Looking to apply the concept of supply availability forecasting, planning, and optimization to field-based product repair, Servigistics Inc. yesterday unveiled software said to help manufacturers ensure that their skilled technicians have the right parts to resolve a reported problem before entering the customer's premises.
Having extra parts on hand is a tactical after-market business for manufacturers of durable goods -- one that has traditionally been viewed as a cost center because of the risk involved. If a service technician visits a customer site without the right part, for example, and has to return later to resolve the problem, field service becomes an expensive proposition that could potentially damage the customer relationship.
Intense competition and eroding profit margins, however, have some manufacturers seeking to convert risk into revenue. "Executives understand [after-market service] has a huge revenue potential and it's an opportunity to develop loyal customers," said Gary Brooks, Servigistics' executive vice president of marketing and alliances, in an interview.
According to Brooks, 50% of the executives in a recent focus group said they have over $100 million invested in service parts.
"Service is now an agenda item," Brooks said. "There's a lot of money invested in it. The problem is, companies lack the processes and systems that enable them to manage their service operations and to have visibility and control over whether they make a service call or not. That is a void we are filling."
Servigistics Workforce Management is built on a Web-based architecture that includes planning and forecasting based on SLAs, a command center that provides real-time tracking and monitoring of service calls to manage customer commitments with technician and service part availability, and exception-driven workflow that issues alerts to individuals based on policy and security thresholds defined by the user.
The software was built using the same architecture and data sources as Servigistics' existing parts planning and pricing management software -- which figures out the optimal price a manufacturer can charge for a part. The suite also includes an integration gateway that can filter in data from multiple sources, such as enterprise systems.
"It's built to address flexibility on the service side of business," said Mike Landry, Servigistics' founder and CTO. "You have a lot of variability that needs to be baked into service. It starts with the commitment to the customer. Based on that, forecast in the need for parts and labor capacity at each location ... that translates into recommended action, what to buy, what to stock, what to move. On the labor side it is hiring and training. But all of those decisions must be made months before the actual need of the customer in order to be prepared in the most profitable way possible," Landry said.
By increasing first-call resolution rates, manufacturers not only improve compliance with service level agreements but can increase customer satisfaction rates by 19%, reduce overall service costs by 27%, and grow service revenues by 13%, according to a white paper from Aberdeen Group called "The Convergence of People and Parts in the Service Chain".
Aberdeen calls this space service chain management, which Aberdeen says is defined by how companies wrap after-market services around a product to create a value proposition. "Tackling it end-to-end means incorporating people, process, data management, and warranty management," said Mark Vigoroso, vice president of service chain management research at Aberdeen. "It allows [companies] to manage service as a business."
There are piecemeal approaches, but other vendors serving up a broad footprint of field service offerings include Oracle Corp., SAP America, Astea International Inc., and Metrix Inc.
The challenge, Vigoroso said, is getting separate organizations -- supply chain and field service -- to blend. The applications can help, but companies need to realize it's an exercise that requires restructuring how services are planned, conducted, and measured.
Indeed, it's a stretch for some companies to understand the potential of workforce management. Just one of Servigistics' 85 customers -- Dell Computer -- is currently using the workforce management application. It requires an evolution in mindset, Brooks concedes, in much the same way that ERP or SCM did, he said.
Now that there is technology that can be applied to forecasting, planning, and monitoring both the parts and the field service workforce, the revenue opportunity for manufacturers is huge, Brooks said. "If you just have point solutions that are not fully integrated you are only delivering half of the value equation," he said. "Executives are focused on meeting customer commitment ... and doing it profitably. That is primarily what our solution is designed to do."