In case you missed it, the Syncron team is in Chicago, Illinois for this year’s 2018 Smarter Services™ Symposium, hosted by the Service Council. Taking place right on the river at the Westin Chicago River North this Monday, September 17, through Wednesday, September 19, 2018 – the event sparking service inspiration for the rest of 2018 and beyond.
Today, we led a breakout roundtable on service parts management and what it means to truly deliver product uptime in a predictive way, especially in a world that’s shifting from the selling of products to the selling of outcomes – otherwise known as servitization. At the table were a few top dogs from companies like Scientific Games, Trane, Dell, thyssenkrupp, Cummins, Phillips, AGCO, Ingersol Rand and Automated Packaging Systems. Together, they discussed the uptime initiative and what that business model actually looks like in a variety of different industries.
In a pay-per-play type business, the most important aspect of the business is keeping those machines up and running. And, as a lottery business for video poker, table games, electronic games, product uptime for Scientific Games means a game downtime equals financial downtime.
The trouble with maintaining this kind of uptime in any industry isn’t necessarily in the maintenance itself, but in having the right amount of parts in the van at the right time. And whether it’s housing service parts, heavily stocking techs with thousands in service parts, or knocking it down to bare essentials in the van, the ultimate goal for everyone at the end of the day is to keep customers moving, no matter what.
Service Parts Cost of Business: A Service Means to an End
What makes that goal into a reality is the evolution of the service parts themselves. With sensor-equipped technology like machine learning and artificial intelligence, uptime services are becoming more and more predictive than ever before. But, what does this business model look actually like? For Cummins, with customers from an engine perspective who would rather plan their downtime, maintenance needs to be preventative. If their customers experience downtime, they have fines. If that downtime results in a performance loss on the customer’s end, they could lose that customer forever. So, the best business case to prioritize proactive maintenance and maximized uptime to help end-customers continue to make money.
To put this in perspective, Cummins has the biggest diesel engine service network. With 350 shops, and more than 3000 dealerships, they understand there’s a certain cost of doing business when it comes to the product side of the business. But, because they sell their products with a Cummins engine, with Cummins-certified experts to maintain them, they’re ultimately prioritizing the service side of the business. Or, in other words, selling service and positive outcomes over more products.
“We need a product that has best in class uptime,” said the Cummins rep. “It may cost more up front, but over the lifecycle of the product, it will be more beneficial. Could we make money [on product alone]? Yes – but that can’t be the end goal. It’s how we differentiate our product.”
The Balance Between Cost and Service
And how about the computer industry – what does a maximized uptime model look like at the hardware level? According to the representative from Dell, it’s about harvesting machine learning benefits and all the feedback that comes back from customers. For customers that are sending the data back, there are some failures that are hard failures, and there are some that take longer than usual. But, with about a 20-day lead time thanks to these analytics, they have more time to make sure the right service parts are available.
But, we all know that getting the feedback loops on all these things is the tricky piece. How do you tie it all together and get the right part? One challenge for thyssenkrupp goes beyond the loss of dollars: if an elevator breaks down in the hotel, they don’t lose revenue, but it’s different service scenario. For them, product uptime is about critical care – and a balance between money and service.
Ultimately, when it comes to servitization, customers know they have to invest as much in their capabilities as the providers have to invest in the technology. Today’s customers have gotten a lot smarter about how to eliminate downtime through their planning, thanks in large part to the unique convergence of IoT and failure analysis. But, the ability for the providers to then collect data and going back to the engineering team to isolate the type of learnings is what makes it truly useful information that directly impacts uptime.
The journey to servitization and maximized product uptime is not necessarily short, and in many cases, not the financially attractive choice right off the bat. But, at the end of the day, economic shifts are proving that initial product sales aren’t going to cut it to meet revenue expectations anymore, making proactive maintenance is a new financial lever for manufacturers. And with that lever, companies can optimize the service side of their organizations to help fund the journey toward servitization.
The shift to servitization is a fundamental change in how manufacturers should approach customers. Download your complimentary copy of our Orange Paper today, and start incorporating this new strategy in your field service organizations now.