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Michael Blumberg, President, Blumberg Advisory Group, reflects on the seven most crucial considerations for service managers tasked with driving additional revenue in today’s market...

Revenue growth is probably the single most important objective for executives who are responsible for managing their company’s field service organisation (FSO) as a profit center or strategic line of business. “I want to double my service revenue in the next 3-5 years” is an incantation that I hear constantly from business owners and executives.

That equates to a 20% or more growth rate per year.

Sure, this type of growth is easily achievable if the market is growing at this rate or faster. I’ve found that these high growth targets are often triggered by management’s desire to take back market share from competitors or increase the share of service revenue contribution to overall corporate revenue.

While high revenue growth in a mature or declining market is difficult, it’s not impossible. A little work is usually required to achieve this type of performance.

To understand where the emphasis is needed, let’s look at where service market programs may fall short:

#1 - Service Portfolio not meeting customer needs:

Quite often service providers fail to meet their revenue objectives because their service portfolio is no longer meeting customer requirements. In other words, they have failed to offer services tailored to their customer needs. For example, offering only next day response when customers require same day.

#2 - Pricing not optimal:

If service revenue is flat or declining, a service provider might want to look at their pricing strategy and tactics. Perhaps their service prices are no longer competitive.

On the other hand, they may be underpricing their services in relation to the value they provide.

#3 - Failure to understand competitive threats:

Many service providers, particularly those that are divisions of manufacturers, fail to understand the competitive threat of third party maintenance (TPM) companies and/or in-house service providers.

For example, they often under estimate the value that TPMs provide to their customer and/or fail to develop an effective value proposition to compete against them.

#4 - Failure to articulate value:

The single biggest reasons why customer don’t purchase service agreements is because they don’t understand their value. An FSO must ensure they have clearly articulated the value of their service offering to current and prospective customers.

Do customers the cost of downtime or the pain points that their services help solve?

It is important that FSOs not only articulate value to their customers but also make sure that their sales people understand it and sales people are provided with the appropriate sale aides and marketing collateral to support it.

#5 - Lack of communication & follow-up:

One way to increase service revenue is by improving contract renewal rates.

These rates often decline though lack of consistent communication and persistent follow-up about the value of services provided, when contracts are up for renewal, special incentives for renewing, and information on when they are about to expire.

Customers are likely to forget about their experiences even if they are positive ones after 30 days. That’s why it is important to follow-up once a month.

#6 - Not asking for referrals or testimonials:

A recent study by HubSpot, a marketing automation software provider, found that 85% of companies who achieve year over year revenue growth do so because they ask for and receive referrals from their customers. Referrals are the best and least expensive source of generating new business.

The problem is most FSOs forget to ask for them. Remember customers speak to each other. They may be involved in the same networks and trade associations, or call on each other for advice and guidance. Why not enlist them in your business development efforts, even if it is to influence their peers in other companies who already know about the services you offer.

#7 - Lack of customer appreciation:

Your customers will remain loyal to you and purchase more from you when you let them know how much you value and appreciate them.

It’s the simple things like a courtesy phone call/visit, thank you card, small gift (i.e., rewards program), or exclusive offer that let them know you value their business. These seven focus areas have one thing in common, they all benefit from market research.

Whether its information that will help redesign a service portfolio or modify pricing, market research provides an unbiased and unfiltered perspective on what customers are thinking and doing. More importantly, market research, when designed effectively will uncover valuable market intelligence that may not have otherwise been captured from a sale’s call or courtesy call made by a company executive.

By implementing all seven approaches to revenue growth, as outlined above, on a highly disciplined and consistent manner, an FSO can expect to achieve a 30% to 120% increase in sales in just one year alone.

 

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In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

In the first instalment of this topic our experts answered the question "It is often said service technicians are the greatest salesmen – what are your views on this?" the second time out the question was Is there a difference between selling service and selling products? and last time around the answered the question Is incentivising service technicians to “sell” opening up new revenue streams or putting their “trusted advisor” status at risk?

Now for the final question of this important topic...

 

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What impact does the rising uptake in outcome based services have on the relationship between service and sales?

 

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Selling outcome based services requires greater collaboration and communication between service and sales than ever before. Service needs to understand and support the solution that the sales force crafts for the customer.

The sales force needs to have a clear understanding of the capabilities of the service team to craft the right solution.

Basically, service and sales must work as a team. In addition, the service organisation must be proficient at sales so they can add-on additional services to better meet outcomes as these opportunities present themselves.

 

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Outcome based services require one of the most sophisticated sales processes as the deliverable is a business outcome, not a well-defined ‘thing’.

Hence the whole process of defining the outcome and configuring a profitable delivery model is very different from a transactional product based sales process. The implications of switching to outcome based business models will challenge almost every aspect of the organisation in terms of mind-set & culture, skills & capabilities and processes & tools.

As the service organisation is such an integral part of the commercial success, it must be closely involved in the sales process from two perspectives. The first is to ensure that within the co-creation process that a delivery model is developed which profitably dovetails into the customer’s operations.

Secondly and probably more importantly, during the sales/co-creation process , to have people within the discussion that convinces the customer that you are the right business partner to deliver an outcome based contract.

 

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In outcome based services, the service company generally is providing an agreed to outcome for a set fee and therefore takes the risk for delivering on their promise at a cost that they can profit from.

Any recommendations for improvements in delivering on that promise more effectively will typically benefit the service company rather than the customer. In these cases, therefore, the results of the field service professional’s efforts are internally focused.

Sales, however, remains externally focused. Their role is to bring more opportunities to the service organisation.

Therefore, the relationship between service and sales can be summarised as follows: In outcome based services, sales is responsible for generating the top line revenue by increasing the number of contracts whereas service is responsible for enhancing the profits on that revenue by improving their efficiency at delivering on those contracts.

 

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In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

In the first instalment of this topic our experts answered the question "It is often said service technicians are the greatest salesmen – what are your views on this?" and the second time out the question was Is there a difference between selling service and selling products?

and now onto the third question of the topic...

 

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Is incentivising service technicians to “sell” opening up new revenue streams or putting their “trusted advisor” status at risk?

 

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Technicians represent a ready and available channel for generating incremental service revenues.

After all, they are at the customer site almost every day.

However, service technicians may become over-zealous or pushy about selling, and jeopardise their “trusted advice” status, if they lack proper sales training or if their performance measurement system and company culture are too focused on sales.

 

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A sales professional is a very different person from the service expert in terms of how they think and what motivates them. The service person is more motivated by relationship and recognition of their skills and it is this that allows them to develop the trust-based relationships that make them so special from a commercial perspective.

Companies should use this relationship to increase value, but be aware that as soon as the balance swings from supporting customer success to earning a sales commission, this trust immediately evaporates. To be successful, the question of incentives is critical yet very contextual to the business environment and company culture. Rarely is sales commission the answer as service peoples are not typically sales animals.

Usually having incentives through management objectives or even reward and recognition will encourage the desired behaviours without risking the Trusted Advisor relationship

 

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I am very wary about incentivising service professionals for making recommendations. When we provide commissions or other forms of compensation for selling services to the customer, it sends a message that promoting a service to the customer is an act outside of their normal job.

We are asking them to provide “something extra”. It’s the “while you are there” approach. If making recommendations that will benefit the customer are perceived as an “add on” activity, then this suggests that service professionals can opt out. As I indicated above, I see promoting services as a service itself and therefore as much a part of the job as everything else that they do. Incentives can also encourage the field service professional to make recommendations for the wrong reasons (to get the commission as opposed to acting in the best interests of the customer).

Evidence also suggests that incentivising can actually discourage the type of behaviour it was intended to boost. Daniel Pink’s book Drive – The Surprising Truth About What Motivates Us (New York: Riverhead Books, 2009), provides a wonderful and often counter intuitive account of the impact of extrinsic rewards on employee performance.

Finally, what if the customer asks? What does the field service professional tell their customer if asked if they are getting compensated for make the recommendation? The customer may feel uncomfortable if the technician answers yes. How would you feel if you found out that your auto mechanic was commissioned on all parts sold?

 

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Look out for the final part of this series when we ask our panel "What impact does the rising uptake in outcome based services have on the relationship between service and sales?"

 

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In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

In the first instalment of this topic our experts answered the question "It is often said service technicians are the greatest salesmen – what are your views on this?"

and now onto the second question of the topic...

 

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Is there a difference between selling service and selling products?

 

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Yes, there is an enormous difference.

Selling products requires the salesperson to focus on the form, fit, and function of the product and how it meets the customer’s needs. Selling products is about selling the tangible.

Selling services requires the salesperson to focus on how the service can help the customer solve a problem, improve their situation, or achieve a better outcome.

More importantly, it is about selling the intangible.

 

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In general yes, but not always.

If a service is very tightly defined in terms of the value proposition and delivery, then it can follow a very similar feature/benefit selling process of a product. In other words selling against a tightly defined customer specification. An example of a service sold in this way might be an extended warranty.

The difference comes when the customer need is less well defined. Here the selling process moves towards addressing a business problem and involves an element of co-creation between the customer and supplier.

The more co-creation that is required, the more business orientated the discussion becomes. Not only is the sales process very different in terms of the discussion and detail, but also the management level at which the decision maker sits tends to be more senior. So yes, the more co-creation is required, the greater the difference.

 

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In technical terms, there is a difference between selling service and selling products. You can touch and feel a product. You can see and hear it operate. You can see the craftsmanship in its features.

Selling a product often involves helping the customer see the benefits in the product’s attributes and purchase decisions rely on both the trust built by the seller and the product’s features and track record.

A service, on the other hand, may not necessarily be seen, felt or heard. Good service may even result in the absence of something (fewer unexpected outages, less downtime or fewer complaints for example). Selling a service is more about helping the customer see the benefits of the experience the service will create for them. Success in selling tangibles depends on the salesperson’s ability to help the customer envision the experience the service will provide. Purchase decisions for services tend to rely more heavily – if not exclusively – on the customer’s trust of the seller.

In practical terms I don’t think that this difference is very important when a field service professional makes a recommendation as a trusted advisor. In most cases the field service professional has high levels of trust from both a personal and a professional perspective. The approaches that he or she uses to justify the recommendation will be the same whether product or service.

 

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Look out for the next part of this series when we ask our panel "Is incentivising service technicians to 'sell' opening up new revenue streams or putting their “trusted advisor” status at risk?

 

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In the Big Discussion we will take one topic, bring together three leading experts on that topic and put four key questions to them to help us better understand its potential impact on the field service sector...

This issue our topic is the relationship between Service and Sales and our experts are Nick Frank of Si2 Partners, Michael Blumberg of Blumberg Advisory Group and Jim Baston of BBA Consulting

So with three fantastic experts lined up lets dive straight into the first question of the series...

 

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It is often said service technicians are the greatest salesmen – what are your views on this?

 

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Service technicians bring a perspective and outlook that makes them great at sales in certain situations. For example, where the sale solves a critical problem for the customer.

Basically, customers appreciate the fact that service technicians are problem solvers and place the customer’s need first. As a result, the service technician has trust and credibility with the customer.

In turn, the customer is highly likely to act on the service technician’s recommendations. Sometimes, the only way a technician can solve the customer’s problem is by having them buy something new like a spare part, new piece of equipment, or value-added service offering.

In these situations, the sale is not viewed as a sale at all by the customer but merely as an attempt by the technician to solve the customer’s problem.

 

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To believe service technicians are the greatest salesmen is to misunderstand the true skills of sales professionals. These are people who have the skills, mind-set and drive required to identify and close new customer opportunities.

It is very different from the more nurturing and customer focused individuals usually found in field service. That said, selling is a team effort and many people are involved in to the GoTo market process. In some respect everyone sells the company and the service technician has an important a role as anyone else. Through being the person who sees the customer more than pretty much anyone else in the organisation, they are ideally positioned to advise the customer on services that can improve value, or identify new opportunities.

But playing an active role in the sales process should not be confused with the sales professional who is accountable for closing deals.

 

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I guess it depends on your definition of “salesperson”. If you mean the ability to recognise opportunities and be successful in helping the customer make a decision to purchase, then this statement is true.

Field service professionals are in a unique position. They understand the technology and where it is going. They know the equipment the customer has and what they are trying to achieve. They have proximity to the customer and generally high levels of trust.

However, I have concerns over the term “salespeople” when it comes to field service professionals.

I take the perspective that when a field service professional brings a product or service that will benefit the customer in some way to that customer’s attention, then that is a service rather than a sale. It’s part of the value that the field service professional brings. It is every bit as important as that field service professional’s ability to troubleshoot and repair.

Those field service professionals that recognise this are usually very successful because they see their role as helping the customer and the customer has confidence in the validity of their recommendations and trust in their motives.

 

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Look out for the next part of this series when we ask our panel "Is there a difference between selling service and selling products?"

 

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Whilst some were heading out to the desert to watch the likes of Radiohead and Lady Gaga at Coachella 2017 early this year, others were in Palm Springs for perhaps the lesser known but equally fantastic Field Service USA.

Field Service News sent Michael Blumberg along to talk to the USAs largest collection of Field Service professionals in one place, find to out what were the biggest challenges being faced by the industry at large and how we can overcome them...

In April this year I attended WBR’s Field Service 2017 in Palm Springs, California. While I was at the conference, I spoke to several Field Service leaders about their biggest challenges and the strategies they will pursing to overcome them.

I was expecting to receive a myriad of different answers when I first thought about asking conference attendees about these issues. After all, business executives often think their problems and challenges are unique to their specific situation. However, I was surprised to learn of the common thread that ran through my conversations with field service leaders.

 

Basically, four different themes emerged from my conversations. Rather than keep you in further suspense, let me share what I learned from my discussions:

Key challenge #1 - Keeping up with advances in technology:

Field Service leaders understand that their customers expect the same experience they do with using consumer electronic products. In other words, they expect an always on, always connected, always available service experience.

Strategy to overcome challenge - Develop & Implement an IoT Strategy:

Field Service leaders recognise that that IoT improves the customer experience in very much the same way it does with consumer electronics.

While field service leaders I spoke to agree that conceptually IoT is the right technology to achieve this outcome, they also admit that the real challenges lie in competing for capital resources to implement service led, IoT solutions and prioritizing where these investments should be made.

Key Challenge #2 - Determining which technologies enable an improved service experience:

Field Service leaders are faced with a myriad of choices when it comes to selecting and implementing technology to improve the customer experience.

For example, there’s various categories (e.g., AR, IoT, mobility, etc.) of technology to choose from as well several different vendors in each category segment.

It can be an overwhelming and taunting task to learn about every technology on the market.

Strategy to overcome challenge - Due Diligence and Planning:

Field Service leaders understand that they must adopt an objective approach to identifying, evaluating, and prioritising investments in technologies as well as vetting and selecting vendors. This means they must find the intellectual bandwidth and manpower to complete this strategic work of their organisation.

Key Challenge #3 - Keeping up with the skills gaps

Let’s face it, millennials are not lining up in droves to accept field service positions. In addition, the baby boomer generation in retiring from the workforce as a rapid rate.

As a result, Field Service leaders are under pressure to implement creative strategies to overcome the current and growing shortage of skilled technicians.

Strategy to overcome challenge - Implement Augment Reality (AR)

Many Field Service leaders perceive that AR solutions provide an effective solution for dealing with the shortage of skilled labor. By utilising this technology, field service organisations can do more with less. Basically, they can leverage the expertise of a limited number of skilled Field Engineers and distribute this knowledge remotely to a broad number of people.

Key Challenge #4 - Becoming a customer centric organisation:

Field Service leaders understand that if service business is going to thrive and grow then their organisations must become more customer centric. Unfortunately, some companies still have a product focused orientation.

They are more concerned about feature on the feature functionality of their products then the quality of service and its impact on the customer experience.

 

As a result, they are not making the necessary investments or resource allocations for the field service organisation to remain profitable and competitive.

Strategy to overcome challenge - Influence senior management on the value of service

Basically, Field Service leaders realise they must exert greater effort in influencing senior management on the benefits of becoming a customer centric organisation.

This means they need to build a strong business case as to why their companies should invest in technologies that make their companies more customer centric such as IoT, AR, FSM software, mobility, etc.

The business case must consider the impact of technology investments and process improvements on customer satisfaction, product sales, and the overall financial performance of the company.

Interestingly, the comments that I received were very consistent with the overall themes of the conference. Obviously, WBR has a good pulse on the industry.

Nevertheless, it is always great to speak to people one on one at industry conferences. I find these conversations provide so much more insight and context then sitting through a “canned” presentation.

The common thread between all these issues is that they involve the use of technology to optimise and improve field service delivery. This makes perfect sense as field service is a technology intensive business.

However, it is important that field service leaders do not fall into the trap of viewing technology as panacea for all aliments facing their organisation. The best technology is of little value without solid management, effective planning, and strong leadership behind it.

 

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Michael Blumberg, President of the Blumberg Advisory Group discusses recent research his organisation worked on with Giuntini and Company on the processes being used to effectively sell extended warranty programs and argues that if you adopt the right approach, moving from customised service contracts to selling outcome based services isn’t such a huge leap of evolution...

No one can dispute the fact that manufacturers are placing increased attention on growing top line service revenue. Typically, this revenue is captured through the sale of EW/ES programs.

Given the level of focus place on this subject by manufacturers and service providers, Blumberg Advisory Group and Giuntini and Company partnered to conduct a study among professionals involved in selling extended warranty and/or extended service programs. To qualify as a survey participants, respondents had to influence, recommend or make decisions about these programs.

The objective in conducting the survey was twofold: To identify best practices involved in marketing and selling extended warranty and/or extended service (EW/ES) programs and to evaluate the impact of these practices on key performance indicators (KPIs).

 

As field service leaders may recognise, contract attachment and contract renewal are the most important Key Performance Indicators (KPIs) associated with marketing and selling of EW/ES programs. Interestingly, we found that only a small number (less than 22%) of survey participants have achieved best in class performance metrics of greater than 50% for contract attachment or 75% for contract renewal rates.

 

The factors that drive contract attachment rates are warranty configuration and the types of marketing tactics employed.

Configuration refers to the length of coverage, level of customisation, processes engaged and resources employed in delivering the warranty, and entitlement levels offered. The survey results suggest that the more distinctions a company can make about its EW/ES program, they more likely customers will be to purchase it.

In other words, customers consider the value of a service contract before they purchase it.

This is an “eye-opener” because many companies have the view that a warranty is a warranty. The management within these companies believe that just because customers purchase their product they’ll also purchase the extended warranty.

Most of the companies we surveyed rely on traditional marketing tactics like sales aids (e.g. brochures) and direct sales to sell EW/ES programs. Usually, these tactics are employed at the product point of purchase.

 

However, companies who continue to sell service contracts after the product sale are likely to experience a 20% improvement in attachment rates on average. Other sales and marketing tactics which have proven to be effective in driving attachment rates include customer testimonials, reputation management, telemarketing (i.e., outbound sales), public relations (e.g., press releases, article placement, etc.) and analyst reviews.

 

Manufacturers who experience high EW/ES contract attachment and renewal rates understand that the activities involved in marketing and selling these programs is separate and distinct from those involved in selling products.

In other words, service leaders in these best in class companies put as much time and effort into configuring, marketing, and selling service contracts as their counterparts in the product organisation place on designing, marketing and selling products.

Effective field service leaders recognise that service won’t sell itself. They understand that just because the customer owns the product doesn’t guarantee they’ll buy the service. In addition, field service leaders in these service organisations make sure they have the right systems and processes in place to market and sell service contracts.

 

For example, processes and systems that facilitate a company’s ability to configure, price, and quote customised service contracts. While 87.5% of companies surveyed have a formal process in place to configure and price service programs, only 13% employ a Configure, Price, and Quote (CPQ) software application.

 

The trend toward customers wanting to buy outcomes as opposed to services or products will place even more pressure on field service leaders to become proficient at configuring, pricing, quoting, and selling service contracts.

While recent technologies like IoT, AI, and Big Data will make it easier for companies to deliver outcomes, manufacturers still need to provide customers with a contract that specifies exactly what is include in the “outcome” they have purchased.

For example, it defines the terms and conditions, the hours of coverage, the level of availability, the resources provided, and the processes engaged in delivering the agreed upon outcome to the customer. It also describes the level of entitlements and roles and responsibilities of the party providing the outcome as well as the party receiving the outcome.

Furthermore, it is likely that outcomes may differ from customer to customer.

Manufacturers who have not mastered the fine art of selling traditional service programs may find selling outcome based services a real nightmare.

Yet in many ways, selling an outcome based contact is no different than selling a customised extended warranty or extended service contract.

That’s why companies need to start investing in systems and processes that facilitate configuration, pricing, and quotation of services contracts today.

 

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Worldwide Business Research (WBR) held its Field Service 2017 conference at the end of April with over 450 service leaders from top manufacturing and service companies in attendance.

With so many service leaders in one place what better opportunity to find out what five key areas field service companies are focussing on? Michael Blumberg, was on hand to find out...

 

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1. Leveraging IoT to drive service efficiency:

There has been a lot of buzz lately in the media and among industry analysts about the value of IoT in improving the efficiency of field service operations. No wonder it was one of the key themes of Field Service 2017!

IoT offers several benefits to field service organisations (FSOs) including the ability to remotely monitor machine performance, make proactive adjustments to improve machine life, predict when a machine is about to fail and provide proactive service, and remotely diagnose problems when the do occur.

As a result, FSOs can gain better control over costs and resources. While IoT holds great promise, many conference participants have not fully implemented end to end IoT solutions. Field Service 2017 provided them with an opportunity to gain new perspectives from Field Service leaders who have already achieved these outcome.

 

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2.  Embracing digital transformation to create a “Uber” like service model:

Today, many Field Service leaders are asking themselves if their service businesses are ready for uberization?

This question stems from the growing trend of companies to offer services through an always on, always connected, always visible, and always available business model. Technologies such GPS, mobility, optimisation software and innovative approaches to sourcing labour (think - gig economy jobs, crowdsourcing, contingent labour) have helped to facilitate these models.

Given that these technologies and labour models are also available to FSOs combined with the fact that consumers have grown to expect an “uber”-like experiences in general, Field Service leaders believe it is only a matter of time before they need to implement similar business models.

 

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3. Creating and finding a new workforce:

A common challenge facing the field service industry, regardless of the technology supported, is the shortage of skilled field service engineers (FSEs).  Let’s face it, the younger generation does not view field service as a “sexy” profession.  Given other career paths, why would anyone want to fix broken products when they can be building the next “big-thing”. 

On the other hand, there are a ton of good people out there who can perform field service jobs.

The problem is they either prefer to work freelance and/or lack the appropriate level of training or experience.

Field Service 2017 provided attendees with the opportunity to learn how Crowd-sourcing applications and Freelance Management Systems can provide access to a broader labour pool, and how Augment Reality tools can help less experience FSEs overcome any knowledge gaps they possess.

 

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4. Optimising service parts management:

Managing service parts is the costliest aspect of field service management after managing labour.

Not only do customers expect their FSEs to arrive in a timely manner, they also expect them to resolve their issues right the first time. Having the right spare parts available at the right time is critical.

However, FSOs can’t afford to have too many parts sitting in many locations for too long as it causes a drain on profits. Optimization of spare parts, in other words, making sure you have just the right amount of parts at just the right number of locations is critical. Although this seems like an age-old problem facing FSOs, it is nice to see the topic on the agenda at Field Service 2017 since Field Service leaders need to continually refresh their knowledge of this subject.

 

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5. Nurturing an environment of customer first:

This topic is also a long-standing issue facing Field Service leaders. It has gained renewed attention as companies place greater and greater focus on improving the customer experience.

However, there are still a great deal of high-tech companies who remain focused on putting their products first, customers second, and service third.

Competitive trends, technological developments, and market requirements are continually forcing companies to rethink this paradigm.

If Field Service leaders are serious about creating at customer first environment and want their service organisations to play a more key role in this shift, they must be able to influence their management teams to invest in the strategies, tactics, and tools that make this transition possible.

Learning about best practices and similar experiences from peers at Field Service 2017 helps facilitate this outcome.

 

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Michael Blumberg, President of the Blumberg Advisory Group looks at how Augmented Reality can quickly become a standard part of the very fabric of field service delivery...

The importance of service to the manufacturing sector 

Industrial Machinery and Equipment (IM & E) manufacturers form an integral part of the manufacturing supply chain as their equipment plays a critical role in the automation of production processes such as shaping, extruding, moulding, crimping, cutting, folding, etc.

In addition, every manufacturing process has its own set of specialised machinery. For example, manufacturing equipment in the food processing industry is different from equipment found in the apparel manufacturing industry.

These machines must perform at very high levels of reliability to keep manufacturing processes operating at optimal levels of productivity.

The lost value to manufacturers of machine downtime is extremely high. It is not atypical for a manufacturer to lose hundreds of thousands of dollars a day in lost revenue due to machine downtime.

Challenges to keeping factories running

Providing fast and efficient service in the industrial machinery world is no a small feat for equipment service providers. Diagnosing and resolving equipment problems quickly is challenging when the machinery is highly complex, the installed base is relatively low and plants are scattered worldwide. Service organisations of IM&E manufacturers are usually staffed by a small cadre of field service engineers (FSEs) and technical experts. IM &E FSEs often possess deep subject matter expertise in some but not all product lines.

The FSE who assembles and installs the machine is often the same person who diagnoses the problem and initiates corrective action.

In addition, machines are manufactured to customer specifications. Thus, service is not standardised from machine and there is often a huge knowledge gap among FSEs and between customers. Language barriers can also make it difficult for customers in one country to communicate with FSEs in another and vice versa.

 

Furthermore, machines often have a long service tail and be in operation for 10 or 20 years. Thus, there may be no one at the customer’s site who has the knowledge to maintain the equipment properly. Tribal service knowledge, where knowledge that rests in the minds of individual FSEs is shared with others through verbal communication, is the norm within the IM &E service market.

The Service Conundrum

IIM&E manufacturers typically help customers resolve service issues by first attempting to diagnose and resolve problems over the telephone and prior to dispatching a FSE to repair the machine. However, there are certain times when the service expert cannot resolve the issue remotely. In other cases, the remote service expert may not understand what the customer is describing over the telephone or vice versa, or maybe the technician simply needs to see the problem for himself.

When situations like these occur, the FSE must travel to the customer’s site to troubleshoot, diagnose, and resolve the problem.Onsite travel is both time-consuming and expensive. It may involve a flight to another country and days at the customer site to resolve the issue. Capacity constraints may prevent that technician from traveling to the customer’s site. Also, if the FSE is at the customer’s site, no one else may be available to handle incoming requests from other customers.

At times the IM&E service provider may send an alternative FSE. There is a chance that the FSE who arrives onsite may not have seen this issue before and needs additional assistance to resolve the problem. In this case, the FSE assigned may need to telephone a more experienced technician for back-up support.

Other challenges include the fact that many IM&E manufacturers do not charge for service.

Furthermore, lengthy road trips add significantly to operating costs and place a great deal of stress on technicians.

From Road Warrior to Service Hero

Fortunately, IM&E Manufacturers now have a solution to their challenges; Augmented Reality.

By using smart glasses or a smart phone, machine operators at the customer site can capture a video image of the equipment and then transmit it to the equipment manufacturer’s service technician at another location.

If it is a relatively simple issue, for example one that can be resolved through a customer replaceable unit, the remote support specialists can send images, text, and annotated repair instructions back to the customer so that the customer can resolve the issue himself.

This saves time and money, as downtime and lost productivity is minimised for the customer. A live chat session can also be opened so that the customer and technician can communicate in real-time.

Considering FSE travel and per diem costs (e.g., meals, hotel, etc.) to another country can be quite expensive, savings from providing remote support through an AR platform can add up to thousands of dollars per service event.

This is a huge savings given the fact that a large percentage of service issues are the result of enduser (e.g., machine operator) error.

[quote float="right"]With AR, the remote service specialist can obtain rich contextual information about the machine problem, isolate or identify the fault, and then determine what skills and parts the FSE needs to have with him when he arrives onsite.

Fieldbit, Ltd., a leading provider of AR solutions, has been able to help its customers in the IM &E market improve remote resolution rates by as much a 50% AR solutions like those provided by Fieldbit also make it possible for IM & E suppliers to improve first-time fix rate. Repeat visits to solve the same problem are costly for the IM &E service provider not to mention stressful and embarrassing to their FSEs.

 

Normally, if the FSE lacks proper parts and/or skills to enable a fix, he must return or wait onsite until the correct resources are supplied.

However, with AR, the remote service specialist can obtain rich contextual information about the machine problem, isolate or identify the fault, and then determine what skills and parts the FSE needs to have with him when he arrives onsite.

The FSE can also use the live chat to communicate with the remote support specialist while onsite if additional troubleshooting and diagnostics are required. Utilising AR to improve FSE proficiency minimises the percentage of times onsite service calls are broken or extended due to the lack of spare parts or skills, thus improving “First Time Fix” rate.

Another practical application of AR solutions like Fieldbit is in the creation of a self-learning knowledge base. Remote support specialists can use the platform to develop and record step-by-step repair procedures for resolving equipment issues that are stored in a searchable database.

When a customer or FSE encounters a similar situation, he can search the database for the right solution.

The technical learning curve is shortened and on-the- job training time can be reduced by as much as 40% using this approach.

Recognising the high value in use for machine uptime and the tremendous impact Augmented Reality plays in cost avoidance, many end-users have begun to monetize their investment in these platforms.

For example, Fieldbit’s customers include downloadable, one-time-use licenses for Fieldbit Hero™ in the service level agreements they sell to their end customers (i.e., machine users).

These end customers can of course purchase additional licenses when they need them.

However, the benefit is clear: AR not only improves customer satisfaction and reduces service delivery costs, but drives additional profit to the service provider’s bottom line.

 

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