#depotrepair Archives - Sales DNA and a Service heart

Will there be an uplift in Depot Repair (vs Onsite Repairs)?

If a product requires a physical repair there are two options: a technician goes to the product or the product comes to the technician. Whatever model is used depends on many different parameters. The good news, with modern service execution tools your options grow exponentially while maintaining control.

Covid is adding an additional boost to the uplift of depot repair. If technicians are not welcome on the site of installation, then the assets, or part of it, have to come to a depot.

A balanced choice

It would be nice if the repair model could be a choice. A choice based on situational characteristics, instead of rock solid process defaults.

Why choice? Because more vocal and demanding customers expect and request choice. Situational, because the conditions can be different each time to both requestor and provider. By giving choice you provide a level of autonomy to the recipient. Choice is double edged as well. The receiver has to process choice and thus you can get valuable information on what is important to that person. Again, what is important, changes over time and is situational.

Multiple service delivery options

To put field service and depot service in a perspective, I want to paint the wider picture of service delivery options.

Diagram

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In this picture the cheapest mode of service delivery is the self healing variant. Though cheap from a service delivery point of view, it may be expensive from a product engineering point perspective.

On the other end of the spectrum we have the dual-visit engineer on site variant. If the failure is hard to diagnose, you need a trained engineer to find the problem and define the mitigating action plan. If the spectrum of potential solutions is wide, it is likely you are not carrying all spare parts and tools resulting in a second visit for the fix.

Note: not depicted in the landscape is the NPS/ CSAT element of all these service delivery options. It is in the entitlement process that you weigh the business objectives and select the best option for that service instance.

Design for Service

The various service delivery options are very much tied to the way your products are designed. We all know the example of the owners manual of a car. The manual defines the maintenance guidelines based on a generic use profile. The setup of the service delivery in car dealerships is based on that manual. In short, the simple things are customer replaceable^[1], some repairs can be done in the field, whereas others can only be done in a fully equipped depot.

A similar setup applies to the maintenance manual of capital goods. If the capital good itself is non-moveable, then it becomes even more important to design for service. It is unlikely one will deinstall an MRI to send it to a depot. It is also unlikely the technician will carry an unlimited amount of spare parts, tools and calibration equipment. Thus the manual prescribes which ‘nodes’ in the bill-of-material are fixed on-site and which ones will be swapped and sent to a depot.

The rise of depot repair

If technician capacity is scarce. If technician capacity is expensive. If customers want more uptime and faster repairs. Then it is logical that a service organisation moves from lower level component on-site repair to higher level sub-assembly swap. The effort and complexity of repairing the sub-assembly is moved from on-site to depot. As a result you can do more repairs with the same pool of technicians … and even use lesser skilled technicians.

“I used to pay 5$ for a component and 80$ for 1 hour of technician time, now I pay for a 200$ subassembly and 15 minutes of swap time”

And what is the advantage for the asset owner? It is more than only comparing the material and labour cost. You get a faster fix, alias more uptime. The new sub-assembly is fully tested and comes with warranty, alias you get better quality at lower risk. One more benefit. If the sub-assembly swap requires lesser technology skills from the technician, what if the swap could be performed by yourself? This gives you more freedom and flexibility to source those sub-assemblies.

Whether the depot model is charged as part of a full service contract or time-and-material, the value promise presents itself beyond the individual repair action. More-over, the value appraisal will be dependent on the weighing of cost & benefit factors fro both the service organisation and the asset owner.

Enabling and invoking depot repair

To facilitate a depot-model you need business process support that manages :

reverse logistics of the sub-assembly from customer to depot
facilitates the actual repair/ refurbishment of the unit in the depot
triggers forward logistics to get the sub-assembly back to the customer

Depending on your commercial offering, you may want to add additional features like:

provide a loaner while sub-assembly is in depot or
offer an advance exchange so only one on-site intervention is required and the refurbished unit ends up in inventory.

And maybe most important of all is getting decision-making support when to and when not to invoke of depot repair. This ties to your entitlement process and how you weigh your business objectives when your vocal customer is calling.

With modern service execution tools it’s all about connecting the dots. Using available information from Customer, Workforce and Asset to present choice to both the asset owner and the service provider.

^[1] Some of you may be familiar with acronyms FRU & CRU (Field Repairable Unit and Customer Replaceble Unit). If we had to give an acronym to the depot variant, it would be called DRU.

Back to the Future with Design-for-Service

“Yes, it’s really happening!”. That was my feeling when a customer of ServiceMax contacted me to enlighten them on the Design-for-Service concept. Six years ago, they started their service transformation journey to get Visibility and Control. Now they are moving the needle towards Excellence and Growth. What makes this ask even more ‘special’, is that it is the engineering department that wants to know what service needs to deliver value.

Black swan

Most of us will have plenty of examples where engineering asks technicians to record all kind of diagnostics, reason and fault codes during the service execution. What happens with that data? Will the technician feel taken seriously when servicing yet another piece of equipment that is engineered for manufacturing?

Thus, you can imagine my positive surprise when engineering wants to ‘learn’ what service needs and what modern service execution tools are capable of. It is a true win-win when both service and engineering are seeking the joint benefit of their siloed effort.

Technicians will get a return on their administrative effort when they see that it results in easier-to-maintain products.
Engineering will get the justification to fund their design-for-service effort when they see that service can improve the margin and drive new revenue streams.

Attach Rates

The concept of design-for-service is not new. Still many organisations only apply design-for-manufacturing. The latter concept drives for cost optimisation in the manufacturing process of a product at the expense of a potential higher maintenance cost over the life cycle of the product. Design-for-service optimises both the manufacturing and the maintenance aspects of a product. Yes, I hear you. What about TCO, total cost of ownership? TCO is great, but TCO only works when capital expenditures (Capex) and operating expenses (Opex) are evaluated by a single entity.

Cutting a few corners and dialling it down into a single metric, have a look at your Attach Rates. You can imagine that when engineering puts more effort/ cost into the design of the product, the selling price of the product goes up. Balancing the effort equation, you have the maintenance cost going down due to better quality and more efficient maintenance delivery. On top of that, the engineering effort may also result in the creation of new types of service offerings like availability services and data-monetisation. To reap the benefits post point of sales, you need to have or get your customer ‘attached’.

Attach Rate: the percentage of your installed base that has an associated service contract with your organisation

Getting ‘attached’ customers might be easier when you sell your product via your own direct sales channel versus units sold via your indirect channel, read dealers and resellers. That all changes when engineering starts including concepts like ‘digital activation’ of the product.

Serviceability

When engineering defines the Product, the result is captured in a BOM (Bill of Material). So far, nothing new, this is design-for-manufacturing 101. When we start designing-for-service, we need to make a number of explicit decisions. Amongst those I’m highlighting two of them:

What components from the BOM are serviceable?
What service delivery model is applicable for that component?

First, is the product serviceable at all? If it remains a single unit, you have made the implicit choice to exchange the whole unit with the option to have the defect unit repaired or scrapped at a depot. This model may be a fit for some products but the larger, expensive and critical the product, the more you’ll need to ‘open the box’.

Second, in the BOM you’ll have to identify those components that are serviceable. For each component in the Service-BOM or SPL (Spare Parts List) you’ll have to classify the part.

FRU: Field Replaceable Unit – the repair/ replace of the component requires specialised skills of a technician
CRU: Customer Replaceable Unit – the repair/ replace of the component can be done by any customer (no explicit skills required)
DRU: Depot Repairable Unit – the repair cannot be done in the field, but requires the asset to come to a depot where dedicated skills, tooling and components are available

Old-school textbook?

I’ve come to learn the above two service design considerations when I stumbled into my first service job at IBM in 1993. Though I did not grasp the full impact at first, the more I talk to today’s customers, the more I am convinced we need to re-establish the handshake with engineering to deliver above and beyond the service value promise.

Handshake

In my session with this customer, I had conversation with a very adept, eager and forward-looking engineer. He understood the consequences of engineering choices for the service delivery … and ultimately the impact to cost, revenue and customer expectation.

Next, he wanted to know how service delivery constraints and possibilities would impact his engineering process. It was clear to him that state-of-the-art service execution tooling, with a high degree of asset centricity would enable him to create a positive ROI for his design-for-service efforts.

This article is published in ServiceMax Field Service Digital on December 10th, 2020

Battery Gate

The dust is settling over Battery Gate. I’ve heard many woes and seen people in disbelief. Is this really happening? Is a mobile phone the only product affected? Social media exploded with conspiracy theories and various law firms have started class actions. What can we learn from Battery Gate?

Sales and After-Sales

A relationship between Supplier and Customer starts with an initial sale. With array of tools Suppliers bid for repeat purchases:

Dazzle them: Brand/ customer loyalty
Force them: Technology/ customer lock-in
Convince them: Maintenance & Value-added Services
Help them: Operate & Ease-of-use Services

In the case of the phone we can see multiple types of product related repeat purchases:

	Revenue	When
New phone	$999.00	In x years
Extended warranty	$199.00	Point of sale
Battery replacement	$79.00	Approx. after 2 years

In this example the supplier drives its revenue figures through product sales and has little incentive to lengthen the life cycle of the product. After-sales revenues even jeopardize future product sales.

Many OEM’s/ Manufacturers will find themselves in exactly the same position: after-sales revenues are a welcome addition to sales revenues as long as they don’t compete.

Doing the right thing

So, what is “doing the right thing”? In case of Battery Gate consumers got the impression that the supplier was purposefully reducing the product life cycle, thus forcing earlier product repurchases. We’ll probably never know all supplier considerations in their course of action, we do know Battery Gate back fired … to a certain degree. Analysts predict that the supplier may see “mild headwinds” (see inset).

When considering “doing the right thing” from the customers perspective, the concept of Total Cost of Ownership (TCO) could come into play: the optimum of both the initial/ capital sale and the operational expenditures throughout the life cycle.

Does this mean we would rather buy a phone with a longer life span and user replaceable parts? I guess here we must make the distinction between “needing” and product and “wanting” a product. If you want the new functions and features you’ll probably forgive the supplier. Your repeat purchase will be the next product. If you need the product to generate output and outcome for your organization, you’ll drive your supplier, or third-party maintainer, to deliver after-sales services.

Loyalty

Would a Battery Gate in your industry impact your NPS and revenue stream? Would the headwinds be negligent, mild or violent? I believe being honest and transparent is your route to loyalty and repeat revenue.