Manufacturers from John Deere to Rolls Royce now make ever larger chunks of revenue from servicing the machinery they sell rather than the machinery itself. It’s a shift that brings to mind Clayton Christensen’s famous ‘jobs to be done’. Companies are no longer focusing purely on selling kit, but instead are helping their customers do the job they need doing as effectively as possible.
Nowhere is this more prevalent than in servicing, where a particular emphasis is given to ensuring the machinery is operational for as long as possible. Indeed, 25% of manufacturing companies’ total revenues and 50% of their operating margins come from after-sale service—the service delivered after the initial sale of the product.
This transition is underpinned by predictive analytics that is increasingly capable of monitoring the health of equipment and predicting when it might be about to fail.
Whilst such a future is undoubtedly tantalizing, there remain a number of weakspots in such a transition. One of these is ensuring that service technicians are able to get equipment operational as quickly as possible. It’s an unglamorous job that Swedish company Syncron have become experts.
The company, who work with companies such as Hitachi Construction Equipment, Volvo, Deutsche Bahn, JCB, Motor Coach Industries, Morbark, Electrolux and Perkins, reasoned that often a technician would arrive on site with all the skills and knowledge required to make the repair, but without the part to do the job.
Syncron attempt to improve things in three ways. Firstly, they help manufacturers identify any patterns in their repair work. For instance, if the same part needs changing at the same location. The aim here is to help the manufacturer predict when issues may arise in future.
The next improvement is in the visit itself. By ensuring that the right parts are in stock, it helps to ensure the time of both technician and customer are not wasted. This is important as the technician is often the most customer facing aspect of the brand, so they need to be seen as a trusted advisor that is capable of providing the support needed, when its needed.
Finally, by ensuring the technician has the right parts to do their job in a single visit, it means they can fit in more visits every day, thus improving their efficiency and effectiveness.
In a partnership with heavy equipment manufacturer JCB, this service optimization resulted in a 7.4% improvement in customer service levels. It’s an improvement that is reflected across their customer base, whether in terms of gross profit improvements or a decrease in inventory levels.
We’ve seen consistent investment by companies in the optimization of large parts of their business, and now it seems that the long overdue investment in service optimization is upon us too.