The Uptime Blog
Aircraft Commerce held their Airline & Aerospace MRO & Operations IT Conference—APAC in Singapore this week. It was the second year that the publication has hosted part of its MRO conference series in Asia; last year’s event was in Bangkok. It seems the change of venue was a wise move, as attendance this year was considerably higher. More than 30 airlines and MROs sent delegates (except for the Chinese airlines, who seem not to attend these events unless they are held in the PRC). Floor “traffic” throughout both days was lively and the conference proceedings were also well attended.
Many of the speakers talked about the importance of “data cleansing” and the “data integrity” in the various MRO IT systems. Sharhabeel Lone of SAKS Consulting opened the proceedings by highlighting “key strategic mistakes in MRO technology implementations”, and provided examples of failures in this domain and their consequences (a news item about a CFO losing his job due to an IT systems glitch drew some audible gasps from the audience). The fact that he kept returning to the obvious need for “clean data” might have seemed unnecessary to an IT crowd, but it says a lot about the persistence of this problem in MRO IT implementations.
A different, and also well-known issue, came up in the case study presented by Cathay Pacific, who presented their lessons learned in the implementation of an MRO IT system (Ultramain): the crucial need for proper management of process change. A survey conducted after the system went live found that many engineers were having a hard time adapting to the new way of working and found “clever” ways to continue working as they were used to. Some were exporting data from the new system and using it in “private” databases and spreadsheets. Insufficient and inadequate change management procedures are another obvious trap that everybody keeps talking about but many keep falling into.
But the presentation that most caught my attention, and not in a positive way, was the one given by InfoTrust Group’s VP of Sales, Jason Duffey, who spoke about the new documentation standards: S1000D (for technical publications) and Spec2300 (for flight operations). Mr. Duffey lauded the new standards as “consolidating” existing standards and enabling airlines to re-use and distribute content as they please. S1000D in particular was portrayed as heralding a “new age” in the industry, one in which airlines will be free to do as they please with technical documentation. Documentation nirvana is just around the corner.
When the time came for questions from the audience two people spoke up. The first, a representative from Lufthansa, asked how the new standards would set the airlines free, especially when OEMs are forcing them to use proprietary viewers. He went on to question why the OEMs won't provide the data in standard formats that allow airlines to make real use of it by integrating into their IT systems. (As an example of this policy, he mentioned the A380 content, which may only be viewed with Airbus’s application and incorporates tags in a way that cannot be re-used by Lufthansa.) The second comment came from a software vendor who asked (sarcastically) how one could talk about “consolidation” of standards with S1000D when technical documentation for all existing aircraft will continue to be provided in ATA iSpec2200 (or older standards) and PDF for decades to come; only new aircraft (B787 and A350) will use S1000D. Mr. Duffey could only concede that he agrees with this statement. If most aircraft rely on data that is not S1000D compliant, and new aircraft use S1000D data that cannot be integrated with existing IT systems, then where exactly is the “huge business benefit” for the airlines?
These two comments highlight the problematic situation in which airlines and MROs find themselves as a result of the OEMs’ anti-competitive policies regarding technical publications. Instead of allowing the airlines to make best use of the technical content for their MRO operations, Boeing and Airbus are adopting policies that restrict airlines by forcing them to use proprietary systems that limit airlines' IT choices and infringe on their ability to realize technological advantages and savings. Airlines are thus unable to leverage the wealth of information contained within their current technical publications to enhance their maintenance operations: work scheduling, job card generation, parts list synchronization, inventory cleanup, etc.
While this may not seem like a major issue for a small, single-fleet airline, it is. Airlines that get “kidnapped” by the OEMs will find themselves with few options when it comes to reducing maintenance costs, optimizing inventory and sourcing alternate parts (PMA). This trend can already be seen as Boeing has become a competitor in aftermarket MRO (see Boeing Shanghai) and their S1000D policy will further reduce the ability of independent MROs to develop efficiencies that are possible only with proper data ownership. This seems to be an effort on Boeing's part to take MRO shops out of business and to compete directly with airline maintenance organizations. In the words of the Lufthansa representative: “this is a disaster for the airlines”.
It will be interesting to see how this plays out between the OEMs and the airlines/MROs. Hopefully, the strong message that came out of this conference—that “content is king” when it comes to successfully implementing MRO IT systems—will prompt the airlines and MROs to adopt a more independent approach vis-à-vis the OEMs and take control of the content that shapes and determines the efficiency of their maintenance operations.
Field Service Management is a crowded technology field, and there’s much ado about the importance of scheduling service calls to improve first-time fix rates (FTFR). “The Hidden Costs of Low First Time Fix Rates,” a blog post by a company called Conductrus, chimes in on this topic. Conductrus cites some statistics from an Aberdeen Research report: “…best in class service organizations achieve a first-time fix rate of 86% compared to 58% for all other organizations.” The blog author goes on to write: “By using Conductrus you can be sure to send the right talent to the right place at the right time, increasing your first-time fix rate and saving your company thousands of dollars.”
Of course we would agree that improving FTFR would save money; being able to fix a machine on the first try means that the service technician can move on to other service calls, generating more revenue for the company. But service scheduling is a tough way to solve a low FTFR problem. The Conductrus approach wrongly assumes three things:
- Managing the schedules of expert technicians is the key to improving FTFRs.
- Field service organizations have enough pools of available “talent” (people with particular levels of experience and certification) who can be dispatched to handle specific types of service calls.
- Customer support is able to properly diagnose the customer’s problem and select the appropriate “talent” to send to each service call.
The problem with these assumptions is that field service is an unpredictable business; the onsite inspection might present a completely different diagnosis, root cause or other unscheduled maintenance requirements. Therefore, the real solution is to empower every service technician with the right information so he can perform like an expert. We’ve written extensively on the topic of first time fix rates and have pointed out that providing accurate, updated service and parts information to the field technician significantly improves FTFR. Analysts and consultants, including IDC Manufacturing Insights and Carlisle & Company, have also emphasized this fact in their blog posts.
What good is it to get a technician to the service call if he doesn’t have the right parts and service information at his fingertips? Even service technicians with “the right talent” can’t fix everything if they don’t have updated/accurate parts and service information. Electronic parts catalog technology makes it possible and practical to assemble and publish the latest information out to dealers/distributors/field technicians, via the Web or incremental DVD updates. A good EPC will provide a variety of functions, including troubleshooting (for unscheduled/break-fix events), parts identification, parts ordering, configuration management/feedback, service bulletins, best practices documentation, subject matter expert collaboration, closeout notes, compliance notes, etc.
It’s largely up to the OEMs to provide updated service and parts information to their field service and/or dealer network. You might ask, why should they bother? Many of them don’t make money directly on service, so why would they care about FTFR? Because when a machine can’t be fixed quickly, the brand name suffers as much as the service company that fixes the machine. (Maybe more, since it’s hard to hate the guy holding the wrench.) The bottom line is, improving FTFR increases customer satisfaction, but it’s not about scheduling the right people, it’s about providing the right information.
A recent blog post by Carlisle & Company highlighted an interesting problem for automotive OEMs and their dealers; they’re competing against independent repair facilities (IRFs) online and in the social media outlets, and they’re losing.
Carlisle & Co. wrote: “The internet is the next consumer “service” battlefield, and there seems to be only one army out there. Social media and third-party sites are foot soldiers and mercenaries of the independent service and parts providers.”
The blog discredits many of the consumer-oriented review sites that are out there, providing some good reasons and evidence for their indifference. In a nutshell, the blog says that John Q Public thinks dealers are more expensive than IRFs, and John Q Public rails about it publicly—and inaccurately—all the time on the numerous consumer review sites. The blog argues that the facts are on the side of OEM-franchised dealers (i.e., it’s more effective to have your car serviced by a well-trained, well-equipped, dealer-certified service technician); ergo, dealers and OEMs should be using the internet more effectively to proclaim the truth and defend their turf. That’s one reason why Carlisle & Co is hosting its Digital Summit this week (October 15), which will discuss how dealers and OEMs can leverage the Web and social media to drive both business and customer satisfaction.
The Carlisle & Co. blog post makes many recommendations, regarding marketing tactics (SEO & SEM), consumer education, lobbying, and providing useful content on their sites, etc. From Enigma’s perspective, we are especially intrigued by the blogger’s advice to provide “Sticky Content.” The writer states: “Customers only return to websites that provide robust information that has high quality broad-based utility and provides simple, tangible value. It has to be at the top of the list of places-to-shop. It needs to be the portal to OEM owner centers, vehicle shopping sites, service parts information, recall notices, user manuals, service intervals … and much more.”
OEMs/dealers own vast reservoirs of parts and service information; is Carlisle suggesting that service and parts info should be broadly distributed to consumers as well as dealers? If so, this might be a welcome second step towards improving customer satisfaction. But this raises another question: how many OEMs can confidently say that they have taken the first step, which is to effectively create and distribute updated parts and service catalogs for their dealers, never mind publishing some of that information for John Q Public? The technology to create and distribute parts and service information is already available. (Full disclosure; Enigma provides electronic parts catalogs for automakers including Ford and Volvo.)
We commented before on an earlier Carlisle blog post, which reported that in a survey of 9,000 dealer fixed operations managers on the subject of OEM support, the lowest scores were for technical support. We say the solution to improve technical support is to automate delivery of updated service/parts information and to easily integrate that content with existing parts inventory and service management systems. This is the type of system that has allowed our OEM customers to improve dealer support—increasing service bay throughput by 12-18%. We all know that equates to more revenue per service bay (happier dealers) and faster service (happier car owners). Though it’s true that some dealerships already provide faster, better service compared with IRFs, they can improve even more in this category by having more accurate, easy to use parts catalogs at their fingertips in the service operation.
Perhaps sharing some service information more broadly, via the Web, with aftermarket customers would build customer loyalty. Hopefully most OEMs are already invested in the first step, which would be making sure that their dealerships have accurate, updated service information. Then they would have an easier time of transferring some of that information to the public Web sites. We realize that “sticky content” is just one item on the long list of suggestions from Carlisle & Company, but if OEMs and dealers can successfully promote it, it might help win over the John Q Public reviewers and their followers in the social media sphere.
“Software as a service (SaaS) -based content delivery offers product companies and service organizations a cost-effective way to disseminate better and timelier information to the field.”
A recent blog post by IDC Analyst Sheila Brennan (“Service Information Delivered as a Service Improves Quality”) validates what we’ve been saying about the importance of getting accurate service and parts information out to the field. In her blog post Brennan echoes our thoughts:
- It pays to pay attention to the aftermarket; companies can (and some do) make a lot of money on parts and service; Brennan backs up this argument with an interesting stat: “47% of Caterpillar's $32 billion revenue in 2009 was from sales of parts and services.
- Technical information is important for providing excellent service, to maintain brand image and capture market share.
- Delivering the most up-to-date, accurate and configuration-specific service and parts information to technicians in the field reduces costs.
- Without detailed technical information, service operations suffer from low first time fix rates (FTFR) and high no fault found (NFF) rates, which increase not only repair time and cost but also spare part inventory related costs.
- There’s great value in offering parts and service information via The Cloud, or in a SaaS-based offering. It’s good to see that others recognize the value of software-as-a-service (SaaS) offerings in this space. There are not many to choose in this category: Enigma’s SaaS EPC solution is one of just a couple of them out there. The benefits of a SaaS offering appeal especially to the SMB market because it improves customer and dealer support with minimal impact on back-office IT resources and budgets, and reduces server hardware and maintenance costs. Brennan predicts that more companies will embrace Cloud-based content as the market and technology matures; we agree.
On the subject of aftermarket service/support, Brennan’s post hits the proverbial nail on the head. The facts speak for themselves, in sync with what we’ve been saying for a very long time. But don’t take our word for it; read Brennan’s blog post here to get the perspective of an independent analyst.