Innovation within industry is a must to improve processes, products, and customer experience. Although some innovations, like Amazon’s floating distribution center, seem implausible, other sci-fi technology is already revolutionizing and redefining the way employees accomplish tasks.
Tales of manufacturing and servicing
“Across the durable goods industry there is tremendous volatility,” says Gary Brooks, CMO of Syncron, a global manufacturing and supply chain technology company. “One month, orders are up 4 percent and the next month they’re down 5 percent. This causes great financial challenges for manufacturers. However, while we’re seeing some declining margins and revenues on the product-based side of the house, on the after-sales service side, the margins are incredibly healthy. We typically see upward of 25 percent of a manufacturing company’s total revenues come from after-sales service.”
It’s easy to see why a manufacturing company might put a heavy emphasis on improving the profit margins associated with its service department.
Companies manufacturing asset-generating products like mining equipment, commercial aircraft, or construction equipment—also known as durable goods—strive to build products that have a high percentage of uptime. Obviously, when that equipment is running, their customers are happy. Happy customers are repeat customers, but every machine fails at some point, at which time the manufacturer’s service department steps up to restore uptime. Increasingly, servicing equipment after the initial sale is having a positive impact on equipment manufacturer’s revenue.
“Durable goods manufacturers are trying to maximize product uptime in two primary ways,” explains Brooks. “One is making their durable goods more durable; the other is faster service when one of their products fail. That means having the right parts at the right place at the right time.”
Whether it’s an appliance or a piece of earth-moving equipment, having the right part typically leads to having the repair done quickly and efficiently, as opposed to, “Oh, I’m sorry, we don’t have the part in stock. We’ll have to get it from our central warehouse, which is going to take about three days.” That maximizes downtime instead of uptime.
Maximizing service department profits with innovation
For after-sales service, inventory management is crucial for a healthy profit margin. Ergo, improved inventory management can lead to increased net revenue. And yes, there are tech innovations that can help.
Predictive analytics meets inventory management
On one hand, there are the futuristic “floating warehouse” solutions, and on the other are innovative solutions available today. Innovations like predictive analytics (PA). PA may not sound exciting, but it has become a major consideration for organizations seeking to gain competitive advantage within their respective industries. PA is now being applied to the after-sales service sector.
“Our solution basically has two sides,” explains Brooks. “One helps predict the inventory that’s needed. We deliver a cloud-based solution that looks at mean time between failure (MTBF) for particular products and parts, and then comes up with the optimal stocking levels for each level within the supply chain—from a central warehouse to a regional warehouse to a dealer and even down to the trunk of a technician. The goals are, in addition to making sure we have the right part at the right place at the right time, minimizing the stocking of obsolete parts. Excess parts on the shelf are just tied-up capitol. We can typically achieve a high level of over-the-counter fill rate with significantly less inventory than the department currently maintains. The result is maximum uptime, a very happy customer, and delivering that service at a lower cost. Manufacturers increase their service parts revenue upward of 15 percent, increase their gross profit margins upward of 40 percent, and do that while reducing service parts inventory levels by 15 to 40 percent.
“The other side of our solution figures out the optimal price for any given part,” says Borrks. “In any given market, there’s an optimal price. If the price is too high, you’re going to impact sales; if the price is too low, you could be leaving margin on the table. So, our solution comes up with the optimal price for a given part, in a given market, in a given season.
“It’s an exciting time to be in the after-sales service business,” admits Brooks. “Technology is changing at an unprecedented rate, and it’s having a significant impact on the way manufacturers deliver service.”
Augmented reality in the field
Indeed, there are some pretty incredible innovations in technology that have transformational implications within the after-sales service industry, including drones, driverless cars, 3D printing, machine learning, IoT, and the soon-to-be $34 billion wearable tech industry.
“In the earlier days of our industry, we did more work in the nonindustrial sector, particularly targeting soldier-worn applications of AR and smart glasses,” says Jay Kim, chief strategy officer at Upskill, a world leader in enterprise software for augmented reality devices. “The fundamental benefit that we deliver to our end users is still real-time access to information delivered in a heads-up, hands-free way. Our marquee offering is an award-winning platform called Skylight, which is being used globally for manufacturing, material handling, and field service applications.”
For what it’s worth, we’ve already seen wearables like Fitbit adopted in fitness, and VR goggles in gaming. In the arena of field service however, wearables like smart glasses have the potential to profoundly impact a manufacturer’s ability to improve uptime and deliver service in a more efficient way.
“We can think of using this tech as a sort of personal guide where if I’m a tech onsite and I’m wearing smart-glasses, I can gain access to a tremendous amount of information, like diagrams and schematics, and exploded part views,” says Brooks. “In some cases, the augmented reality device might even be able to walk me through a repair with text or video on a heads-up display. I might also receive safety messages that if I’m about to remove a particular component, and there’s potential danger, I might get a warning message. So if I’m a junior tech on a complex call, and I run into a problem, I can call support and through the glasses, they can see what I see and help guide me though that repair. This has benefits of improving first-time fix rate, improving customer satisfaction, and it lowers cost for the manufacturer.”
The internet of things (IoT) is also a budding technology that hints at far-reaching ramifications for service departments.
“We are making it possible to connect the field service technician, IoT-enabled tools and machines, and an organization’s ERP and life cycle management systems—in real-time,” boasts Jay. “The information that a service tech is accessing for the daily routine—reference materials or manuals or a checklist—gets pulled from components within your ERP stack. A technician with a robust wearable solution can retrieve that information, collaborate with a support team, shoot photos and video with the glasses, and then, again via the smart glasses, upload them to the ticket that is associated with the service call. Sometimes it’s all about trying to solve that last mile or meter problem where technicians with smartphones or tablets are going to have a tremendous amount of information available at their fingertips. The problem is, they need those fingertips to do the work but still connect with a Bluetooth-enabled torque wrench or their company’s database.”
The video below provides visual punctuation for the power of information available to a tech in a heads-up, hands-free manner:
Although Syncron and Upskill haven’t introduced flying cars or holodecks, they are definitely working in the arena of innovative technology that is redefining the way employees accomplish tasks.