Service Lifecycle Management - Tapping into the Value of the Product Aftermarket

What is Service Lifecycle Management?

Service Lifecycle Management (SLM) is a business initiative focused on servicing a company's products, and the customers that bought them, after the product has been sold. Simply put, SLM focuses on making more money from the product after the initial sale. But it is more than that; it is also a way to become a strategic part of the customer's business after the sale is completed.

General Electric (NYSE:GE) is an excellent example of a company that has focused on aftermarket opportunities, going so far as to call themselves a "services" company as opposed to a "products" company. General Electric is widely reported to have significantly increased both their total revenue and their profitability by focusing on services opportunities in addition to developing world-class products. While General Electric may not have called their strategy "Service Lifecycle Management", they have certainly proven the value of serving the product aftermarket. SLM is an initiative that impacts the product lifecycle, which has some asking whether it is a part of Product Lifecycle Management (PLM). The broad definition of Product Lifecycle Management (PLM) describes it as a business initiative that addresses the full lifecycle of a product, from initial concept through retirement, in order to gain maximum value out of the product. The value being offered from most of the current PLM solutions, however, is gained primarily through improvements in the development and introduction of new products and product enhancements and centralized management of product data. While there are tremendous benefits available from improvements to the new product development (NPD) processes and product data management (PDM), there are important, additional benefits that lie throughout the product lifecycle. SLM is a complementary, yet separate, initiative aimed at the benefits that lie beyond the product sale, in the product aftermarket.

Many industry analysts include SLM as a part of Customer Relationship Management (CRM), although implementation of an SLM strategy does not require a broader CRM solution. There is some logic to this, because SLM shares many of the same goals of CRM, including increased customer revenue and improved customer satisfaction. Regardless of where SLM is categorized, there is growing interest in SLM because of the tangible benefits available from increasing revenue opportunities, decreasing internal service costs, and improving customer satisfaction.

Tapping the Value of the Aftermarket

Many manufacturers and distributors are beginning to recognize that there are significant revenue and customer satisfaction opportunities available after their product has been sold, in the "aftermarket". The aftermarket has been a lower priority for many, particularly for manufacturers, who have historically viewed themselves purely as product companies. This sole focus on developing and selling products as their key to success ignores the fact that the cost of maintaining some products can easily be 4 to 5 times the cost of purchasing the product - or more. This additional revenue has often been left to third party companies.

The value of the aftermarket is highly dependent on the type of product and the industry. In industries that sell capital equipment such as medical devices, telecommunications, instrumentation, IT hardware and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies this is a strategic move to grow the top line, while others are looking to replace revenue from slower product sales in the current economic conditions.

Better Service, Lower Cost

Another benefit of SLM is the automation and optimization of the service processes in the field. Resource utilization and efficiency can be increased through effective call scheduling, allowing more service to be performed with fewer technicians. Companies have found the value of completing service calls on the first visit by deploying the right technician, with the right service parts and the right skills at the right time.

In addition to reducing service costs in the field, SLM can also impact the help desk processes in order to allow for more efficient call centers. Service requests can come from many places in addition to a problem report from a customer. These service requests must be routed to the right company representative and then efficiently dispatched for service.

Maybe most importantly, SLM can integrate the service-oriented business processes that span from the time of the service request through to satisfaction of the need and billing or warranty. Still better, SLM may be able to predict the need for service in advance and avoid an unplanned service call with a planned preventative maintenance call, lowering costs and increasing customer satisfaction.

Become the "Trusted Advisor"

Another benefit of being a larger part of the customer's product lifecycle is that when the product is due for replacement, the service company is often in the best position to influence the buying decision for the replacement. In fact, who outside the customer is better positioned to know about the potential replacement of a product than the service technician? This is also true for the purchase of related or complementary products.

If the company can leverage the service relationship properly, they can increase product sales to existing customers in addition to increasing the amount of service revenue earned after the sale. By investing in keeping the customer well serviced, not only can the company generate more service revenue but it can also extend its relationship with the customer to that of "trusted advisor". Trusted advisor status can lead to increased customer loyalty and also increased sales and service opportunities beyond the current products.

SLM Needs

SLM, like any other business initiative that involves new business processes, is best implemented alongside strong enterprise applications. There are many software vendors that offer products that support SLM, or Service Process Management (SPM) as some call it. What are the features required from an enterprise solution to support an SLM initiative? The two primary capabilities required are "Call Center" and "Field Service" applications. These two categories of software provide support for capturing, or generating, the initial service request and managing it through completion all the way to the back office. In order to manage the total lifecycle of the service requirement in a continuous business process, integration between the Call Center and Field Services capabilities is essential.

Call Center applications must manage the demand for service through completion in order to satisfy the needs of the customer and the manufacturer or distributor. The initial service request may come from a number of different sources, all of which must be captured and processed through the call center. In addition to telephone, self-service, or e-mail requests, an increasing number of products are being embedded with self-monitoring capabilities that can evaluate the health of the product and self-report on service needs.

In addition to reported problems, effective service management requires that service problems and preventative maintenance calls be proactively generated by the SLM applications. As the service request is reviewed, company representatives must have the ability to review all past service requests as well as all relevant contracts, service level agreements (SLA) and warranties in order to determine customer entitlements and the best course of action.

Once the service request has been reviewed and targeted for service, Field Service applications must be able to ensure that the optimal resources are deployed to provide the service. Once dispatched, the technicians or service representatives should have ready access to company knowledge on the product they are servicing, the customer, the maintenance history and configuration of the product in order to complete the service with the first call. In addition to the knowledge required, the technician should be armed with the appropriate parts and tools for the job parts that may have been planned for months in advance. Service representatives should then have the ability to close the loop on the service call and provide the appropriate time and materials information back to the office in order to generate appropriate billing and update warranties and service level agreements.

When evaluating an SLM solution, look for depth and experience in automating the service management functions and relevant experience in your industry. For more detail on the application requirements for SLM, please see The CRM Selection Challenge


SOURCE:
http://www.technologyevaluation.com/research/articles/service-lifecycle-management-tapping-into-the-value-of-the-product-aftermarket-16979/

The Strategic Importance of Asset Management Part Three: A New Framework

A New Framework for Asset Management

As the level of understanding of these areas begins to rise, so too do the expectations that managers and companies will be able to meet modern requirements.

In the past, maintenance strategy has frequently been treated in a highly reactive manner. Maintenance regimes are often created in response to machine breakdowns or incidents. Often, in the aftermath of disasters, there are public statements made demanding, or promising, "more intensive maintenance."

While the intention is laudable, the result of such reactive actions is often either non-effective or counter productive. Either way it is too late to stop the original incident from having occurred.

Managing assets needs to be done in a truly proactive approach, one that ties the management of physical assets to the corporate objectives.

A modern approach to asset management can be visualized as a series of dominoes. Each domino needs the momentum from the previous area, and then proceeds to pass this momentum to the next domino in the line. Starting at any point other than the beginning will leave some dominoes standing.

Modern asset management can be seen in the same way. Each of the dominoes represents one of the decision-making areas that are required to adequately manage assets.

The initial momentum to begin the sequence comes from the vision of a future state. This needs to clearly represent the corporate objectives and goals, and expressing how asset management can play a part in achieving these goals.

This energy is then carried forward to impact on the remaining areas of decision-making. As with the dominoes, a decision to begin in the middle of this chain reaction will omit areas important to the end result.


This is Part Three of a three-part note.

Part One discussed changing attitudes.

Part Two covered the implications for asset management.

The Corporate Viewpoint

Perhaps more than any other management initiative, asset management is heavily driven by the corporate requirements and objectives. Yet it is often overlooked or summed up in global statements regarding "improved efficiency" or "improved quality."

One of the more recent tools in a manager's arsenal is the balanced scorecard. This proven tool has been used successfully throughout the world as a means of communicating corporate strategy, and converting strategy into results. However specific asset management goals and causality links are rarely included in corporate scorecards. Including asset management at this level of corporate objective setting, sets two powerful dynamics in motion. Firstly, it raises the level of understanding, throughout the company, of this area and its importance. Secondly, it provides guidelines for future decisions that will need to be taken regarding the following steps in the chain reaction.

Developing Maintenance Strategy

The corporate objectives, once clearly defined and linked to asset management, act as "requirements" in the creation of the strategy regimes.

An example of this can be found in the linking of corporate objectives regarding quality to asset performance. Determining exactly what the future acceptable level of poor quality will be immediately provides a guide for the performance standards required of the assets in the production lines.

These then need to be considered along with all other requirements that the company may have of its assets. There are a large number of areas that contribute to the company's requirements of its assets, and all of these need to be considered in the resulting analysis.

When there is a clear definition of what it is that companies need from their asset base it will allow them to
a)
understand if their assets are able to achieve these objectives in the first place, and
b)
determine the maintenance strategies required to ensure that they do, or
c)
determine what enhancement actions are required to meet corporate requirements Working through these two steps not only forces a radical change in the manner in which companies view their assets, it also leads to a radical change in the way that the assets are managed and that decisions are taken in this area.

Applying Maintenance Strategy

As work on maintenance strategy gets underway, work can begin on the steps relating to the application of maintenance strategy. This means taking the strategies and determining what are the supporting business needs and processes that will be required to execute them.

As the strategies are developed, information regarding the clear requirements of the materials and human resources functions will begin to emerge.

This gives a company the ability to totally plan and control the maintenance efforts and spending, from the strategies through to the materials and human resources dimensions, all aligned with the true asset requirements.

Similarly, as these fundamental issues are addressed, there begins to be an understanding of what the business processes need to be. Quite often this can mean a radical change to existing processes.

These can range from processes governing acquisition, installation and enhancements, through to the operational processes. In some cases it may require different maintenance scheduling frequencies, in others it may require whole new skill bases to be developed or it may lead to changes in the ways that we plan, perform, and record work that are done.

In stark contrast to conventional thinking in field of asset management systems, it becomes clear that business processes do not drive "requirements". In fact business processes, and the systems that are used to manage them, are driven by asset requirements.

This is one of the key misconceptions to have emerged regarding enterprise asset management in recent years.

Administering Maintenance Strategy

With the asset requirements, supporting business needs, and work processes defined, attention can now turn to the use of an existing or future computerized maintenance management system(1).

It sometimes becomes clear that the systems in place are either inadequate for managing the asset portfolio or that they are being used in a manner that does not align with the newly defined business processes.

This is often a startling revelation to companies expecting to be able to merely "roll out the maintenance modules" of their existing ERP that was bought for financial or other business reasons.

This can often be a rude awakening when the amounts of money that are sometimes involved are taken into account.

Conclusions

There can be no doubt that the perceived importance of physical asset management has risen substantially during 2003. There can also be no doubt that this trend will continue into the future as it has done over the past three decades.

It is beginning to become more widely understood that asset management is a complex and specialized area. One which can be a source of strategic advantages, but also one in which the implications of misjudgement can be extremely serious. Not only from a financial perspective but also in many areas of corporate activity. In order to exploit the advantages available in asset management, and ensure their responsible stewardship, management will need to be based around three basic tenets:

1. Using the correct people;

2. With the correct knowledge;

3. To make decisions in the correct way.


Bibliography
Maintenance—A New Paradigm, John Moubray, available from www.aladon.com

(1)Often referred to as a computerized maintenance management system (CMMS), or enterprise resource planning (ERP) system, or enterprise asset management (EAM) system.

The case Against Streamlined RCM, John Moubray, available from www.aladon.com
Reliability-centred Maintenance report Dolby Access Press






SOURCE:
http://www.technologyevaluation.com/research/articles/the-strategic-importance-of-asset-management-part-three-a-new-framework-17140/