Why We Should Share In The Service Supply Chain

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1 Service Supply Chain : Why We Should Share In The Service Supply Chain Brought to you by:

2 Introduction Why We Should Share In The Service Supply Chain Cross-industry opportunities to leverage best practices, tools, and information to optimize aftermarket support Problem Attention is building too slowly The manufacturing or production supply chain garners a lot of attention due to its impact on the bottom line. Yet the service supply chain, deemed the more profitable of the two, seriously lags in attention from analysts, media, consultants, and other thought leaders, leaving executives searching for information and solutions. After all, if the right engine, laser, or SIM card doesn t arrive because the ship, the plane, or the truck is late, then an assembly line or mission may be halted, with costly implications. OEMs (original equipment manufacturers), distributors, retailers, and the host of companies that operate on their behalf spend a lot of time and money creating and enhancing this supply chain. As a result, an army of analysts, consultants, associations, media, and other thought leaders exist to capitalize on this interest, creating benchmarks and research, exhibiting at tradeshows, and inking publications to share best practices across and within industries. But what about the other half of the supply chain? The supply chain that only insiders talk about. In recent years, emphasis on the supply chain has garnered a lot of attention due to its impact on the bottom line. The supply chain that supports the equipment once it s sold. Equipment has to be maintained and repaired until something new replaces it. This part of the equation, known as the aftermarket or service supply chain, has clearly caught the attention of the OEMs and others. Companies such as Boeing, Ford, HP, Oracle, and Siemens reap billions of dolllars by servicing their equipment and that of their competitors. Many have deemed this supply chain the more profitable of the two. A profitable aftermarket service line is the gift that keeps on giving. Yet the information sharing for this side of the equation lags so far behind its counterpart, it has been called the silent supply chain. The production supply chain is studied and written about by global, cross-industry organizations such as APICS (Association for Operations Management) and CSCMP (Council of Supply Chain Management Professionals), influential analysts such as Gartner and IDC, top tier consultants Accenture and Deloitte, and a vast array of publications and conference producers. While they prophesize the rights and wrongs, the bad and good, the new and improved, the executives managing the installed equipment supply chain are left searching for best practices. Who are these unsung heroes and who can they turn to for help? Solution Learn and help each other Why this disparity? A major obstacle is the perceived inability to share the knowledge and insights learned from one industry to another. The density of available information in the production supply chain diminishes the need to share those processes and technologies. Yet the opposite is true for the service supply chain. Service providers have the opportunity to align based on the value, availability, regulatory requirements, and maturity of the equipment they are supporting. For instance, companies supporting high value, high availability equipment in mature and regulated industries such as Aerospace & Defense, Construction Equipment, and Semiconductor should look to collaborate. So should service providers on the other end of the spectrum growth/start-up industries that are less regulated like Consumer Electronics, Mobility Devices, and Retail Automation/POS. In an effort to understand the opportunities, ignite embarked on an analysis of industry similarities and differences to identify some of the real opportunities. After vetting the evaluation with service and support veterans from companies such as FedEx and IBM, the outcome looks as follows. 2 Service Supply Chain

3 Are we so different? Are these industries really so unique that they can t learn from one another? We would argue no, that although the requirements differ from industry to industry, their similarities support the rationale to share. Take for instance, workforce management for companies supporting high value, medium availability equipment such as ATMs and medical devices. In general, this category of equipment does not require highly skilled technicians, supporting the use of contingent labor. In order to adequately balance service quality and costs of these internal and outsourced resources, a workforce management tool that collects technician information ranging from background checks through certification scores is required to easily find and schedule the most qualified and available individual compared to contracted service commitments and costs. The same holds true in high value, high availability equipment for service parts planning and optimization. Without the right part at the right time to support same-day service level agreements (SLAs), 911 (networking/ telecom equipment) might not be available to answer your emergency call, and your credit card would not be recognized for the next purchase (storage equipment). (est) Value, Availability Equipment deemed as the highest value is, by definition, expensive. Naturally, the companies owning and maintaining these assets want to extend the lifetime as much as possible to avoid frequent upgrades and costly investments. When the challenge of high availability, or always on, is added to the equation, servicing this equipment becomes even more complex. Many of the service delivery functions, such as Technical Skills, Warranty Management, and Reverse Logistics requirements are high, but they are also specific. Although industries share the same challenges, they are unique from the perspective that technicians or knowledge can t typically be shared between them. Aircraft & Aircraft Engines, Aerospace & Defense, Alternative Energy, Industrial Automation, Life Sciences, Medical Equipment, Network Security, Network Infrastructure, Semiconductor, Security & Detection, Super Computing, Utilities/Energy Service Delivery Requirements SLAs (Response Times) Technical Skill Advanced Exchange/Swap-Outs Contingent Labor Workforce Management Knowledge Management Warranty Management Parts Availability Reverse Logistics End-of-Life Planning Level Same-day: 2-hour, 4-hour, some NBD (specific) No No (Specific) 3 Service Supply Chain

4 Value, Availability As with the highest value equipment, companies with high value assets strive to extend these lifecycles too. The key difference is that the equipment types in the high value category typically advance more rapidly, shortening the lifecycles with upgrades. Regardless, the issue of high availability remains, making many service delivery requirements high, yet they begin to become a bit less specific. Technicians who understand storage equipment can typically service networking and telecommunications equipment too, bringing contingent labor into play. Building/Home Automation, Networking/Telecomm Equipment, Office Automation/Printing, Storage Service Delivery Requirements Level SLAs (Response Times) 2-hour, 4-hour, same-day, some NBD Technical Skill When the challenge of high availability, or always on, is added to the equation, servicing this equipment becomes even more complex. Advanced Exchange/Swap-Outs Contingent Labor Workforce Management Knowledge Management Warranty Management Parts Availability Reverse Logistics End-of-Life Planning No 4 Service Supply Chain

5 Value, Availability value equipment and its priorities are already established. availability is the main differentiator for this group of equipment with service levels that are slightly lower than those of the two previous categories. With this fundamental change in availability, many of the requirements change from high to medium lessening (but not diminishing) the importance of some service delivery priorities. ATMs/Kiosks, Construction Equipment, Display Boards/LEDs, Medical Devices, Office Automation/Printing Service Delivery Requirements SLAs (Response Times) Technical Skill Advanced Exchange/Swap-Outs Contingent Labor Workforce Management Knowledge Management Warranty Management Parts Availability Reverse Logistics End-of-Life Planning Level NBD+ Some There is very little focus on the Service Supply Chain, its complexity, and opportunity. Organizations that look at their Service delivery model as a Service Supply Chain find that there are large opportunities for optimization across all of their network of functions when considered as an End to End process. They are also better positioned to create value for units within the larger organization. Providing a communication process for business leaders to communicate and share their knowledge and experience, on an ongoing/real-time basis, makes sense. -Mark Deitemeyer, Senior Director, Global Customer Service Logistics. 5 Service Supply Chain

6 Value, Availability value instinctively implies high equipment change-overs. Although the assets are not disposable, they are definitely less expensive than their counterparts, making advanced exchange/swap-outs more prevalent and end-of-life planning much less so. Since technical skills are usually at their lowest for low value equipment, contingent labor is used the most for these equipment types while reverse logistics is less predominant. Appliances, Automotive/Commercial Vehicles, Consumer Electronics, HVAC, Mobility Devices, Office Equipment, Network Routers, Point of Sale (POS) Service Delivery Requirements Level SLAs (Response Times) NBD, some same-day Technical Skill Advanced Exchange/Swap-Outs Yes Contingent Labor There is very little focus on the Service Supply Chain, its complexity, and opportunity. Providing a communication process for business leaders tocommunicate and share their knowledge and experience, on an ongoing/real-time basis, makes sense. -Mark Deitemeyer, Senior Director, Global Customer Service Logistics. Workforce Management Knowledge Management Warranty Management Parts Availability Reverse Logistics End-of-Life Planning What does it mean? Can aerospace & defense and medical equipment companies really have the same service supply chains and requirements? Well, yes and no kind-of (not very analytical). Although it is true that both aerospace & defense and medical equipment service requires experienced, certified technicians, the same field engineer that can expertly repair a C-130 would not be qualified to fix an oncology machine. Not only are the skills and technologies incredibly specific, these industries are also highly regulated. 6 Service Supply Chain

7 Regulated servicing perspective Another key element that determines how and when industries can share is the level of regulation. that are highly regulated require specific skills, knowledge, and processes that are not as transferable as those that are not. Aerospce & Defense Aircraft & Aircraft Engines Alternative Energy ATMs/Kiosks Appliances Automotive/Commercial Vehicles Building Automation Consumer Electronics Construction Equipment Home Automation HVAC Industrial Automation Life Sciences Mobility Devices Medical Devices Medical Equipment Network Infrastructure Network Security Networking/Telecom Retail Automation: Point of Sale (POS) Office Automation/Printing Security & Detection Semiconductor Super Computing Storage Devices Utilities/Energy Regulations 7 Service Supply Chain

8 Maturity and its categories A final consideration in industry sharing is maturity levels. like Construction Equipment and Office Automation that are very mature will likely have different service priorities than those in Development or industries like Alternative Energy and Home Automation. Certainly the opposing groups can learn from each other, but the former is often more difficult to change. Aerospce & Defense Aircraft & Aircraft Engines Alternative Energy ATMs/Kiosks Appliances Automotive/Commercial Vehicles Building Automation Consumer Electronics Construction Equipment Home Automation HVAC Industrial Automation Life Sciences Mobility Devices Medical Devices Medical Equipment Network Infrastructure Network Security Networking/Telecom Retail Automation: Point of Sale (POS) Office Automation/Printing Security & Detection Semiconductor Super Computing Storage Devices Utilities/Energy Maturity Level Development Service providers have the opportunity to align based on the value, availability, regulatory requirements, and maturity of the equipment they are supporting. 8 Service Supply Chain

9 Conclusion Learn from Each Other As stated earlier, the intrinsic uniqueness of these industries should not be overlooked. Yet in the service supply chain where research and knowledge is lagging, companies have an opportunity to share their proven processes, performance metrics, supply chain best practices, and thought leadership in the same way that their forbearers do. Do not reinvent the wheel! Innovation is happening around every corner in the aftermarket supply chain and anyone supporting it should make an effort to learn from others within their industries and those with similar equipment value, availability, regulatory, and maturity attributes. Finding the outlets that actually support this interest can be challenging, but they are available. So service industry executives come out and share! You are sure to glean new information, perhaps even from someone in a completely different industry. About ignite Marketing With over 22 years of B2B marketing experience, Stephanie Williams, ignite s Owner and President, is a seasoned marketing leader that has exclusively supported aftermarket supply chain service providers for the last 15 years. Stephanie founded ignite Marketing 9 years ago to provide strategic marketing consultation and implementation for all high-tech installed equipment supply chain service providers, encompassing software, logistics, 3rd party service, parts and repair, requiring targeted messaging, positioning, infrastructure development and tools to differentiate and reach their business objectives. She partners with organizations with marketing resources of varying sizes, providing unique, valuable industry expertise and a 3rd party perspective that helps her clients accomplish their goals. Media Contacts Stephanie Williams ignite Marketing ignitemarketing@bellsouth.net Learn more at Interlog and Field Service Field Service and Interlog are the leading service and support events that attracts seniorlevel professionals from over 15 different manufacturing industries including Aerospace, Medical Device Manufacturing, Hi-Tech Electronic, Semi-Conductor and Capital Equipment, Construction, Automotive, Telecommunications Equipment, Energy, Industrial and Agricultural Equipment and more! Togther, Field Service and Interlog tackle the latest strategies in core service functions including mobility, workforce management, technical support global inventory and knowledge management. Additionally be sure to gain as much insight to the new areas hounding service and support professionals all over the world including innovative developments in increasing service revenue, customer soft-skills, technician utilization, developing service leadership and effective mobile resources management. Amol Tembe Worldwide Business Research atembe@wbresearch.com 9 Service Supply Chain