Tag: #engineeringchange

Managing product recalls – five keys to success

As an equipment manufacturer, you hope a product recall never happens. In reality, most OEMs have their share of misfortune. The recent example of Philips apnea machines shows how complex a recall process can be. How it can get out of hand. How it can impact your brand experience. Instead of trying to avoid product recalls it is better to be prepared for them.

Preparing for the unlikely

Every product is designed with a set of checks and balances. In the final stages, before general availability, Quality Control assesses safety and fit-for-purpose. Once the product hits the market in grand(er) volumes, the OEM will receive a much larger dataset telling how the product performs and behaves in real-life situations. That is, if the OEM has set up a channel to listen.

When you’re in the middle of a product recall, all stakeholders will be aligned and feel the sense of urgency of using data to mitigate the quality issue. If you hadn’t setup a data collection process, the ability to reconstruct the data is limited and likely comes at a high cost. You’ll also have to be mindful that a product recall is a period of anxiety to both the OEM executives as well as the owners of the affected products.

In our practise, we see that companies that come prepared experience lower costs and higher customer loyalty. These benefits are incentivising other OEMs to follow suit. Especially when the pace of launching new products is increasing and quality assurance is under duress.

Gaining installed base visibility

In an ideal world, any OEM would love to know where each product sold is installed, in what state it is, and how it is being used. The value of that data will enable the OEM to develop better products, be more efficient in their service delivery, and increase their service revenue through hyper-personalized service offerings.

In the real world, we see a lot of OEMs struggling with their installed base visibility. And this is a real problem. If you don’t see your installed base, how do you expect to be efficient in service delivery and driving revenue from that base? It becomes really problematic when you have a quality issue with a product and you don’t know where they are.

Managing the indirect sales channel

The apnea case shows the recall struggle in its extreme. On the one hand the OEM has a medical compliance obligation to manage the product recall and replacement. On the other hand, the OEM has no visibility on who owns them, because the bulk of the units were sold via the indirect sales channel. 

Though the OEM does not have visibility on the end-user of the affected units, the OEM does have a record of the serial numbers sent to the dealers/resellers. Those dealer/ resellers ‘own’ the commercial relationship with the end-user, potentially having sold a service contract too. In this model, the OEM is the orchestrator of the recall, whereas the dealer/resellers are the eyes, ears and hands.

Prioritizing the roll out

Once the OEM has diagnosed the product issue and created an engineering change, the complete supply chain needs restocking. First, the faulty components need to be recalled, to avoid a widening of the quality issue. Then, the new components start to fill the pipeline to enable the roll-out. 

Because the production of the new component version needs to ramp up, there is a constrained supply in the early days of the recall, which is a form of service campaign. At the same time, vocal customers will demand instant replacement. Scarcity will require the OEM to make choices and communicate them.

If the OEM only has information on shipping volumes to dealers/resellers, prioritization options are coarse. That becomes more apparent when the dealer/reseller has sold a ‘gold’ contract to the end-user. The end-user has a perception that it purchased an OEM product with an associated gold contract, oblivious to the fact that both elements are delivered by two different commercial and legal entities. That becomes an interesting prioritization puzzle and can become a cause for discontent when not accounted for.

Monitoring the service campaign

Now let’s assume you are in the middle of rolling out the engineering change to your installed base. How do you know you are done? When have you successfully completed the product recall and can you prove that you are compliant?

Based on our conversations with OEMs, we’re hearing a need for a workbench-like tool to slice the installed based according to multiple and changing criteria, while maintaining an overview of progress and cost. Last but not least, having tools to prove you’ve done the work and communicate that to the involved stakeholders. At ServiceMax, we’ve bundled these capabilities as Service Campaigns enabling any OEM to be prepared and enabled for future product recalls.

This article is published on Diginomica and Field Service Digital.

Developing Engineering Change Strategies for CX and Customer Engagement

Each time when you launch an engineering change (EC) campaign you’ll have to balance brand image, quality and cost. In my previous blog 3 Steps to Make Engineering Change Management Easier (FSD, March 2nd, 2021), I added two additional business drivers: customer engagement and upsell revenue. I promised to elaborate on EC strategies, on how to use the EC touch points to further your business objectives.

But first I want to say thanks to a reader who helped me frame the two different emotions associated with an engineering change: the ‘positive’ and the ‘negative’ engineering change.

  • Negative: the EC is triggered by a quality issue or a complaint.
  • Positive: the EC improves the specifications/ capabilities of the original product.

Does the emotion matter? Yes, it does and maybe it shouldn’t matter that much. Let me explain.

When the negative emotion is associated with cost and a perceived reduction of CX & brand value, its mitigation is deemed operational. Getting your act together. When using the EC as an instrument to exceed expectations, the positive emotion will trigger growth driven stakeholders to jump on the bandwagon. With a comprehensive EC strategy, you can nudge the negative to the positive side too.

“There’s no such thing as bad publicity” – P.T. Barnum (1810 – 1891) 

Creating a plan

Creating an engineering change strategy is a subset of product life cycle management. During the operational life cycle of a product many things can happen. Some of these occurrences are pre-conceived and/or planned. Some will happen ‘as you go’. Simply because it is nearly impossible to predict how a product will behave in each and individual use context.

Creating a plan is like preparing for the unknown. The good news is that the unknown can be moulded into a limited number of buckets:

  • The product does not deliver on its as-sold and nominal attributes
  • The product is used in a context beyond its nominal attributes
  • New product capabilities enhance the nominal specifications

For each of the three buckets you can create a communication channel with your installed base and define a follow-up workflow. As a potential response to each of the three buckets:

  • Document and investigate the gap, provide a product fix … or change the expectation.
  • Investigate the use context of the product and re-evaluate the product specifications. Advise on product replacement or product upgrade possibilities.
  • Filter the installed base on those customers that will perceive the enhanced specifications as a value add.

Each of these workflows impacts cost, revenue and CSAT. Most of all, you build a communication relationship with your installed base, managing customer experience over the life cycle … and beyond. Just imagine your EC strategy becoming the proactive/ predictive instrument to avoid unplanned downtime.

What does your customer buy and expect?

Words like strategy and lifecycle imply a longer timeframe. This requires us to revisit the original value promise made at point of sale. Is that promise a one-off or a longer-term commitment? The answer will impact your EC strategy.

If the sales value promise is a one-off, the customer buys the product as-is with an optional limited warranty. Because warranty is an integral part of the product sale, we need to define both coverage and period. Also, we must be mindful of expectations and regulations.

  • In Japan the phrase “Quality is included” drives EC and lifecycle services to high expectations with ample opportunities to monetise them.
  • In Germany the warranty construct is decomposed in two definitions “Gewährleistung” and “Garantie”. The former relates to a defect and/or violation of regulations, the latter is a voluntary value promise.
  • When you buy a product from a AAA-brand you’ll likely have a different lifecycle support expectation over a B-brand.

With the above components it becomes clear that you’ll need a product lifecycle vision with an EC strategy spinoff.

A steady flow of engineering changes waiting for a framework

Now, let’s expand the horizon beyond the warranty period. Your customer may have bought a product. What your customer needs is the output and outcome of that product, preferably over a longer period of time. Over that time entropy and technology advancement are the biggest drivers for engineering changes. 

Knowing you’ll have a steady flow of ECs you’ll need a framework to manage them. Even more so when we’ve learnt in the previous blog that ECs often occur in an environment of constraints. You’ll need to make choices of who gets scarcity first, knowing this will impact cost, revenue and CSAT. 

Scarcity is a multi-facetted ‘beast’. It can work both for and against you. Thus, one more reason to put a lot of thought into defining an EC strategy.

“There is only one thing in the world worse than being talked about, and that is not being talked about.” – Oscar Wilde

Every touch point is an opportunity

In the world of sales and engagement the mantra is: every touch point is an opportunity. Throughout the operational life cycle of a product there are many touch points. When you can explain entropy and technology advancement in its use context, when you have a compelling engineering change strategy and when you can embed that EC strategy in your service portfolio, then you’ll get the level of engagement and life cycle partnership you seek. Driving cost, revenue and CSAT to both party’s satisfaction.

This article is published in ServiceMax Field Service Digital on May 4th, 2021

Managing your Quality and Engineering Changes

February 2021, breaking news, your engineering team issues a mandatory engineering change to all product models ABC built between 2011 – 2013. “The gearbox needs a retrofit to avoid potential injury and claims”.

Change the verbatim, the dates or the technical details. I guess you’ll recognise the scenario. Whether the origin of the change is quality, compliance, engineering maturity or commercially driven, managing engineering changes is a big deal. A big deal because you don’t want claims. You don’t want your brand image tarnished. You don’t want cost overruns. It’s a big deal because you want to convert a negative into a positive.

Engineering changes extend into the operational life cycle of a product

I once believed every product was 100% engineered before it found its way onto the markets. Having run service organisations for more than 25 years I’ve reduced my confidence in this percentage year over year. Don’t get me wrong, I don’t mean to say that is a bad thing, but I do want to emphasise that acknowledging that anything less than 100% puts a burden on the service organisation to build mitigating processes.

I’ve seen organisations introduce 80% engineered products by business model design, as they need the usage feedback to finalise the engineering. Other organisations aim at a near 100% engineered product, only to discover their products are used in unforeseen contexts leading to post-GA modifications. And in the digital age I see more and more organisations enhancing product capabilities of physical products by ‘selling’ software upgrade options.

Where is my Installed Base?

All variants share a common premise: you need to have installed base visibility as well as an accurate as-maintained BoM to be able to manage your engineering changes effectively.

To illustrate this, I’ll give an example on the other end of the spectrum. If you don’t know where the affected products are, and you have a compliance obligation to reach out to the product/ asset owners, you can only go public … and that is not good for your brand image … as many car manufacturers and food companies will confirm.

In our Global Customer Transformation (GCT) practice we often see a hybrid. Some units sold have an associated warranty and/ or service contract, other units are not visible because they are sold via an indirect channel and/or the owner does not want to be visible. What engineering change managers need is a ‘workbench’ to create a near-complete installed base from multiple data sources.

Now we have a near-complete installed base, we can filter on model ABC with a commissioning date between 2011 – 2013. 

Spread the Wealth

A common characteristic of engineering changes is that they tend to come at an inconvenient time, on top of the existing workload. What potentially complicates things is the combination of a) the availability of replacement parts and b) the customer expectation to be first in line.

Let me give you an illustration that reveals my age. In 1989 Intel launched the 80486 processor. High-end customers upped the specs of their PC’s with the 80487 co-processor. Then a researcher detected a mathematical flaw in the co-processor. Immediately people wanted a replacement. The supply chain was stocked with the flawed 80487 revision 1, whilst Intel had to ramp the production and shipments of revision 2. In analogy to Covid-19 vaccinations you can imagine this became a puzzle of priorities and constant shifting plans.

In our GCT practice we talk to Engineering Change Managers. They receive so called product bulletins on a regular basis. And each time they need to make decisions on when to launch an engineering change campaign while weighing brand image, quality and cost. And once they have launched a campaign, they want to know the progress. But the most asked ‘feature’ by Engineering Change Managers is the ability to adapt the priorities in a campaign based on progress, the amount of ‘wealth’, the voice of the customer and the impact on existing SLA & Contract commitments. Regarding the latter, I’ll dedicate my next blog on Engineering Change prioritisation strategies. 

Digital EC’s and Retrofit Kits as Upsell and Lock-in instrument

I’d like to change the ‘energy level’ of the conversation. Engineering changes are not always negative from a quality, financial or brand image perspective.

There is a limit to the number of mechanical and electrical changes you can make to a product post commissioning using Retrofit Kits, but more modern products have an ever-growing digital component. Digital engineering maturity continues post commissioning.Do you own a Sonos sound system, a Tesla, a digital press? The physical product you bought remains the same, while over-the-air digital EC’s deliver a steady stream of new features and enhancements. Whether your organisation uses this EC-stream for lock-in purposes or upsell revenue, at the core you need an asset centric infrastructure with comprehensive engineering change capabilities.

This article is published in ServiceMax Field Service Digital on March 2nd, 2021