeed in legitimate copy, learn and improve program.
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What's top of mind for retail executives? Enhancing fulfillment capabilities. Nearly 90 percent of retailers say that direct-to-consumer fulfillment issues will command a greater level of attention from their supply chain management teams to support online and mobile sales. This according to The Fourth Annual The State of the Retail Supply Chain Study, a JDA sponsored study conducted by Auburn University and the Retail Industry Leaders Association.
For more information about the report and how you can achieve Retail. In Sync. with JDA, visit:
http://now.jda.com/RILA-AuburnStudy-2014.html
Communications in the retail sector - a report by Frost and SullivanICON
A recent Frost & Sullivan end-user survey which interviewed 158 IT decision makers working in the retail industry found that retailers are moving away from purchasing multiple products from multiple vendors and are looking to deploy end-to-end solutions from a single vendor.
Slide share British Quality Foundation UK - Customer Relationship ExcellenceDr. Ted Marra
Here is 'an oldie but goodie' I wrote for the British Quality Foundation in London - keeper of the EFQM Business Excellence framework. You will be able to see how things have evolved by comparing to recent materials on this subject - but still lots of nuggets! Enjoy
The pervasiveness of digital technologies is reshaping aftermarket. e-tailing is gnawing away the market for spare parts as more people are buying online, social media is influencing the consumption of aftermarket services and customers are demanding deeper 24*7 experiences. In this article Browne & Mohan consultants showcase the drivers of digital transformation and adoption for aftermarket.
Stratgic imitation-Road to business growthBrowne & Mohan
Strategic imitation is a low cost, low risk strategy many companies adopt to challenge pioneers and often succeed in gaining higher market share and growth than pioneers. In this paper we describe elements that strategic imitators must pursue to succeed in legitimate copy, learn and improve program.
A Positive Outlook: Fourth Annual State of the Retail Supply Chain ReportJDA Software
What's top of mind for retail executives? Enhancing fulfillment capabilities. Nearly 90 percent of retailers say that direct-to-consumer fulfillment issues will command a greater level of attention from their supply chain management teams to support online and mobile sales. This according to The Fourth Annual The State of the Retail Supply Chain Study, a JDA sponsored study conducted by Auburn University and the Retail Industry Leaders Association.
For more information about the report and how you can achieve Retail. In Sync. with JDA, visit:
http://now.jda.com/RILA-AuburnStudy-2014.html
Communications in the retail sector - a report by Frost and SullivanICON
A recent Frost & Sullivan end-user survey which interviewed 158 IT decision makers working in the retail industry found that retailers are moving away from purchasing multiple products from multiple vendors and are looking to deploy end-to-end solutions from a single vendor.
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Winners will improve responsiveness while cutting costsCBX Software
In today’s highly complex global sourcing environment, apparel companies must aggressively explore more opportunities, including the pursuit of new sourcing countries and partners, increasing value-added services and upping supply chain efficiency.
Of our days, with the opening of borders, the companies compete very aggressive for the flow of their products in a market, where only the companies well organized can afford a good share of the market. The survival of such and such company necessarily passes through the improvement of performance and competitiveness of organizations in general, and small and medium-sized enterprises (SMES) in particular. It is in this perspective that the establishment of the platform of the supply chain management can provide considerable benefits to SMES on their competitors
Reliability, quality and a competitive price are table stakes in
the business of maintaining and repairing industrial facilities
and equipment, commonly known as Maintenance, Repair
and Operations (MRO). Given the nature of MRO, urgency can
often catapult to the top of the list of requirements. Sellers
who cannot consistently come through will almost certainly
be dropped from future consideration.
Supplier financial stability and risk differentiation in turbulent times -sup...Thomas Tanel
There is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers. The simple fact is that in today’s longer global supply chains, product
moves over greater distances and across more multinational borders than in the more localized supply chains of the past. In an era of wildly fluctuating commodity prices and security regulations, the coordination and execution required for international shipments has become
more of a challenge than in the past.
As technology demands on logistics services providers (LSPs) become more intense, organizations are seeking to integrate or consolidate their third-part logistics (3PL) providers' solutions for tasks such as warehousing, inventory management, shipment management, cross-docking, order management, bar coding, analytics and far more. We offer a roadmap for selecting whether to make such a transition in logistics systems via a big bang or phased/pilot approach.
ER Publication,
IJETR, IJMCTR,
Journals,
International Journals,
High Impact Journals,
Monthly Journal,
Good quality Journals,
Research,
Research Papers,
Research Article,
Free Journals, Open access Journals,
erpublication.org,
Engineering Journal,
Science Journals,
Giles, from his immense experience in areas of procurement has learned that traditional forms of buyer-seller relationship management have run their course and are no longer delivering value that should be expected. Check this presentation, which is brought to you by the FMCG Confext team. Visit www.fmcgconfex.com to know more on the event.
Manufacturers, Retailers Look to Adaptive Supply Chains to Increase Revenue, ...Cognizant
Changing market dynamics and emerging technologies enables players across the consumer goods value chain to revisit their supply chain strategies to propel growth and gain operational efficiencies.
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SSCG Insight: Agile Automotive Quality Governance and OversightEugene Nizeyimana
Agile approach is changing the way companies manage quality. When becomes a company’s standard delivery methodology, it invigorate the way quality delivery, assurance and oversight is managed. This requires a significant shift in practices and behaviours that affect all parts of both the business and quality function. When well executed, Agile Quality Delivery will minimise quality risks, realise expected benefits, improve value delivery and cross functional collaborative management.
Winners will improve responsiveness while cutting costsCBX Software
In today’s highly complex global sourcing environment, apparel companies must aggressively explore more opportunities, including the pursuit of new sourcing countries and partners, increasing value-added services and upping supply chain efficiency.
Of our days, with the opening of borders, the companies compete very aggressive for the flow of their products in a market, where only the companies well organized can afford a good share of the market. The survival of such and such company necessarily passes through the improvement of performance and competitiveness of organizations in general, and small and medium-sized enterprises (SMES) in particular. It is in this perspective that the establishment of the platform of the supply chain management can provide considerable benefits to SMES on their competitors
Reliability, quality and a competitive price are table stakes in
the business of maintaining and repairing industrial facilities
and equipment, commonly known as Maintenance, Repair
and Operations (MRO). Given the nature of MRO, urgency can
often catapult to the top of the list of requirements. Sellers
who cannot consistently come through will almost certainly
be dropped from future consideration.
Supplier financial stability and risk differentiation in turbulent times -sup...Thomas Tanel
There is a Darwinian effect occurring in the supply chain as Fortune 1000 companies cut weaker suppliers. The simple fact is that in today’s longer global supply chains, product
moves over greater distances and across more multinational borders than in the more localized supply chains of the past. In an era of wildly fluctuating commodity prices and security regulations, the coordination and execution required for international shipments has become
more of a challenge than in the past.
As technology demands on logistics services providers (LSPs) become more intense, organizations are seeking to integrate or consolidate their third-part logistics (3PL) providers' solutions for tasks such as warehousing, inventory management, shipment management, cross-docking, order management, bar coding, analytics and far more. We offer a roadmap for selecting whether to make such a transition in logistics systems via a big bang or phased/pilot approach.
ER Publication,
IJETR, IJMCTR,
Journals,
International Journals,
High Impact Journals,
Monthly Journal,
Good quality Journals,
Research,
Research Papers,
Research Article,
Free Journals, Open access Journals,
erpublication.org,
Engineering Journal,
Science Journals,
Giles, from his immense experience in areas of procurement has learned that traditional forms of buyer-seller relationship management have run their course and are no longer delivering value that should be expected. Check this presentation, which is brought to you by the FMCG Confext team. Visit www.fmcgconfex.com to know more on the event.
Manufacturers, Retailers Look to Adaptive Supply Chains to Increase Revenue, ...Cognizant
Changing market dynamics and emerging technologies enables players across the consumer goods value chain to revisit their supply chain strategies to propel growth and gain operational efficiencies.
Optimizing the Content Supply Chain: What Manufacturing Can Teach the Broadca...Cognizant
By applying best practices and models used to optimize physical supply chains, broadcasters can more effectively manage their digital content operations.
Informed Manufacturing: Reaching for New HorizonsCognizant
Although still in its infancy, informed manufacturing -- making the right information available in the right form at the right time -- is advancing across industry sectors. Cognizant's recent in-depth study involving interviews with manufacturing CXOs, engineering firms, service and IT providers, academia and industry analysts worldwide, revealed that while most companies understand the signifiance of informed manufacturing, many are proceeding carefully -- working to balance the conflicting priorities of managing day-to-day business while focusing on innovation and breakthrough initiatives. They see external support as a critical success factor.
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Choosing the right Professional Employer Organization will help your business remain in compliance, leverage the efficiencies of great technology, and facilitate access to comprehensive capabilities that will benefit your business and its employees. So what are the most basic and key things you need to know about PEO?
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Learn how Blackstone found significant value in deploying a single global payroll solution and transferred that knowledge across the firm’s private equity portfolio.
Manufacturing is a major contributor to GDP and employment provider in many countries. Both large and MSME are facing effects of global downturn which has made survival a test for many. With customer gains becoming far and few many companies worried about growth and profitability. Browne & Mohan consultants in this paper present the approach manufacturing companies should use to turn around profitability and survival.
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Field Services Transformation: Leveraging Change ImplementationCognizant
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ndustry leaders have never been confronted with so much business volatility, complexity and uncertainty. From the triple (external) challenges of regulation, low interest rates, and sluggish growth, to the triple (internal) challenges of “limited” infrastructure spending, legacy systems, and fragmented views of the customer; each of these can constrain asset servicing opportunities for insurers.
With these changing business dynamics, leading companies are rethinking their approach to the after sales business, as the same cannot be taken for granted any more.
Business Operational Risk Management Powerpoint Presentation SlidesSlideTeam
"You can download this product from SlideTeam.net"
Finding ways to reduce threats in business operations, then here You have professionally designed business operational risk management PowerPoint presentation graphics. Best thing is that with our content ready PPT you can easily manage your requirements and purposes of a risk assessment plan. To make this key risk indicator presentation more specific, we have added exclusive slides like industry operations summary, operational challenges, sales & marketing challenges, company strategy, product roadmap, financial summary, operating plan, threat mitigation strategies and many more. Not only this, our ORM presentation templates help to reduce the roadblocks in order to develop a better business management. Also, if you want to Create presentations on similar topics like risk assessment, implementation of threat control, strategic goals, tactical planning, integrated business planning, manpower planning, industry problem solving etc., then go with this organizational risk management PPT. So now what are you waiting for? Download our professionally created business operational risk management PowerPoint presentation graphics now and get the desired results. Address their gripes with our Business Operational Risk Management Powerpoint Presentation Slides. Identify cause for genuine complaint. https://bit.ly/3pEhMMs
Business Operational Risk Management PowerPoint Presentation SlidesSlideTeam
Finding ways to reduce threats in business operations, then here You have professionally designed business operational risk management PowerPoint presentation graphics. Best thing is that with our content ready PPT you can easily manage your requirements and purposes of a risk assessment plan. To make this key risk indicator presentation more specific, we have added exclusive slides like industry operations summary, operational challenges, sales & marketing challenges, company strategy, product roadmap, financial summary, operating plan, threat mitigation strategies and many more. Not only this, our ORM presentation templates help to reduce the roadblocks in order to develop a better business management. Also, if you want to Create presentations on similar topics like risk assessment, implementation of threat control, strategic goals, tactical planning, integrated business planning, manpower planning, industry problem solving etc., then go with this organizational risk management PPT. So now what are you waiting for? Download our professionally created business operational risk management PowerPoint presentation graphics now and get the desired results. Address their gripes with our Business Operational Risk Management PowerPoint Presentation Slides. Identify cause for genuine complaint.
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Enabling Aftermarket Services as a Growth Driver for Manufacturers
1. Enabling Aftermarket
Services as a Growth
Driver for Manufacturers
By embracing SMAC technologies and focusing on
service excellence, manufacturers can overcome
structural and cultural challenges and reap a panoply
of rich rewards, including happier customers, more
cross-selling and upselling opportunities and the
chance to create lasting competitive advantage.
2. 2 KEEP CHALLENGING August 2014
Executive Summary
The manufacturing industry clearly recognizes the importance of
aftermarket services as a growth driver. However, manufacturers face
formidable challenges in implementing aftermarket services strategies,
both from within and outside the organization. Obstacles include an
historically reactive internal service culture, gaps in service capabilities and
a “let it break” customer mindset that is rampant across industry sectors,
particularly in the aftermath of last decade’s global downturn.
This white paper examines how manufacturers can address these
challenges by taking several key steps, including reevaluating their
entrenched product-centric operating culture and processes, investing
in new technology powered by social, mobile, analytics and cloud
technologies (aka, the SMAC Stack™) to strengthen services capabilities,
establishing customer experience as the focal point of their operations,
and measuring success on an ongoing basis. We provide guiding principles,
actionable insights and case study examples of how manufacturers can
successfully implement aftermarket services strategies as a driver of
significant growth and sustainable competitive advantage.
4. 4 KEEP CHALLENGING August 2014
A Challenging Environment for Manufacturers
Manufacturers have operated in a highly challenging economic environment for the
better part of the last decade and more so since the global downturn of 2008-
2009.1
According to a 2013 IDC Manufacturing Insights survey, just 12% of capital
equipment manufacturers expect a substantial increase in equipment sales revenue
over the next three years. A further 30% expect some increase, with 30% predicting
flat revenues and 27% forecasting a decrease. In Europe, the Middle East and Africa
(EMEA), just 15% of respondents expect a substantial increase in equipment sales
volume over the next three years, compared with 9% in North America.2
Given the industry’s engrained pessimism, equipment manufacturers worldwide
have increasingly looked beyond traditional product portfolios to improve their top
lines and profitability. They have focused on aftermarket services to counter both
the cyclical demand for equipment and the volatility resulting from a persistently
tough macroeconomic environment. Industry analysts predict that service opti-
mization will be core to future profitable revenue growth; to enable new service
strategies, leading manufacturers must make necessary investments.3
Obstacles to Establishing Strong Aftermarket
Services Capabilities
In 2013, service excellence emerged as one of the top business concerns among
manufacturers worldwide4
(see Figure 1). While the importance of aftermarket
services is now widely recognized in the industry, we have observed that equipment
manufacturers continue to face significant ongoing challenges when transitioning
to the aftermarket services space (see Figure 2, next page).
0%
10%
20%
30%
40%
50%
60%
70%
80%
GlobalGlobal North AmericaNortth Ame a EMEAEMEA
Cash flow
SSeerrvviiccee eexxcceelllleennccee
Recruit, train and retain a
skilled workforce
Source: IDC Manufacturing Insights, 2013
Figure 1
Top Business Concerns of Manufacturers Worldwide
5. Identity Crisis
For a traditional product manufacturing company, moving from product-centricity
to aftermarket services is easier said than done. When manufacturers discover that
the product-focused strategies that have served them well and are responsible for
their strong market positions are no longer sufficient to sustain their competitive
advantage, they become unsure of their identity. The idea of moving away from a
successful approach to a new, untested strategy — and the critical questions around
repositioning as a service provider — are causing a troubling case of cognitive
dissonance.
Entrenched Product-Centric Culture
Identity issues are exacerbated by an entrenched culture that revolves around
products. A lack of clear vision and support for services from top leadership further
compounds this problem. Resistance from product managers and internal competi-
tion for resources between products and services often emerge. The organization
can even fall victim to its successful products if it refuses to look beyond them. It
is, therefore, critical to overcome internal cultural issues and focus on improving
service capabilities.
Reactive Service Mindset
Cultural problems are not limited to the leadership and product manager levels;
they extend to the service organization, as well. Cast in the mold of the traditional
service model, field service personnel tend to be highly resistant to change, putting
them at odds with attempts to adopt new service strategies that revolve around
proactive services and new technology platforms geared toward strengthening
service capabilities and enhancing the customer experience. Figure 3 (next page)
depicts a reactive service model.
ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 5
Identity
Crisis
Recognize
Customer
Needs
Investment
Decisions
Limited
Service
Capability
Reactive
Mindset
Product-
Centric
Culture
CChal ngessalllleennaalllenn
inininin tththethhhethetth
AAfteermaer arkkeettma
Figure 2
Aftermarket Services Challenges
6. 6 KEEP CHALLENGING August 2014
Understanding Customer Needs and Your
Service Capabilities
The challenges for manufacturers are not limited to identity or cultural issues.
Typically, customers of industrial manufacturers are not proactive in their service
investments, adopting instead a “let it break” mentality. Changing this type of
attitude is a significant challenge that requires long-term commitment, with gradual
results. Moreover, manufacturers must understand their own ability to more effec-
tively meet customer needs, a significant challenge that cannot be underestimated.
Developing Service Capability
It takes considerable time, resources and business acumen to develop strong service
organizations. Manufacturers must make tough calls on service strategy, focus
areas, personnel, training, customer experience and required technology invest-
ments, while continuing to administer to the health of their traditional product
portfolio.
Nature and Scale of Service Investments
Developing service capabilities requires considerable focus, as well as allocation
of limited resources. On the one hand, manufacturers can significantly impact the
bottom line if they make an investment in assets such as qualified service delivery
teams, service offerings and new technology infrastructure. However, they also
need to balance their desire to capitalize on the potential of aftermarket services
with the risk of over-investing in services or depriving resources to critical areas
such as product innovation. This balance is not an easy one to strike, as immediate
returns on investment have to be weighed against long-term goals.
Overcoming Challenges: How to Implement
Aftermarket Services Strategies
The challenges outlined and the strategies required to counter them are complex and
demand difficult cultural and operational changes. To overcome these challenges,
manufacturers must focus on developing an internal culture that fosters customer-
centric services. This new focus needs to be complemented by a technology infra-
structure that enables service delivery and promotes a change in the service culture
and its underlying processes in the long term.
Reactive Service Model
Figure 3
Provider service teams likely to develop
a reactive mindset and weaker
long-term service execution capabilities.
Future contact, long-term
customer relationship
and opportunities
uncertain.
End of
engagement
Provider
delivers service
Customer initiates contact
and reports problems
7. ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 7
Quick Take
A prominent equipment manufacturer with a highly
diverse customer base is a classic example of a
company struggling with an identity crisis. This
company has enjoyed tremendous success due to its
products, and it has continued to maintain a product-
centric approach.
Despite its presence in close to 100 countries, this
global manufacturer did not shift its focus sufficient-
ly to aftermarket services, nor did it capitalize on its
enormous installed equipment base when market con-
ditions were favorable. In recent years, it has struggled
to maintain revenues due to sluggish demand for its
traditional products and the lingering effects of the
global recession.
As a result of these market conditions, the company has
been forced to enact significant austerity measures,
including workforce reductions. In 2012, this manufac-
turer earned only about 6% of its total revenue of over
$15 billion from maintenance or service of its installed
base of equipment and related components — signifi-
cantly lower than some of the leading equipment man-
ufacturers, which average over 20%. This situation
highlights the challenges faced by manufacturers in
shaping their identity and determining the optimal
product-service mix. More importantly, it presents
a critical opportunity for this company to capitalize
on aftermarket services to diversify its portfolio and
mitigate the impact of declining product revenues, an
approach that is likely to serve it well in the future.
Struggling with Aftermarket Services Challenges
8. 8 KEEP CHALLENGING August 2014
The proven guiding principles illustrated in Figure 4 should serve as the foundation
for any aftermarket services strategies.
Vision: Organizational Goals and Customer Focus
There is no one-size-fits-all prescription for the extent to which an organization
adopts service strategies, if it chooses to adopt them at all. Manufacturers must
understand and lay out their long-term vision and goals for aftermarket services.
Manufacturers that decide to make aftermarket services central to their operating
model must confront a critical challenge of a traditional product-centric mindset,
namely, a reactive service culture and the transition toward a proactive approach.
A reactive service culture results in transactional relationships with customers,
depriving organizations of key opportunities to nurture long-term relationships
and build service capabilities during the course of these relationships. On the other
hand, a proactive approach, as represented in Figure 5 (next page), facilitates
long-term relationships, enabling manufacturers to adjust to changing customer
needs, and requires the ability to sustain such relationships.
For example, one of our clients, a leading industrial equipment manufacturer, is
moving beyond a focus on operator-level customer personnel and maintenance
issues and is making a proactive effort to engage the C-suite and directors, as
well. It is pursuing an advisory role and educating customers about various service
offerings and the impact of services on capital and expense planning, lifecycle
costs for asset operation, operator productivity and intangibles such as safety, sus-
tainability and environmental quality.
Figure 6 (page 10) provides a comparison of the performance indicators for both
models and highlights the results achieved by one of our clients that made a
concerted effort to change its reactive service culture to a proactive one.
Guiding Principles for Implementation of
Aftermarket Services Strategies
Figure 4
Vision Capability Execution
• CCusttomer needds
• Business goals
• Service goalse g
• MMettriics
• Measurement
• Feedback
• menttsAAssesssmm
• ility gapsCapabi
• tionMitigat
9. ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 9
Further, manufacturers must establish goals for aftermarket services that are
informed by their customers’ expectations, which tend to be unique to each organi-
zation. This will also promote long-term internal organizational changes and foster
an environment conducive to a proactive, customer-centric service model.
One of our clients, a leading HVAC equipment manufacturer, presents an illuminat-
ing example. This manufacturer has historically provided a valuable contract-bound
service by sending highly critical alarms by e-mail to customers regarding their
installed equipment. The alerts include the equipment name, equipment location,
information regarding the root cause of the alarm and other details, wrapped in a
string of characters that could be very difficult to interpret.
Working with us, this client created a customer service and branding strategy
around this seemingly mundane transactional activity. Together, we:
• Revamped the delivery format, extending delivery to new channels, including
smartphones and tablets with no change to the delivered content.
• Added one-touch service request capabilities that allow customers to request
service calls, schedule service appointments and interact with service represen-
tatives instantly.
• Provided estimates of the time and cost of potential service visits based on the
classification of the problem, which went a long way toward improving transpar-
ency and building the service brand.
These changes resulted in an overwhelmingly positive response from both
customers and internal field service personnel, who were highly satisfied with the
system’s visual experience and ease of use. The average adoption rate increased
from under 10% to over 70%, trending higher each month. These new customer
touchpoints present new cross-sell and upsell opportunities, such as new equipment
sales, parts sales and premium contracted service sales.
A Proactive Service Model
Figure 5
Demands and
results in stronger
service execution
capabilities to deliver
to terms of service
agreements.
Provider leverages stronger
capabilities and initiates
contact proactively.
Contact focused
on holistic service
and not solely on
specific problems.
Supports long-term
engagement
and ongoing
opportunities.
Opportunities to provide
performance insights,
early warnings,
advisory services.
10. 10 KEEP CHALLENGING August 2014
Continuous Self-Assessment of Service Capabilities
and Mitigation
Services capabilities are not only difficult to establish; they are even more chal-
lenging to sustain over the long run. We believe the key is to cultivate a strong
service development lifecycle similar to the one shown in Figure 7 (next page) and
then progress toward service maturity. Manufacturers’ competence in continu-
ously assessing their capabilities, understanding customer needs, conducting a gap
analysis and deploying mitigation strategies, such as investments in new technolo-
gies, is critical to progressing on the service maturity path and sustaining competi-
tive advantage.
To assess capabilities and identify gaps, we recommend that manufacturers seek
answers to the following key questions:
• How do we sell services today?
• What are our existing service capabilities?
• How do customers rate our existing services?
• What are our service goals?
• Do we have the technology infrastructure to support the desired service capabili-
ties?
• How is our service organization adapting to these new technologies?
• What existing free services can be delivered for a price by adding additional
value?
• How much are our customers willing to pay for such services?
Performance Attributes for Reactive and Proactive Service Models
Figure 6
Service Attributes Reactive Service Proactive Service
Contact initiation By customer By service provider
Predictive capability Low High
Problem identification By customer By service provider
Problem magnitude Likely high Likely prevented or low
Resolution time Likely lengthy Likely quick
Cost of resolution to service provider Likely high Likely low
Cost of resolution to customer Likely high Likely low
Continued customer engagement Unlikely Highly likely
Competition from other service providers High, no service contract Low during contracted period
Direct revenue forecast for service provider Short-term, variable Long-term, minimum assured
Pull-through revenue opportunities Unlikely Highly likely
Impact on provider’s service capabilities Negative Positive
Impact on overall brand Negative Positive
11. • What do our customers want beyond our existing services?
• How much are customers willing to pay for these new services?
• What investments are required to build the capabilities to deliver new services?
• What non-service-related best practices can we leverage?
• How can we customize services and provide additional value at a premium?
• What is the experience that we want to deliver that complements our current
brands?
• What is the impact on our existing operations?
Leveraging New Technology to Mitigate Capability Gaps
Cultural change is a long-term achievement that can be accelerated by the adoption
of new technology, which also serves to mitigate capability gaps. It is not a coin-
cidence that aftermarket services are gaining prominence in the age of advanced
information technology. A recent phenomenon is the increasing emphasis on
predictive capabilities using components of the SMAC Stack and the multiplier
effect they provide when applied holistically.
Manufacturers are leveraging these technologies to sift through vast troves of
mobile and social data stored on the cloud to identify value propositions for their
customers, address specific customer needs and enhance the customer experience.
For example, we worked with a leading HVAC equipment manufacturer to redefine
its service delivery mechanisms and the customer experience provided by its field
service personnel. The manufacturer developed a remote service management
ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 11
Service Development Lifecycle
Figure 7
Analyze feedback and
identify high-impact
customer needs
Assess existing
capabilities to
address customer
needs
Develop services
leveraging
existing
capabilities
Invest in new
capabilities and develop
new services
Deliver new
services and
enhance customer
experience
Engage
customers
proactively to
gain continuous
feedback
12. Quick Take
One of our clients, a global industrial manufacturer,
recently revisited its services strategy and organiza-
tional structure as a result of better understanding
its customer base, reassessing its service capabili-
ties and taking a proactive approach toward services.
Over the past decade, it spent considerable resources
on developing and delivering centrally envisioned
services that complement its product portfolio. As a
result, the manufacturer was able to achieve signifi-
cant results, with over 30% of total revenues originat-
ing from aftermarket services.
However, in order to achieve continued growth by being
more responsive to local needs, the manufacturer
recently dissolved its global service organization and
replaced it with four separate regional service orga-
nizations. The company discovered over the past two
years that although its product portfolio is the same
around the world, the dynamics that define the service
market and the capabilities required to be successful
vary drastically between regions. Customer attitudes
toward aftermarket services, their willingness to pay,
pricing differences and the capabilities of the local
service teams are among the major contributors to the
overall customer experience.
Our client also realized that despite ongoing success,
it was important to adopt a proactive approach and
ensure capabilities that are sustainable in the long
term. We are helping this company redefine its service
offerings, sales and service practices, and customer
outreach through a customizable platform and
regionalization initiatives. These initiatives include
locally prevalent units of measure, local language
support, customized reporting capabilities, emphasis
on metrics that are relevant to local conditions, region-
specific performance metrics and training. Such a
localized approach is more effective than a one-size-
fits-all, standardized global services organization.
Self-Assessment and Applying a Proactive Service Approach
12 KEEP CHALLENGING August 2014
system that uses data analytics to generate alerts based on raw data collected
from customer equipment. When the company utilized a holistic SMAC solution, it
achieved benefits on many fronts simultaneously. The manufacturer is able to:
• Collect high volumes of real-time equipment performance data and store it on
the cloud without capacity constraints.
• Detect early warnings of potential problems through predictive analytics, schedule
technician visits for customers, identify potential causes for the problems based
on the diagnostics codes detected remotely, and furnish an estimate of potential
repair costs.
• Proactively send alerts to customers’ mobile devices, advising them about ideal
equipment use, and seek feedback at the push of a button provided in advisory
messages.
As a result of this work, our client can now resolve over 55% of reported service
problems remotely, thus reducing the cost of service visits by over 30%. Early
diagnosis has helped improve equipment life by 30% and reduce the number of
problems reported by an additional 20% compared with a standalone data analytics
solution.
As a result of this work, our client can now resolve
over 55% of reported service problems remotely,
thus reducing the cost of service visits by over 30%.
13. ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 13
Combined, these improvements resulted in a dramatic increase in customer sat-
isfaction ratings, from an average of less than 2 to over 6 on a scale of 1 to 7
(with 7 being the highest). This illustrates the power and multiplier effect of the
integrated SMAC Stack compared with the benefits that would have materialized
from individual SMAC elements. (For more insights on this topic, see parts one and
two of our white paper series on mobility in field services management.)
Adopting the SaaS Model to Deliver Services
Manufacturers are also leveraging technology by adopting the software as a service
(SaaS) model to custom-build and/or deploy out-of-the-box software platforms
that are capable of delivering services that did not previously exist in their service
portfolios. For example, a leading building automation system and equipment man-
ufacturing client recently ventured into energy management services by leveraging
a combination of smart meters and customer energy consumption data. The manu-
facturer’s customers were using third-party services to obtain these metrics.
We advised this company to invest in integrating a third-party energy benchmark-
ing platform with its service portfolio, which consisted of equipment performance
assessments, quarterly and on-demand performance insights, and sustainabil-
ity advisory services to create new energy service offerings that make use of
the benchmarking data. This was an innovative shift for our client from its core
competency. As a result, the company can now sell services that provide insights
about future trends in energy consumption, potential costs and comparisons with
established industry benchmarks.
Execution: Establish Success Criteria, Measure
Success and Incorporate Feedback
When implementing aftermarket services strategies, manufacturers should
establish well-defined success criteria, measure success systematically and create
mechanisms to incorporate the lessons learned. We recommend that companies
develop internal assessment tools and metrics that will enable them to track the
impact of the strategies implemented and take corrective actions promptly. Figure
8 (next page) depicts a scorecard that we developed for one of our clients to assess
the maturity path of service teams across its service locations in North America.
The resulting corrective actions from such assessments served as inputs to the
operational goals for the following period. They also provided visibility to top
leadership regarding the performance of each service location, based on criteria
such as vision, organizational structure, investments, technology adoption rates,
incentive structure and so on. This has helped the service teams set realistic goals
and show progress on the maturity path during each successive period. It has also
helped improve mutual accountability between the leadership and service teams as
they track leadership support and team performance.
Assessing Real-World Results
The journey to implement a successful aftermarket strategy places enormous
demands on organizations to define clear goals, develop capabilities that run
counter to traditional operating practices, and engage in a perpetual cycle of self-
evaluation and gap mitigation. However, the benefits that manufacturers can realize
are compelling, to say the least (see Figure 9, page 15).
Our clients have realized some of the benefits depicted in Figure 9 by diversifying
into aftermarket services. One client — a global diversified manufacturer of industrial
14. 14 KEEP CHALLENGING August 2014
Performance Attributes for Reactive and Proactive Service Models
Figure 8
Competencies/
Maturity
Path Scorecard
Initiating Progressing Growing Sustaining Leading
Prior
Rating
Current
Rating
Gaps
Identified
Corrective
Actions
Vision and goals √
Clear internal brand √
Leadership
commitment √
Investment √
Organizational
structure √
Defined roles and
responsibilities √
Adoption rate of
new technology
platform
√
Domain expertise √
Revenue ($) √
Pull-through
revenue ($) √
Percent growth over
last period √
Opportunities
pipeline ($) √
Opportunities
conversion rate (%) √
Number of new
contracts signed √
Contract renewal
rate √
Incentive structure √
Training √
Consolidated
customer rating
√
Consolidated
internal team rating
√
Consolidated
leadership rating
√
15. ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 15
products, including power tools, pumps, fluid handling systems and compressed air
systems — invested in areas such as training and new services development, and
partnered with us to develop a SMAC-enabled technology platform that leverages
data analytics, cloud and mobility.
This platform allows our client’s service teams to compare equipment performance
over time and compare it with the performance of other assets operating in similar
conditions and recommend changes to operator behavior. Because it is a cloud-
based system, the platform also helps the company track the performance of higher
numbers of equipment and handle larger data volumes.
Through the platform, the company can now provide business insights derived
from analytics to its customers using Web and mobile dashboards. The platform
also empowers its sales teams to convey the strong value proposition of its service
offerings, such as deep insights into equipment performance, proactive service
capabilities, reduced maintenance and service costs due to remote service features,
and robust services capabilities that result in high responsiveness and an enhanced
customer experience.
The quality of the manufacturer’s business insights, enriched user experience,
speed to market and scalability, powered by SMAC technologies, has enhanced the
company’s interactions and relationships with customers, which has benefited the
product business, as well. The company is able to cross-sell or upsell alternative
products, as well as upsell premium service contracts by leveraging the credibility
of its existing services and the strength of its established relationships.
Typically, service contracts result in two to three times pull-through revenue. With
new capabilities enabled by the service platform, our client anticipates up to 10
times pull-through revenue from service contracts and related equipment sales. In
terms of revenues, it has reported over 30% of its $14 billion in annual revenues
from the aftermarket.
The company can now collaborate with customers on service attributes such as
delivery schedules, customer-preferred metrics and asset performance reports.
These co-created services and their delivery structure serve as inputs to our client’s
larger service organization and are extended to its other customers, as well. Our
Benefits of Aftermarket Services
Figure 9
Sustainable
competitive
advantage.
Transform
business.
Co-creation
of services
over time.
Respponsive
service and
enhanced customer
experience.
Increase in
revenue and
profitability.
Cross-sell
and upsell
opportunities.
16. 16 KEEP CHALLENGING August 2014
client’s customers are recognizing the value of buying a product that is backed by
an equally valuable service platform and the long-term benefit it will yield.
In addition to the new service platform, we also helped our client develop analytics
to measure the adoption and effectiveness of the service platform within its internal
services organization and use these tools to roll out new initiatives for training.
Such initiatives are gradually improving organizational service capabilities and —
coupled with enhanced customer relationships — transforming the business.
From operating as a reactive service provider, where services played a supporting
role to product sales, our client is now a proactive service provider that uses its
new SMAC-enabled capabilities to convey its strong services value proposition
to customers. It is strengthening its brand by enhancing aftermarket customer
experience with effective services and generating revenues independent of its
product offerings. Moreover, it is now mature enough to perform self-evaluations
that lead to corrective actions that advance its progress on the services maturity
path. These capabilities are difficult for a competitor to replicate in a short period
of time, thus delivering a sustainable competitive advantage.
Looking Ahead
Although manufacturers face formidable challenges when attempting to implement
aftermarket service strategies, they must challenge the status quo with an eye on
the future. This involves disruptive change, starting with the service culture and
operating model, through building a new technology infrastructure around the
SMAC Stack. In addition, they must establish competence and, eventually, outper-
formance in the aftermarket.
Achieving both objectives will help manufacturers serve the end-to-end needs of
their customers, thereby facilitating a sustainable competitive advantage for the
foreseeable future. Although this is by no means easy, it is possible, as the case
studies in this white paper illustrate.
Footnotes
1
Bettina Wassener, “Manufacturing Reports Show Depth of Global Downturn,” The
New York Times, Jan. 2, 2009, http://www.nytimes.com/2009/01/03/business/
worldbusiness/03yuan.html?_r=0.
2.
“Aftermarket to Dominate Revenues for Equipment Manufacturers,” Monitor Daily,
Aug. 28, 2013, http://www.monitordaily.com/aftermarket-dominate-revenues-equip-
ment-manufacturers/.
3.
“Manufacturing Insights Predictions 2014: Worldwide Manufacturing,” IDC,
Dec. 10, 2013.
4.
“Aftermarket to Dominate Revenues for Equipment Manufacturers,” Monitor Daily,
Aug. 28, 2013, http://www.monitordaily.com/aftermarket-dominate-revenues-equip-
ment-manufacturers/.
17. ENABLING AFTERMARKET SERVICES AS A GROWTH DRIVER FOR MANUFACTURERS 17
About the Authors
Nikhil Kulkarni is a Senior Consultant within Cognizant Business Consulting’s Manu-
facturing and Logistics Practice. He has over eight years of experience in business
and technology consulting and has worked on numerous strategic business trans-
formation and technology implementation engagements. His experience includes
working with clients on new product/service development initiatives, business
process reengineering, and mobility-based customer engagement strategies.
Nikhil holds an M.B.A. from the University of Connecticut and graduate degrees in
Industrial Engineering and International Affairs from the University of Florida and
Georgia Tech, respectively. He can be reached at Nikhil.Kulkarni3@cognizant.com |
LinkedIn: www.linkedin.com/in/nikhilvkulkarni.
Mark Hadler is a Consulting Partner and leader of the Business Transformation
Practice within Cognizant Business Consulting. He focuses on assisting organiza-
tions with developing strategies, systems and solutions to improve their profitabili-
ty, increase their customer satisfaction and extend their service offerings. Mark has
over 23 years of combined industry and consulting experience, advising clients on
transforming and optimizing their processes. Prior to joining Cognizant, Mark held
various leadership positions at Deloitte Consulting and Harley-Davidson. He holds
an M.B.A. from Marquette University. He can be reached at Mark.Hadler@cognizant.
com | LinkedIn: http://www.linkedin.com/pub/mark-hadler/1/836/532.