Nicola Saccani - Università degli Studi di Brescia (IT)

Transcription

1 The challenge of servitization of manufacturing in durable goods. Structuring the service offer and the service supply chain Nicola Saccani - Università degli Studi di Brescia (IT) New Challenges in Service Operations POMS and EurOMA conference London Business School July 12-13, Agenda Context After-sales strategies and service offer After-sales strategies and Product design Case studies Discussion 2 1

2 From a Product-Centric to a Service- Centric perspective Provision of benefits This leads to the concept of extended product, which includes the physical (tangible) product together with a series of (intangible) services. These "extensions" provide a company with the possibility to differentiate its offer Offering of services Offering of products Manufacturing of parts 3 Issues How to define the service portfolio How to design the physical product How to design the (after-sales) service operations and network consistently with servitization strategies? focus on DURABLE goods industries focus on AFTER-SALES perspective 4 2

3 The key role of (After Sales) services (After Sales) services become a strategic driver for ensuring: long-term revenues customer satisfaction customer retention a continuous improvement of the product and service quality, an important support for other company functions 5 Academic Partners: Università di Bergamo Università Commerciale Luigi Bocconi Università di Brescia Università di Firenze Politecnico di Milano The ASAP Service Management Forum Manufacturing and retail companies: 6 3

4 Agenda Context After-sales strategies and service offer After-sales strategies and Product design Case studies Conclusion 7 The After Sales strategic profiles Cost driven Product Support Performance Profit driven Loyalty driven Cost Leader Innovation Pioneer Differentiator Cash Generator Best-in-all (compound strategy) Role Role of of After After Cost Business Business Strategy Functionality Relevance Relevance of of of After After of After After Sales Sales Sales Variety Economic Economic Sales Strategy Responsibility Sales Strategy Responsibility Critical Factors of Success Product Business Brand Cash Best Technological Cost Cost in Leader all Necessary Supporting Generator Ancillary Evil of company s Role new Cost Profit Business / Centre Investment Centre Unit Support Generator Fostering Generator Pioneer Technological image business Source and of opportunities customer profitability Centre Pioneer loyalty Differentiator and profitability Business Generator Brand Fostering Product-Service Product-Service (Cavalieri Time Time et al. Horizon Horizon 2006) Portfolio Portfolio Relevance of of of Long Short Medium Term Term intangible properties properties properties 8 4

5 The service offer Product Customer delivery installation Check-up Tangible Repair service (under warranty, after-warranty) Accessories and spare parts Upgrade (HW) Dismissal courtesy / substitutive product Extra-products warranty extended warranty Service contracts Intangible technical documentation / instruction Upgrade (SW) Customer care Financial services pre-sale advice / support services Fidelity programs Service network information Tracking of reparation process Training / information on product usage 9 Tangible The service offer Intangible Product Customer delivery installation Check-up Repair service (under warranty, after-warranty) Accessories and spare parts Upgrade (HW) Dismissal courtesy / substitutive product PRODUCT SUPPORT warranty extended warranty technical documentation / instruction Upgrade (SW) CASH GENERATOR Customer care Financial services pre-sale advice / support services Fidelity programs Service network information BUSINESS GENERATOR Tracking of reparation process BRAND FOSTERING Training / information on product usage 10 5

6 Agenda Context After-sales strategies and service offer After-sales strategies and Product design Case studies Discussion 11 DFX approaches are part of the Concurrent Engineering philosophy. They suggest that the design of a product may be continually reviewed in order to find ways to improve company s effectiveness and efficiency Benefits: (Huang, 1996) Product quality and cost Design for Productivity / efficiency of the manufacturing/assembly system Efficiency and effectiveness of the product/service development process Some DESIGN FORs Manufacturability Assembly Maintenance maintainability Reliability Serviceability Lifecycle 12 6

7 Life cycle Relates After-Sales strategies to Design For approaches Framework Design for life-cycle Servicea bility Maintain ability Design for serviceability Design for maintainability Design for maintainability Design for serviceability Reliability Design for reliability PRODUCT SUPPORT CASH BUSINESS BRAND GENERATOR GENERATOR FOSTERING 13 PRODUCT SUPPORT After-sales strategy and DFX AFTER-SALES PRODUCT DESIGN necessary evil, no valueadded services simplicity Product with low-value or quality control and testing subject to obsolescence (small of parts during the appliances, Cons. electronics), manufacturing/assembly early life-cycle stages process Minimise variable cost (favours Identify, classify and substitution to reparation), and fixed costs (structure avoid potential failure organisation) sources (process, products, components) Redundancy (low cost) DESIGN FOR RELIABILITY 14 7

8 CASH GENERATOR After-sales strategy and DFX AFTER-SALES A source of revenue through physical services Products with long lifecycle, components with shorter lifecycle Minimise the cost of maintenance activities PRODUCT DESIGN Easy identification of product and components failures Easy access to components and fast disassembly Use of light and regularshaped components Reduce the number and type of special tools Assembly and testing procedures DESIGN FOR MAINTAINABILITY 15 BUSINESS GENERATOR After-sales strategy and DFX AFTER-SALES PRODUCT DESIGN A source of revenue through a Easy identification of product complete service offer and components failures (physical/intangible services addressed to the product and Easy access to components to the customer) and fast disassembly Products with long lifecycle, Easily up-gradable products components with shorter Standardisation of lifecycle components, support activities Minimise the cost of and support competencies maintenance activities and of the whole service process across the product range Maximise service levels Remote diagnosis / selfdiagnostic tools DESIGN FOR MAINTAINABILITY DESIGN FOR SERVICEABILITY 16 8

9 BRAND FOSTERING After-sales strategy and DFX AFTER-SALES complete service offer long term competitive weapon to retain customers and acquire new ones Minimise the total cost of ownership for the customer and the environmental impact Maximise the total customer lifetime revenue/profit for the company PRODUCT DESIGN Remote diagnosis / selfdiagnostic tools Easily up-gradable products Incorporate life-cycle modelling into product design, in order to optimise product management performances during its life from the concept to the disposal manufacturing, environmental impact, time-tomarket, quality, cost DESIGN FOR SERVICEABILITY DESIGN FOR LIFE-CYCLE 17 Agenda Context After-sales strategies and service offer After-sales strategies and Product design Case studies Discussion 18 9

10 Case companies Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Size Large multinat ional Large multination al Medium Italian company Large multination al Medium Italian company Small Italian company Large multination al Analysed business Power tools, garden tools Small appliances Wall hung boilers White goods, floor care and small appliances White goods White goods Audio video and white goods Product value 10s to 1000s 10 to 100s s to to to 1000s 10s to Topics Economic relevance of (after-sales) services Service supply chain and operations design After-sales Service strategy Product design 20 10

11 (After-sales) service economics Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Business Power tools Small appliance s Wall hung boilers White goods, floor care and small appliances White goods White goods Audio video and white goods (After-sales) service turnover in Italy (% of total) 5% 1,6% 6,7% 2,6% 4,1% 1,9% 2% Intangible services 2% Composition of revenue: "After-sales" Other sales 1% 15% Spare parts 82% 21 profit (After-sales) service economics After-sales Profitability Company 7 Company 6 Company 4 Company 2 Company 5 Company 1 Company 3 Losses 4% very Low After-sales turnover in Italy (% on total) "High" 22 11

12 The after-sales service supply chain design Field technical assistance network Customer care Spare parts inventory and distribution Vertical integration Centralisation 23 Insourcing Vertical integration % of outsourcing (Repair volumes) Outsourcing Companies 2, 4, 6 0 % 20 % 40 % 50 % 60 % 80 % 90 % 100 % Company 1 Company 7 Company 5 Only one owned repair Company 3 shop, 50% of volumes Tight Degree of control over outsourced repair shops: Loose De-verticalised Company 3 Company 5 Company 7 Company 1 (Share of) mono-brand repair shops in franchising Agreements with a (share of) mono-brand repair shops Companies 2, 4, 6 Agreements with multibrand repair shops Company 7 Company

13 High Centralisation Company 1 Company 5 Company Company 7 6 Companies 2, 4 Low Company 3 Company 1 Company 7 Company 5 Company 3 Total number of repair centres Around 1600 Additional collection points Sales points In some cases salespoints None None 25 Company 2: small appliances Sees after-sales as a necessary evil Adopts a Product Support service strategy The after-sales function has a minor role in the company Narrow service offer: only tangible product services (spare parts and accessories, substitution favoured to repair) Product design focused on Manufacturability (cost of production) and Reliability (cost of warranty) Repair activities are outsourced, allowing for customer proximity 26 13

14 Company 3: wall hung boilers A potential for Business Generation is seen through service The after-sales unit depends on the Sales&Marketing function Service offer includes intangible services, mostly addressed to the product Design for Serviceability practice have been adopted remote monitoring / diagnostic tools on some product line Repair activities are outsourced. Franchising network of top repair shops to preserve control on brand image and service standards Some misalignment in the Business Model: offer of remote diagnosis tool and related service; role of the after-sales function; internal contrast After-sales reach break-even 27 Company 3: repair flows Company 3 Repair Decoupling of collection-repairdelivery On-site Low Specialisation of resources None Number of tiers 1 for repair activities 2 for administration flows / agreements 28 14

15 Company 1: power tools Adopts a Brand Fostering service strategy The after-sales is an independent business unit Wide service offer, with customer-oriented services (training, advanced customer care ) Product design focused on Maintainability and Lifecycle Most of repair activities are insourced and centralised, although a local interface network allow for customer proximity After-sales reach break-even and customer satisfaction 29 Company 1: repair flows Company 1 Repair Decoupling of collectionrepair-delivery Specialisation of resources Number of tiers On-centre Low to high, according to the collection point 3 groups of repair centres: - Collect only - Simple repair -All repair 1 to

16 Agenda Context After-sales strategies and service offer After-sales strategies and Product design Case studies Discussion 31 Discussion Servitization process ongoing for durable goods manufacturers, often not accomplished: size of companies matters? Service awareness: Different strategies could be adopted, according to several factors, including the underlying product characteristics, regulations, present structure of the sales and after-sales supply chains Commoditisation of durable consumer goods make it hard to reach profitability through after-sales activities Nonetheless, (After-sales) services present unexploited opportunities for building brand image and customer loyalty Importance of product design and operations design to achieve the strategic objectives and to keep cost under control 32 16

17 References Saccani N., Johannson P., Perona M., 2007, Configuration of the After-Sales Service Supply Chain - A multiple case study, International Journal of Production Economics, in press Gaiardelli P., Saccani N., Songini L., 2007, Performance measurement of the after-sales service network. Evidence from the automotive industry, Computers in industry, in press Gaiardelli P., Cavalieri S., Saccani N., EXPLORING THE RELATIONSHIP BETWEEN AFTER-SALES SERVICE STRATEGIES AND DESIGN FOR X METHODOLOGIES, PLM Conference 07, july THANKS FOR YOUR ATTENTION Nicola Saccani - Università degli Studi di Brescia nicola.saccani@ing.unibs.it 34 17