The Syncron team recently gathered in Japan for the Global Manufacturing Executive Seminar 2019 to discuss how the manufacturing industry is undergoing a major business model transformation with nearly 200 Japanese manufacturing execs. And, first on stage is Jay Johnson, General Manager, Aftermarket Supply Chain at Daimler Trucks North America (DTNA), sharing how DTNA transformed its after-sales service operations to prepare for servitization. From what they’ve experienced on their journey toward servitization, to the ways they’ve learned to challenge their business model to maximize product uptime, this service pioneer is walking us through the transformation that changed the way DTNA approaches service.
Challenge, Change, Create
“Someone once told me to follow the three Cs,” says Johnson, “Challenge the way things are done, then change the way things are done – or create a new way.” This was one of the main philosophies that helped spark change within the DTNA organization, starting with the way they challenged the service of trucks. “I wanted our organization to move away from reacting to customer demands and toward anticipating customer demands,” continues Johnson. And so, DTNA embarked on a journey to be more proactive and predictive in their inventory processes, reducing overall time to repair and providing an exceptional customer experience. However, to reach this level of performance, they realized that they needed a solution that significantly increased dealer service levels, improved part availability forecasting, increased part availability for dealers and provided clear, improved performance metrics. With all of these necessary criteria, the challenge now was the dilemma many manufacturers face: do we build a solution ourselves or do we buy?
Build vs. Buy
Building an in-house solution for parts planning requires manual processes (not to mention multiple reviewers) to achieve acceptable inventory performance. But, purchasing a solution also requires new solution adoption, up-front costs, implementation time, annual running costs and regular updates to consider, as well – making the decision to build vs. buy a difficult choice. “We took about a year to look for a solution, weighing the options of an internal solution vs. a purchased solution,” explains Johnson. When looking at building a homegrown solution, DTNA realized that the only true benefit was comfort. And, the fact is: homegrown parts planning solutions can still leave companies in the dark about the relationship between inventory and customer service. The right inventory management solution, however, can help bridge that gap… and DTNA didn’t want to settle for less than the best.
The Transformation Results
Since DTNA started this journey to prepare for servitization, the program has become one of the most reliable programs in the entire organization. “Since we made that transformation it’s become the foundation of everywhere we go from here,” says Johnson, as he lists the tangible results they’ve seen over time:
- Truck repair time is exponentially faster. In fact, DTNA’s RIM solution gets called out regularly by our dealers as one of the highest satisfactory solutions.
- Visibility into dealer inventory has markedly improved. DTNA now knows exactly what’s in stock across more than 450 dealers. And, as they continue to extend this across the organization, there are greater opportunities and ways to leverage this visibility beyond their RIM solution.
- Fill rates have increased – many by 25 to 30 percentage points. Ultimately, the odds of a dealer having the right part available has become so much greater, eliminating the customer’s need to wait for part delivery.
- Returns have dropped below 3%. They can look into systems at more than 750 other locations and, if there is a key part needed, they can see that in the system.
And, with so many more transformations to come, DTNA’s main focus is staying ahead of the competition. “We must get ahead of any competition,” says Johnson, describing a study on Amazon Auto. In just one year, Amazon Auto went from 0 sales to $4B in sales, pulling dollars straight out of global automotive OEMs and local parts retailers in the US. “Our intention is to keep similar competitors out of our truck business in service parts,” continues Johnson, “and the number one way to do that is to provide a better experience for our customers.”
When it comes to exceptional service, it’s about doing whatever it takes to retain customer loyalty while simultaneously outpacing the competition. “Think about where your company is today,” implores Johnson, “I want to give you a challenge that you can take with you as you think about where you are on your journey toward servitization transformation. Are you making the climb alone? Are you on top? Are you in the valley of despair? Or are you climbing with a partner, progressing forward?” You may think you can do it on your own – but climbing with a partner that is focused 100% on this transformation is always going to be better than going it alone.
On your journey toward servitization, what matters most is knowing where you stand today, what your challenges are and what you need to do to move forward. Are you ready to take the leap? Syncron will continue the dialogue at Innovate2019 – the first-of-its-kind global leadership summit focused on 100% on servitization – where you can start to prepare for servitization and the inevitable shift.