2005 Articles
September 07, 2005
Manufacturing Business Technology Magazine - Use readily available apps to lift margins through service
Manufacturing Business Technology Magazine
Manufacturers are struggling to find high-margin niches where they can continue to compete against low-cost global competitors. Some say services are the answer, particularly for complex or technical products. While margins and prices on manufactured goods drop, those on services continue to rise. Many aspects of service are more difficult to perform offshore, with the need for speed, and possibly placing employees on-site.
Services can be lucrative, but successfully providing them takes some out-of-the-box thinking, and new processes and software systems. Companies must first decide what types of service customers might want, ranging from basic, such as installation, training, spare parts and call-center support; to more ambitious, such as field service, depot repair, and systems integration; to high-value risk reduction, such as preventive maintenance, or running an operation for the customer.
Based on the range of services companies might provide, the software functions needed are quite diverse as well. To establish a help desk or call center, a number of CRM systems will serve. Some CRM providers, such as PDSC, are focused on service. However, call-center operations don't tend to provide significant added margins.
Service parts management or inventory optimization can be critical to maintaining a strong brand for manufactured products, whether the company provides service itself or works with partners. Having the right parts available for service is problematic because new production takes priority over service parts for most manufacturers. Companies such as GAINSystems, i2 Technologies, MCA, Servigistics, and Click Commerce—through its acquisition of Xelus—offer service parts inventory optimization.
Dramatically higher margins come from services that reduce risk for customers. Field service is one example, and a common focus of service management software. The main functions tend to be managing incoming calls for service, and scheduling technicians and the resources they need to perform that service. Providers include Click Commerce, Dexterra, FieldCentrix, FieldPoint, Metrix, Nexterna, ServicePower, ServiceBench, and Wennsoft.
Companies that want to provide higher-value service may find enterprise asset management systems can help them develop a business that supports equipment at customer sites. Datastream, MRO Software, Indus International, and a number of ERP vendors offer solutions that support preventive maintenance and shorter mean time to repair.
There are other broadly functional systems that support nearly any mode of service—i.e., systems that support companies as they grow their service offerings. Broad service management systems are available from ERP players including Cincom, IFS, Oracle/PeopleSoft, and SAP; stand-alone players such as Astea; and add-ons to ERP such as Single Source with Sage, and Infor and Wennsoft with Microsoft Business Solutions.
Manufacturers must first learn how to listen to customers about what services would add value, and then design offerings as appropriate. Service needs are different from production. Companies must have appropriate processes and specialized software to support those processes. With that foundation, a new business line with higher margin potential opens up to bolster manufacturers' success.