If you’re competing on price alone, your days are probably numbered. (Globalisation commoditisation, shrinking product margins and diminishing returns from a product-centric approach took care of that argument). As we enter the era of the Internet of Things, a new and alternative services sector is evolving, called servitization – also known as outcome-based services.
It’s based on the premise that by integrating services with products, you can create bundles that are of greater value than products alone. As manufacturers move from being purely product providers to becoming service providers as well, it adds value to their products and generates additional revenue. In other words, service-based outcomes take you out of competing on price alone.
From a consumer perspective, the arrival of IoT means life gets easier and more convenient. From a manufacturing perspective, life will never be the same again. It’s disrupting business as usual for product manufacturers globally.
Intelligent field service management helps companies embrace this outcome-based model by shifting service from being a cost centre to a profit centre. As IoT moves service from being reactive to proactive to predictive, it is also impacting R&D design, with some products being built as ‘service ready’ from the outset.
According to Aberdeen Group, over 90% of field service organisations that are considered “Best in Class” operations are managed as profit centres. Obviously, there is a link between having a revenue target and driving a “Best in Class” operation. Clients will not spend more with a company unless they are receiving excellent value for money.
So what’s all the fuss about? Growth. “Best in Class” field service management systems are delivering a 22% increase in service revenue, a 24% increase in productivity, a 12% increase in contract renewals, and a 19% decrease in average repair times for thousands of companies globally. Not bad when you also factor in that 70-90% of total lifetime cost of heavy equipment lies in maintenance and repair.
Servitization and field service go hand-in-hand. That’s because by empowering and mobilising service technicians with cloud-based, real-time tools in the field, they can do work-orders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively and upsell and cross sell products and solutions where appropriate. More importantly, you can measure and control the spend.
I’ve outlined below, seven different ways that companies are using field service management to boost their productivity and performance:
- Fuel The Top Line – Double digit increases in service revenue, productivity, and contract renewals. Service technicians identifying revenue opportunities on-site and feeding back to sales. Servicing third party and competitive equipment to lock out competitors.
- Control The Bottom Line – Prevent warranty leakage, lower emergency parts shipments, and reduce waste and expenditure.
- Rev Up Customer Satisfaction – Higher first time fix rates, empower service techs to execute work-orders, request parts, schedule and be scheduled, look up manuals, take payments, renew maintenance agreements, use social channels to communicate problems swiftly and effectively and upsell and cross sell products and solutions.
- Adapt The Business Strategy – Shifting service departments from being a cost centre to a profit centre. Moving service from being reactive to proactive to predictive. Supporting corporate shift to an outcome-based business model and harness servitisation benefits (5-10% jump in annual services revenue, profits two to three times greater than product sales alone, and 30% cost reductions for customers).
- Accountability In The Field – Insight into parts ordered by individual technicians, verify if they were actually fitted, and track stock turn and number of jobs down to individual service engineers.
- Getting Stock Savvy – Insights into stock costs hidden in different budgets, visibility into central systems, databases of products and stock levels, measure and control top line parts profitability, track remanufactured parts per engineer, improve cash management, avoid over ordering of stock and reduce idle capital.
- Post Purchase Product Insight – Ability to track how customers are using products, how products are performing onsite via IoT connected field service and capture insights for future R&D design.
Just about every other industry has ditched paper-based, manual processes and clipboards in favour of automated, real time, business insight. If you’ve not yet updated your service processes, it’s time to move service out of the 1980s to take advantage of new systems and efficiencies.