Service effectiveness
“A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large,” Henry Ford said. Decades later, many companies are still struggling to heed his advice.
For many of the world’s largest automotive and commercial vehicle companies, aftermarket service and parts operations essentially define their business. Some companies have built the reputation of their brands and their business models on the back of excellence in service and parts management.
Service effectiveness in uncertain times
In these uncertain times where “cash is king” there is a shift of attention to further optimize and exploit the full potential aftermarket business can bring to a company’s profit margin. Deriving more value from your service parts supply chain is becoming more important than ever.
In these turbulent times, there are several key challenges in the service industry which require full attention:
- Realising that by having the right focus on service effectiveness, companies are able to provide better service to the market AND also benefit from excellent margins.
- The service transformation: moving from traditional, product oriented organization, towards service oriented companies, with a clear distinction between their normal operating business, and their service business.
- A stronger focus on costs requires decrease of inventory levels, yet without jeopardizing customer service.
Service effectiveness improvement potential is huge
Improving the performance of your business can significantly boost aftermarket revenue, profitability, and cash flow. Plus, a well-run service business can improve customer relationships and loyalty by ensuring that customers get the services and parts they need, at the right time for the right price.
Industry trends suggest:
- Service is becoming more profitable than sales. For many OEMs, the profit from after sales service can be four to twenty times greater than the profit on the sale of the manufactured item.
- For computer service, medical equipment and capital equipment manufacturers, it is estimated that optimized service delivery can add 20% to revenue over a three year period.
- Field service is becoming an increasingly important component of a customer-facing strategy. Service technicians spend 40-60% more time with customers than a typical sales representative and they are viewed much more positively by the customer.
- Field service organizations are substantially under developed.
Service management also presents the opportunity to collect important customer information to gain access to the competitive install base of products at customer sites, and to cement customer relationships. These key details can be leveraged and used for competitive advantage.
Unfortunately, most service organizations have been unable to achieve high enough quality and efficiency to capitalize on these opportunities; however, this situation is rapidly changing.
Service Transformation is most effective when a holistic approach is taken. The Service Effectiveness practice incorporates Supply Chain, Logistics, CRM and Human Capital practices to provide this holistic approach.
Where can we support?
To help you reap all the rewards the service industry has to offer, Deloitte's Service Effectiveness Centre of Excellence provides expertise and innovative solutions in the following domains based on a wide range of projects and clients that Deloitte is serving in various industries worldwide:
- Service parts planning and Inventory management
- Warranty
- Warehouse management
- Order Management (including Claims & Returns)
- Service parts pricing
- Field Services Support
- Service Business Organizational Transformation
Alliances
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