Service Opportunities in Manufacturing

Opportunities are being created for both manufacturers and independent service organizations (ISOs) by the emerging demand of plant and building owners to outsource what was previously viewed as internal service.

The typical manufacturer, dealer and distributor provide service only on the products or technologies they manufacture and/or sell. Most independent service organizations (ISOs)--except for those few that are vertical market oriented--are focused on high-volume technology. The basic requirement of this new outsourcing trend is to create service management, infrastructure, systems and technology designed to handle the two key front-end functions:
1) call management, and
2) logistics management.

On the call management side, it is essential to build into the existing system the ability to handle calls dealing with foreign products and to create capabilities for remote diagnostics. New technologies provide the ability to overlay simple software into an existing technology base, thereby allowing wireless communication through the Internet to a central processing facility. This enables personnel to monitor, review and evaluate the performance of this foreign technology in its existing installed base. By adding increased diagnostics, screening and triage capabilities, and improving tools for work scheduling and assignment, the service dispatch can improve efficiency. Dispatchers can now take into account the difference in products supported and a customer's service requirements, needs and willingness to pay. Other factors to consider include the availability of service employees, parts and subcontractor resources.

On the logistics side, it is critical to improve the functionality associated with forecasting parts demand based upon actual failure rates in the field. Another focus for improvement should be in the rapid and efficient return of parts through improved depot repair, scheduling and coordination and control, particularly with the increased responsibilities for servicing and supporting foreign technology.

The best source of spare parts for these foreign products is the reverse logistics return cycle and the refurbishment, repair and disposal/recovery of parts in the foreign technology base.

The new service demands create opportunities as a result of increased outsourcing in the plant and building maintenance technology markets. These demands can be met through the creation of an integrated field service management system with front-end, real-time capabilities for call management-including call screening, diagnostics and advanced scheduling--and logistics management, including forecasting and depot repair.

Our recent studies clearly show that the combination of increased installed base density for service, coupled with improvements in the technology infrastructure, can generate substantial revenue increases, as well as a surprising increase in service profitability of 35 to 85 percent.