ARCHIVE FOR THE ‘parts-pricing-and-logistics’ CATEGORY

Andrea Capello is Head of Parts BU at Ariston Thermo Group. He spoke to Field Service News’ Deputy Editor Mark Glover ahead of his presentation at the Spare Parts Business Platform in Sweden next month about the issues of non-genuine parts and the importance of an accurate stock-inventory.

Spare parts are the lifeblood of the service industry; seen as mini-assets themselves and essential to the heavy asset they form, it’s no surprise that companies invest time and money into the cataloguing and care of such elements. “When we think about spare parts, I have in mind two common themes,” says Andrea Capello, Head of Parts BU at Ariston Thermo Group, the Italian firm that produce thermic comfort products for commercial and industrial use. “One is related to maintenance and the other related to repair." In both, it is important to be fast and to be reactive to customer demand."

To do so, a balance between maintenance and repair components is essential, although some technicians can skew levels, stocking only repair parts to uphold first-time fix rates. "In our business, we should not accept this," Capello says earnestly. "Maintenance is fundamental in order to keep our products working properly. The challenge is to have a clear understanding of stock-balance. Which means understanding what stock you must keep and where you keep it. Only then, can you be fast and responsive to the customer."

Another challenge facing the sector is the increasingly common amount of non-genuine parts. Capello tells me that repairing or maintaining products with sub-standard components can compromise customer safety, the integrity of finished goods and risks reputational damage. But what can be done? “Managing your installed park is important,” he explains. “You can also prevent it by communicating clearly with the installer or by working with a direct service.”

I’m keen to enquire about innovation in the spare parts management, in particular, new technologies such as connectivity and predictive maintenance, the very nature of which lends itself to pre-empting asset faults. Capello agrees, saying it could play a key role for customers: “I think connectivity is extremely important and will become more so in the future when it comes to our finished products,” he says. “This will help us not only to work closely with the customer and better understand their needs and maybe we can realise before the customer that their equipment has an issue.”

Having been in his role for just over a year at Ariston Thermo what does he enjoy about his new position? “It gives me a complete 360 degrees overview of what is a very important part of the company,” he tells me. “I can extend my support into marketing, pricing and business intelligence, topics which are new to me, but areas I find really interesting.” Alluding to his previous comments on connectivity and predictive maintenance, does he finds these areas exciting; to be exploring IoT and machine learning and to witness how these new technologies can complement spare parts management? "Innovation is something we are always exploring at the company,” he says, “and we are always looking at the next step, but we have to make sure that our customer understands why we are doing it."

Andrea's presentation in Stockholm will be a focus on stock optimization, referencing Ariston Thermo's own inventory processes and guidelines. Does attending an event such as the Spare Parts Business Platform bring other advantages such as networking? "It's a great opportunity to meet other people who may have similar challenges that you are facing," he says. "We can share ideas on how to approach those challenges and understand the benchmark processes of other companies and you can go home with useful partnerships and establish another communication channel, to get a different perspective from outside your company.”

Andrea Capello will be speaking at the Spare Parts Business Platform which takes place on 12 and 13 of February in Stockholm, Sweden.

TrueCommerce, a global provider of trading partner connectivity, integration and unified commerce solutions, announced recently that Gartner Inc. has named TrueCommerce a Challenger in their 2018 Magic Quadrant for Multi-Enterprise Supply Chain Business Networks. The company was recognised for its completeness of vision and ability to execute.

“We are excited to be a part of Gartner’s new Magic Quadrant.  We believe it validates our basic premise that the connective tissue (network) between members of a multi-enterprise ecosystem is the key to succeeding in complex, digitally enabled supply chains,” said TrueCommerce president Ross Elliott.  “Our continued investment in innovation and customer success in this area allows our global customer community to thrive in a highly competitive world.”

Describing the reviewed market segment, the Gartner research states that rising interest in digitising the supply chain and recent solution enhancements that improve the trading for all network participants — both in breadth (adding additional supply chain functions) and in depth (improving existing ones) — are fuelling investment in multi-enterprise solutions.

 

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Simon Fahie, Managing Director - Global Technologies, at ByBox reflects on a busy final quarter for the year, what the big challenges for 2019 will be and how we can overcome them...

Judging by the packed conference halls I’ve seen across the world this quarter, I think it’s fair to say that Winter 2018 is ‘events season’ for the global field service industry.

I was among the thousands of professionals who travelled to attend flagship conferences – all connected by a ‘need to know’ the latest developments within our sector.

But, as I heard tales of pioneering innovations and technologies at, for example, exhibitions in the USA, and a user group event in the UK, I was struck that the processes behind our work are just as important as the technology which supports it.

Hearing about the increasing pressures and challenges affecting the field service supply chain, and the different ways organisations are seeking to address them, triggered a train of thought in my mind around the power of lean thinking.

The principles of Lean are clear. It’s a systematic way of checking every process to find and extinguish waste. By eradicating unnecessary spend, time and resources, organisations can focus on adding value to customers.

And this one methodology is so effective, it can be used equally well within a wide range of businesses, from office cleaning, to automotive manufacturing, or the delivery of complex highway schemes. All three of these tasks have been analysed, broken down into steps, designed and redesigned to be as Lean as possible.

For decades, service companies have seen the value in similarly systematically removing unnecessary delays, materials, labour and costs from their processes. And yet, as the events began to wrap up, it became obvious to me that Lean thinking could have played a part in the case studies I had presented, and the networking conversations I had enjoyed.

I heard over and over again that the pain points are there. For example, getting the right service part to the right place at the right time is so important that, ironically, some businesses seem wary of making strategic changes. We heard stories about excessive inventory or significant costs related to same-day distribution being left unchallenged because ‘it works’. We know from analysis carried out recently for one organisation that 65% of items sent to site using same-day transport were returned by the engineer as good stock.

It doesn’t take much effort to start finding waste in that process, but what are the seven types of waste in Lean, and how might field service industries start finding some waste to eliminate?

Based on my experience at 2018 field service events, here are some examples, and how our customers are going about eliminating them:

 

Transport: Unnecessary movement of people or parts between processes

We saw one company save 640,000 miles of driving by delivering parts to app lockers at service sites, instead of using dispersed forward stocking locations. (FSLs)

 

Inventory: Excess raw material or finished parts 

Another firm had more than £1 million-worth of duplicated stock sitting in repair engineers’ vans.

The company cut spend significantly, by storing items specifically required by each location in secure on-site lockers

 

Waiting: People or parts waiting for the next step of a process

45 minutes per day, per engineer – that was the average waiting time saved by one organisation when it replaced PUDO collections with public locker collections.

 

Motions: Unnecessary movement of people or parts within a process

In our experience, the most advanced firms enable engineers to order parts for direct delivery, using a mobile app. This eliminates the unnecessary and inefficient movement of thousands of parts to and from warehouses, and can even enable firms to remove entire FSLs from their supply chains.

 

Rework: Correction or repetition of a process 

Forward-thinking firms also use mobile apps to assign condition codes for parts which need to be returned. This allows items to be directly routed to repairers, rather than return to the warehouse for evaluation. We’ve seen this contribute to a 40% reduction in total inventory for some firms, as well as a reduction in processing resources.

 

Overproduction: producing sooner or in greater quantities than customer demand

We saw one corporation reduce duplicate inventory by consolidating a UK stock-holding into a European warehouse. Delivery lead times and customer service levels were maintained by exploiting scheduled flights, and pre-8am distribution to lockers.

 

Over processing: Processing beyond standard required

Implementing a dedicated delivery point at a secure site reduced same-day transportation costs by 80% for one customer. In this use case same-day delivery was only used to ensure early next day availability.

 

It’s important to remember that the benefits of Lean thinking go above and beyond reducing waste, and into adding value to customers. For example, eliminating unnecessary movements often reduces overall lead-times -which in turn reduces risks to SLA compliance. And reducing transportation waste further supports carbon reduction targets.

I don’t pretend to be an expert in Lean thinking, however, as we seek to meet ever tighter service level requirements while simultaneously reducing costs these examples serve as reminders that there is plenty of waste to find if we go looking for it.

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Simon Fahie is Managing Director, Global Technologies for ByBox

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Trimble and Intelligent Audit, a leader in freight audit and transportation spend optimization, announced a collaboration to integrate their solutions to enable users to benefit from both real-time visibility and one of the most robust audit analytics tools in the industry.

The collaboration between Trimble and Intelligent Audit allows the two companies to provide a solution that solves some of the most significant pain points for shippers today. Users can access visibility and tracking through Trimble's supply chain solution and audit and spend analytics through Intelligent Audit. In addition, Intelligent Audit and Trimble's data sharing will enable both companies to enhance their products, providing a compelling solution for users in the transportation and logistics industry.

Customers of both companies will benefit from this new integration that provides a solution for the supply chain," said Joe DeBoth, vice president and general manager, Trimble Transportation Visibility. "Users have access to improved reporting and analytics with the added freight visibility and tracking abilities through the audit process."

"We were the first company to automate the audit and recovery process in transportation," said Hannah Testani, chief operating officer at Intelligent Audit. "Each year since our inception, we've worked hard to continuously improve our product. Working with Trimble to tap valuable supply chain data will further advance the audit process and is another step in the evolution to continually reduce transportation costs, improve customer experience, and enhance visibility throughout the supply chain."

Trimble's Visibility solutions provide supply chain organizations with visibility into operations featuring a secure, multimodal, real-time information platform. Its features include: Transportation Management System (TMS) integrations, dynamic ETAs, proactive weather and risk alerts, rich data down to the SKU level, temperature control tracking, exception management and final mile functionalities, efficient workflow automation, and a world-class, user-friendly interface.

 

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Artificial Intelligence has increasingly become a key discussion in all industries and its impact in field service management is predicted to be hugely significant, but how should field service organisations leverage this powerful twenty-first-century technology? In the part one of this two-part feature Marne Martin, President of Service Management, IFS outlined why AI in field service is about far more than chatbots, now in the concluding part, she outlines how AI can bring a touch of genius to your field service operations...

 

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Solving Problems When One Isn't Albert Einstein

Human agents are capable of optimally dealing with a customer, and AI can free them up for the most interesting and demanding tasks. In the case of scheduling technicians in the field, humans are just not up to the numerical challenge of adjusting a schedule in an optimal fashion as humans typically focus in on an aspect of a problem to solve rather than finding the best solution overall.

A dynamic scheduling engine (DSE) driven by AI algorithms is designed to solve complex scheduling problems in real time—problems much too complex for any human dispatcher or customer service agent to handle, especially when at times individuals will act myopically based on their area rather than for the greater good of the company and its customers.

 

"Even a static service schedule can be handled in myriad different ways and decisions regarding which technician to send to which of several jobs in what order are often made based on suboptimal heuristics..."

 

Even a static service schedule can be handled in myriad different ways and decisions regarding which technician to send to which of several jobs in what order are often made based on suboptimal heuristics.

“Steve’s son is in daycare in this part of town, so I will schedule this appointment last, so he will be close by.” Sometimes jobs are scheduled based on first-in, first scheduled, regardless of the actual urgency of requests that come later.

Manual or traditional software-based scheduling may be a workable solution for service organizations with a very small number of technicians each engaged in a small number of jobs during a day. But it does not take many technicians or jobs for the number of possible solutions to outstrip human computation capabilities either individually or as a group.

Even at the low end of the spectrum, a human dispatcher cannot quickly identify all the possible solutions and pick the best one. With two technicians and four service calls there are already 120 possible solutions— different combinations of technician, job and order. Two technicians, and five service calls yields 720 possible solutions. Four technicians and 10 service calls present a dispatcher with 1,037,836,800 possible solutions.

But the time you get to five technicians that must complete six calls each—a total of 30 calls, you have 12,301,367,000,000,000,000,000, 000,000,000,000,000 possible solutions.

Finding the optimal solution becomes even more complex as additional and rapidly-changing factors are added into the mix:

• Emergent jobs come in that must take precedence over those already scheduled
• SLAs and other contractual requirements demand that some jobs be completed within a given timeframe
• Technician skill sets that influence which tech is sent to which job
• Tools and materials currently in stock on each service vehicle
• The current location of a technician in proximity to each job and to drop locations for inventory that may be required for a job
• The duration of each service call, both in terms of estimated time required to complete the call and whether a current job is running over the estimated time, resulting in knock-on effect on subsequent jobs

Former world chess champion Garry Kasparov, in his book Deep Thinking: Where Machine Intelligence Ends and Human Creativity Begins, makes clear that even his mind is not capable of computing possible solutions and outcomes as rapidly or effectively as an AI algorithm.

 

"Automating the schedule through AI not only enables a much higher level of service but frees up dispatchers to handle those “beautiful or paradoxical moves” that may delight a customer or solve a tough problem...“

 

The human mind isn’t a computer; it cannot progress in an orderly fashion down a list of candidate moves and rank them by a score down to the hundredth of a pawn the way a chess machine does,” Kasparov writes. “Even the most disciplined human mind wanders in the heat of competition. This is both a weakness and a strength of human cognition. Sometimes these undisciplined wanderings only weaken your analysis. Other times they lead to inspiration, to beautiful or paradoxical moves that were not on your initial list of candidates.”

Automating the schedule through AI not only enables a much higher level of service but frees up dispatchers to handle those “beautiful or paradoxical moves” that may delight a customer or solve a tough problem.

In the end, collaborating with intelligent machines will get us further faster than going it alone. According to Kasparov, the best chess is now played as grandmasters use computers to analyze positions, opponents’ games and their own games—elevating the level of play. In an interview with the Financial Times, Kasparov, who famously had matches against an early chess supercomputer, described how the best chess is now played by combining “human intuition and understanding of the game of chess with a computer’s brute force of calculation and memory.”

“I introduced what is called advanced chess; human plus machine against another human plus machine,” Kasparov said. “A human plus machine will always beat a super machine. The computer will compensate for our human weaknesses and guarantee we are not making mistakes under pressure … the most important thing is not the strengths of the human player. It is not the power of the computer. But it is the interface. It is the corporation.”

 

Legacy Approach to Inventory Logistics

Service management for many businesses relies on inventory … if completion of a service call requires inventory and you are out of stock, you cannot meet your commitment to the customer. When a service request cannot be closed on the first visit, it is often because the right part is not on the truck or immediately available.

So, service management software should encompass inventory management functionality, and that functionality should include automated reorder points for each part. The ability to take parts availability into consideration is a critical data set for AI to work on as parts are a critical determinant in first-time fix and job completion where parts are a factor. It also is a key aspect to successful SLA and outcomes-based commercial relationships.

Once inventory data is available and integrated, a powerful DSE may also be configured to influence inventory logistics so parts and materials are housed in warehouses, satellite offices or inventory drop locations closer to anticipated demand, with inventory matched to jobs in a forward or current day schedule. In one very large implementation of IFS Planning and Scheduling™ Optimization—in the London underground transit system—inventory and tools are dropped ahead of each service visit so technicians who ride the subway to the service site can pick them up.

This is only possible with a high degree of coordination between the service schedule, inventory logistics and an AI-driven scheduling tool.

 

Conclusion

Service organisations should recognise the tremendous potential AI holds—they can harness it to transform their operations, outflank their competitors and disrupt their markets. We are only starting to tap into the different ways AI can be used to better solve the problem of delivering optimal service in a rapidly changing environment as adoption is still lagging despite the real benefits AI brings. The good news is there are several straightforward and easily accessible ways service executives can harness AI technology right now, today.

 

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In a landmark agreement between Volvo Trucks and Norwegian mining company Brønnøy Kalk AS, six autonomous Volvo FH trucks will transport limestone over a five-kilometre stretch in a mine. Tests of this solution have been carried out successfully and will continue throughout 2018 to become fully operational by the end of 2019.

The deal represents Volvo Trucks’ first commercial autonomous transport solution that will run in a real operation. It is a new solution whereby the customer buys a transport service where Volvo Trucks takes full responsibility for the delivery of the limestone to the crusher.

Whilst we may be still some way from seeing autonomous vehicles being used in service logistics, this is an interesting and possibly pivotal new development.

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In an age of servitization and advanced services, spare parts management has become something of a difficult beast to fully grasp for many companies who are offer aftermarket services.

For example, in a world of guaranteed up-times, the cost of failure to keep an asset running can often far outweigh the lost revenue from the sale of the replacement part needed to get the asset back up and running and fully functional again.

Yet, the path to servitization is not an easy one to tread - so is it worth cannibalising what for many service companies is a reliable, consistent and strong revenue stream in its pursuit?

Whichever route companies ultimately turn to, one thing is certain, spare parts management is going to be a crucial aspect within the service delivery sector and as with mobile workforce management, there are a number of technologies and innovations that are emerging that could change the way we approach parts management in the future.

Therefore it was with great interest that we took a look at the insights from a recent research project undertaken by Copperberg. The research was conducted online across the last month primarily to Copperberg’s own audience of conference delegates.

In total the there were 65 responses to the survey and these representatives were all professionals within the sector ranging in seniority from parts managers through to Managing Directors - although the main body of respondents were at the division head/director level on a national scale.

The majority of respondents were from Europe although other regions, including China, were represented. The respondents were largely from manufacturing verticals, which would be anticipated given Copperberg’s flagship event the Aftermarket Business Platform is also a manufacturing dominated event. However, there were a number verticals within the manufacturing sector represented including heavy machinery, medical and automotive.

So let us take a brief look at what trends the research revealed...

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Inventory Management:

Inventory Management sits at the heart of good parts management as without the ability to track components and parts at any given time as they move from depot to the field (and potentially back again depending on a companies approach to repair and reverse logistics) everything else within in the equation becomes open to inaccuracies and subject to guesswork.

Indeed, the importance of inventory management appears to be hugely important within the organisations represented within Copperberg’s research with 91% of the respondents ranking it as being either four, five or six on a scale on to six with six being very important. In fact, almost half of the respondents (43%) listed Inventory Management as very important (6) - further emphasising the significance of inventory management in the context of spare parts management.

So it is absolutely shown to be clear in the research that the focus on inventory management remains one of utmost importance for the vast majority of companies.

 

Parts Pricing and eCommerce:

Parts pricing is also another area that was unanimously outlined as being important to the survey respondents.

This is particularly interesting as the fact that so many companies still view parts pricing as being highly important to them could be viewed as an indicator that the revenue streams that come from spare parts sales is still very much a critical part of the aftermarket landscape.

In fact, 86% of respondents stated that they felt parts pricing was at least a four on the same scale as listed above, however, here it was just under a third of respondents (32%) that felt this issue was very important.

eCommerce is of course another area that is heavily linked with parts pricing and there are indeed some correlations between the two areas, yet in terms of responses, eCommerce remains somewhat less of a priority than pricing.

With regards to eCommerce, exactly two-thirds of the respondents (66%) listed it as a four, five or six with only 16% seeing it as being very important (6).

This is quite an interesting difference between the two as we might have anticipated these results being more closely aligned.

One assumption, however, may be that with regards to eCommerce the solutions have now matured and so most manufacturers in 2018 may have at least some form of eCommerce solution in place - perhaps this explains why it is viewed as less of a priority?

This is certainly though an area for further discussion - something that will be surely had at the Copperberg Spare Parts Business Platforms which are running in Q1 next year.

 

Digitalisation:

Digitalisation is the key buzzword of the last few years although given that it encompasses a number of important shifts within the current evolution of business processes this is perhaps to be expected and there is no denying the importance of digitalisation within the field service sector and it is also a major consideration within the closely related function of parts management as the research reveals.

Digitalisation was ranked was 71% of the respondents to the Copperberg survey as being listed as either a four, five or six on their scale of importance, with 22% of respondents listing it as a six i.e. very important.

This places digitalisation as being deemed to be not quite as important to the respondent base as Inventory Management and Parts Pricing but more important than eCommerce.

What is interesting to note here is that these two very specific niche challenges seem to be in some-ways the eternal, perennial headaches of the sector, whilst broader, business-wide concerns such as digitalisation are possibly more likely to appear as an issue to overcome in the short-term which in themselves could lead to improvements in other areas - such as improved inventory management for example.

Which leads us neatly into...

 

3D Printing & Artificial Intelligence:

Two perfect examples of exciting new technologies that are emerging would be 3D Printing and Artificial Intelligence (AI) - with one set to play a hugely significant role in the niche of spare parts management, whilst the other will play a broad role in almost all sectors, including spare parts management.

So how do the industry experts who made up the Copperberg respondent base see each of these exciting technologies impacting the spare parts management sector?

With regards to AI just over a third of respondents (35% ) thought it would be important to some degree (again listing it as either a four, five or six).

However, less than a tenth of the respondents (9%) felt that AI was currently very important for them.

In terms of 3D printing, surprisingly the numbers were even lower.

In fact, less than a third of companies listed 3D Printing at a four or higher and only 8% of respondents felt that 3D Printing was very important in the sector currently.

 

Parts Logistics:

One area, however, that was overwhelmingly listed as being important within the field of spare parts management across the next 12 months was that of parts logistics.

94% of respondents listed parts logistics as being at least a four in the scale of importance with over a third (35%) going on to state that they felt parts logistics was important enough to warrant being listed as a six.

This makes parts logistics one of the most important areas in the spare parts sector across the next twelve months according to this respondent base, although Inventory Management is very important to more companies.

 

Conclusions:

The results of the survey bring us some interesting conclusions - particularly when we stand them alongside the trends we are seeing from within the field service sector.

Of course, field service and parts management are two leaves on the same branch with deeply symbiotic relationships between the two.

Yet, from this research at least, it does seem that many of the forward-looking discussions we have been having within the field service sector, particularly around emerging technologies such as AI, IoT and Augmented Reality as well as the wider topic of servitization as a strategy for business growth - may be further down the line than their equivalent discussions with our spare parts colleagues - and in some companies that may be significantly so.

Perhaps, part of the reason for this is that parts management is a highly complex beast with a huge amount of moving parts (literally) and even if solutions such as inventory management systems have been put in place it may take time for the benefits there to be truly felt.

However, the simple fact is that no matter how efficient field service management is - it all falls out of the window if parts management is poor - and this is perhaps the greatest learning from the research - that the focus of professionals within the parts management sector currently remains on efficiencies - and for that, we in field service should be hugely grateful.

 

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Want to know more? Click here to Visit Copperberg's website to register for an exclusive white paper based on this research!

 

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OnProcess Technology, a global pioneer in service value chain optimization, today announced OPtimize a digital transformation service leveraging predictive analytics to improve post-sale business outcomes.

Building upon OnProcess’ domain, AI and automation expertise, OPTimize enables businesses to drive unparalleled gains in service revenue, cost savings and customer experience.

“Post-sale service is vital to OEM and service provider success. Not only does it drive customer loyalty, it accounts for the vast majority of a business’ profitability. Many companies struggle with managing the fine balance between revenue, cost and customer experience, and more often than not, one or two get sacrificed for the other. When that happens, business suffers,” said Mike Wooden, CEO, OnProcess Technology. “OPTimize enables OEMs and service providers to streamline critical business processes and maximize those three service components. We make it possible for businesses to unlock new levels of post-sale value.”

“Service Council’s research has benchmarked thousands of service leaders over the years, highlighting how top-performing organizations (Service Champions) combine a holistic approach to out-performance; establishing a balance between operational and customer-facing commitments to yield commercial business success,” said John Carroll, CEO of Service Council. “OPTimize is positioned to solve service and executive leadership’s conundrum of finding an equilibrium between what has long been considered adversarial forces: profit, cost and customer experience. This is an exciting release and OnProcess is a vendor to watch.”

OPTimize provides the visibility, intelligence, automation and exception management required to improve the service value chain, from sales order management, remote triage and inventory management, to field service management, fraud prevention, warranty management, and even end-of-life services. Using OnProcess’ proprietary real-time control tower, predictive analytics and award-winning solutions, OPTimize ensures the precise balance of revenue growth and cost to serve reductions, with an optimal customer experience within your post-sale service value chain.

• Reduce Cost to Serve: Clients dramatically reduce capital expenditures, minimize operational costs and improve efficiencies throughout their post-sale services.
• Grow Revenue: OPTimize speeds time-to-revenue, reduces revenue leakage and boosts customer retention, all of which result in greater post-sale revenue.
• Enhance Customer Experience: Clients eliminate needless triage cycles, improve service quality and resolve customer issues quickly. Service events are transformed into productive, positive engagements that consistently meet and exceed customer expectations.

Click here or email sales@onprocess.com for more information about OPTimize.

 

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