The Uptime Blog
A new report from Gartner indicates that e-commerce is the hot new trend in discrete manufacturing. The report says that, “E-commerce can be used for the direct sales of new products, services, digital goods/ content, replacement parts, accessories, entertainment, travel and much more.” Three items stand out in this list: services, replacement parts and accessories. Each of these items represents a new sale related to an existing product or piece of equipment (already owned by an end customer). In other words, e-commerce is changing the aftermarket.
Manufacturers typically start down the e-commerce path by implementing a few limited, tactical projects. Once there has been some success, initiatives get bigger and more strategic until e-commerce is ultimately viewed as a “mission critical” component for the entire business. According to Gartner, e-commerce is now viewed as an imperative for discrete manufacturing and to meet corporate expectations a consistent approach, across all departments, is required.
For discrete manufacturing, the Gartner report describes two business opportunities that are driving e-commerce: 1) create direct sales to counteract competitors and private labels; 2) reduce the cost of sales and marketing activities/ materials (printing and distribution). Gartner says, “…interest by both groups [revenue and cost] in online selling may have started with the sale of spare parts or accessories, and the groups are now moving on to selling the products.” In other words, allowing dealers and technicians to place online orders for service parts has proven to be so efficient and so valuable that OEMs are now opening up e-commerce to more products and additional customers. Gartner’s findings reflect a similar trend that Enigma sees where customers follow a multi-phase approach to making product, service, and parts information available online, offline and mobile.
The Gartner report tries to measure the interest in e-commerce for discrete manufacturing according to three different dimensions of business impact:
- High heat—reflects the level of interest observed during client inquiries and market analysis
- High rate of change—described as, “how fast organizations are changing their websites to improve the amount of sales coming through the websites”
- High customer-facing business potential—described as, “the degree to which an organization’s customers expect a company’s website to offer online transactional capabilities and their willingness to buy through the Web”
As the report from Gartner clearly indicates, more and more industries (like discrete manufacturing) are turning to their websites for increased revenue, reduced cost and better customer support. Enigma has 20 years of experience helping companies turn the promise of e-commerce into a reality and a recent webinar on electronic parts catalogs (EPC) freely shares the lessons we’ve learned over that time.
Tags: parts and service, service information, field service, customer support, FTFR, Interlog, parts logistics, parts ordering, No Fault Found, Enigma, John Snow
How can OEMs reduce inventory and logistics costs? That was the question being asked at Interlog 2012 (in Dallas) and most presentations focused on either improving logistics or on the importance of customer satisfaction. Unfortunately, these discussions were fairly process oriented, which made them more tactical than strategic. The inventory and logistics conversations revolved around optimizing inventory levels, safety stock and fill rates while the customer satisfaction conversations focused on improving fix first time (FFT) rates (service quality). However, none of the presentations discussed whether or not there is a connection between the two, which raises an interesting question, “Does the pursuit of higher service quality drive up inventory and logistics costs?”
This is not an idle question, it came directly from a conversation I had with a VP of Support Operations. His company partners with various third-parties to service their equipment in the field. To ensure customer satisfaction, technicians get bonuses if they achieve certain FFT levels. However, he’s starting to wonder if FFT bonuses are prompting technicians to order more parts than necessary (driving up returns and re-stocking fees), to perform “pop and swap” maintenance (resulting in more parts with no fault found (NFF)), or to pursue other short-cuts that improve FFT but ultimately drive up costs. To that end, he's been trying to monitor technicians in the field to see if they’re using the proper service procedures before starting a repair.
From our conversation, it’s clear there are three distinct inventory and logistics problems related to field service: ordering the wrong parts; ordering too many parts; replacing “good” parts. Each of these represents a type of misorder. However, none of these misorder problems can be fixed by inventory management systems, which was the primary topic at Interlog. Misorder problems can only be solved by the technicians—giving them better tools that provide accurate service and parts information, configuration-based bills of materials (BOMs), and integrated workflows (tied into ecommerce, inventory and logistics). When service technicians are basing decisions on poor data, or when they have to search for the information they need, is it any wonder that inventory and logistics costs increase?
According to the companies I spoke to, service organizations that focus on quality see a clear pattern emerging:
- Technicians pack more parts than needed to fix a job (over ordering).
- Any extra parts are saved by the technician for future use (trunk spares that can’t be easily tracked as inventory).
- Technicians try to accelerate repairs by replacing different components one after the other until the problem goes away (pop & swap).
- Rather than determine the faulty component, each replaced part is returned to the OEM and tested to identify which one(s) failed (or determine NFF).
- NFF components are processed and returned to inventory (re-stocking fees).
In other words, as OEMs offer FFT incentives technicians are responding by ordering too many parts, stashing them locally, ignoring repair procedures, and replacing perfectly good components…all without any repercussions for their actions.
Enigma believes that improving service quality is critical to our customer’s success however, the methods used to raise quality levels are important. Recognizing that the service and parts business is essential to OEM profits, OEMs need to move beyond customer satisfaction via simple FFT bonuses and start asking better questions. To get an objective view of their aftermarket business, OEMs should be:
- Tracking how many parts are requested for each customer, for each type of equipment, for each service visit, for each service organization, for each service technician.
- Tracking NFF rates for each customer, for each type of equipment, for each service visit, for each service organization, for each service technician.
- Tracking the number of parts requests and service calls where all returned parts were "good" (all NFFs), all returned parts were "bad" (no NFFs), one or more returned parts were NFF (judgment call).
- Tracking which service organizations and service technicians are using approved service procedures.
- Tracking which service procedures or part selections are causing the most difficulty for technicians (without resorting to surveys or feedback from the field).
- Monitoring differences in how technicians approach corrective maintenance vs. preventive maintenance.
These are just a few of the key performance indicators (KPIs) that help uncover problems within aftermarket service and support. OEMs that know some of these numbers can start to ask the next question, which is “what to do about it?” However, capturing an accurate picture of field service doesn’t come from technicians filling out post-service reports and surveys; it comes from monitoring the actual tools that technicians use to perform their jobs.
To maximize customer satisfaction and minimize support costs, OEMs need to continuously improve service quality while simultaneously reducing inventory and logistics costs. New tools are required that not only report on the situation in the field, but also provide an integrated system that improves the technician’s performance as they execute service and support.
If your company is facing service and parts challenges, contact Enigma. We can help.
Tags: MRO, Airbus, aviation, Boeing, technical documentation, ATA, S1000D, SAP, PDF, Tablet, Enigma, John Snow
Last week, the Danish Defense Forces sponsored SUGAIR 60 in Copenhagen, Denmark. The SAP Users Group for Airlines (SUGAIR) is a bi-annual conference for experts, executives and managers of MRO operations in the airline, aerospace and defense industries. Enigma was invited to describe the challenges associated with moving to the S1000D data standard and to discuss the opportunities for tablets in the hands of technicians. It was also an opportunity to update SUGAIR members on the SAP-Enigma integration strategy. (The deep integration with SAP has made Enigma the de-facto standard for delivery of technical information in SAP projects for A&D.) SUGAIR 60 had an impressive list of airlines and defense organizations in attendance and the feedback Enigma received was very positive.
SUGAIR attendees found the S1000D discussion very enlightening. The audience came to realize there is a lot of cost and effort required when implementing a functional S1000D environment; more than previously understood. Many of the “features” touted by S1000D vendors and consultants require custom implementation because OEMs (Boeing, Airbus, et al) have implemented the standard in different ways. (New standards often seem to make matters more complicated, as vendors try to establish or retain a perceived competitive advantage.) The attendee’s reaction reflects the concern expressed by airlines at last year’s Aviation Week MRO IT in Chicago. It turns out that because certain S1000D attributes are considered optional, or vary by OEM, most airlines and MROs won’t be able to reap the benefits of S1000D without a customized solution. However, Enigma did demonstrate some of the potential benefits of S1000D including:
- Fault isolation decision trees – dynamically generating the next information set based off the technician’s inputs, and recording the user’s path to feed a symptom/resolution knowledge base
- Truly interactive maintenance operations – where each maintenance step performed is passed back to the system of record
The next topic generated a huge amount of interest, which is the ability to make PDF data behave like XML...no conversion required. Enigma demonstrated the extraction of text fragments from PDF documents and the dynamic (on-the-fly) creation of job cards based on that PDF content. Furthermore, Enigma demonstrated the ability to link back and forth between XML and PDF documentation so that PDF functions essentially the same as XML. Given the amount of PDF that resides in aviation technical libraries (and the amount of PDF continues to grow) this capability helped many in the audience wake up to the opportunities to leverage existing data (without a complete data conversion initiative).
As in the past, the topic with the greatest “cool” factor was Enigma’s discussion and demonstration of a tablet-based solution. This is not a special tablet-only implementation of Enigma; it is standard InService® MRO using style sheets that have been tailored to the unique requirements and capabilities of a tablet device. The demo showed how single source access to the complete technical library can support routine maintenance as well as non-routine maintenance disposition and correction, and seamless, enhanced maintenance turnover events. By this point in the presentation, Enigma had run over the allotted time but the attendees readily offered more time to complete the demonstration/discussion.
For many attendees, the social highlight was a boat tour of the canals around Copenhagen, which was sponsored by Enigma. It was a great opportunity for members of SUGAIR to connect in an informal way, and for the many defense and airline organizations to get acquainted and compare notes.
Throughout the three-day event Enigma reinforced the strong bonds we've developed with many SUGAIR attendees, and we extend a heartfelt thank you to the members of SUGAIR and to the Danish Defense Forces for their gracious hospitality. Enigma believes that participating in SUGAIR 60 allowed us to help solve today’s (and tomorrow’s) aviation maintenance challenges, and from the feedback we received the airline, aerospace and defense attendees gained valuable insight for how to leverage SAP and partner technology to create success.