ARCHIVE FOR THE ‘through-life-engineering-services’ CATEGORY

In addition to the smooth transition toward an outcome-based business model, the organisation-wide and bottom line benefits of automating asset and service data collection and utilisation are vast. The benefits are perhaps no clearer than when it comes to achieving minimal unplanned downtime, where over nine in ten (94%) respondents report that the automated collection and utilisation of asset service data will be absolutely fundamental or an important factor in actually achieving this asset specific benefit. A similar proportion (91%) report the same for improved first-time fix rates.

 

Plugging the Holes – Revenue Leakage

Further to this, 82% believe that automating asset and service data processes will be pivotal when it comes to lower leakages, and contract leakage is something that is causing a great deal of damage to organisations currently.

On average, respondents’ organisations are undertaking 187,470 work orders per year, but an estimated 8.34% (17,542 work orders1 ) of these work orders are left unaccounted for by engineers according to those respondents who know how many are carried out on a yearly basis. This can lead to huge financial deficits and wasted resources and is clearly a problem that organisations should be taking notice of if they want to remain financially viable.

The issue of contract leakage is proving particularly problematic for organisations in the oil and gas, and telecoms sectors – on average, respondents from the oil and gas sector report that their organisation carries out 228,261 work orders on a yearly basis, and those in the telecoms sector are undertaking 213,424 work orders. The level of contract leakage in organisations from these two sectors is staggering. The respondents from the telecoms sector who know the number of work orders being carried out per year, report an average leakage of 9.64% (26,321 work orders), and this is only slightly lower at 9.41% (23,093 work orders) according to those from oil and gas. It seems unthinkable that organisations are unaware of such a gaping hole in their business, and it raises the question of what else could they be missing?

The process of automating asset and service data practices will not only benefit those involved in keeping track of work orders but can have wider reaching benefits as well, exemplified by the 84% of respondents who agree that the successful utilisation of asset data can positively impact all areas of the business. The specific departments that are expected to benefit include, but are not limited to, sales (38%) and marketing (37%) who will be able to better leverage customer usage behaviour, finance (33%) who will be able to provide more accurate billing, and even corporate social responsibility (27%) who will be able to monitor the environmental impacts of assets more effectively.

 

Bottom Line Benefits: Double-Digit Revenue Growth

While these organisation-wide benefits are impossible to ignore, the truly jaw-dropping potential of automating the collection, aggregation and analysis of asset and service data comes from the bottom line benefits. On average, respondents estimate that this process and using it to drive new marketing, sales and financing models can increase their organisation’s revenue by 14.15% over the next 12 months. In addition, it is thought that operational costs could be reduced by as much as 12.03%, on average.

[quote float="left"]An increase in revenue and decrease in operational costs can only lead to one thing – increasing profit margins.[/quote]An increase in revenue and decrease in operational costs can only lead to one thing – increasing profit margins.

The figures around revenue and operational costs show slight variation by region, with those in the US and MENAT particularly confident about the revenue increases that their organisations will witness – average increases of 15.67% and 15.43% are forecast respectively. Furthermore, those from the MENAT region are almost equally as bullish about the prospects of reducing their operational costs, predicting an average reduction of 14.21%. This is likely to be at least in part down to organisations in the MENAT region starting with a clean slate – the region is currently booming with new business and they are less likely than their counterparts in Europe or the US to have existing legacy technologies in place which would slow down any transition towards the automation of processes. This, in turn, means that they can begin to witness the financial benefits almost immediately – exciting times for the MENAT region providing that any transition is rigorously planned and diligently implemented.

 

Predicted financial benefits over the next 12 months

Another key way of making money is to improve cash flow and automating the collection and utilisation of asset and service data can also assist in this domain – over eight in ten (83%) respondents believe that the automatic collection, aggregation and analysis of asset service data could have a positive impact on their organisation’s cash flow over the next 12 months.

But what about return on investment?

Ultimately organisations are going to have to spend a fairly significant amount of money on the automation of asset and service data processes which might put some businesses off, but if the reward outweighs the risk then this is surely going to be a worthwhile expenditure.

 

Strong RoI

When taking into account all of the benefits that their organisation could experience, respondents believe that for every $1 they invest in ensuring that they can automatically collect, aggregate and analyse asset service data they would expect a return of $4.44, on average. Respondents from organisations in the US are even more convinced about the possible returns that they could experience, believing that this figure could soar as high as $5.29. The potential returns dwarf the initial outlay and it is hard to imagine a stronger case for investing in this process in order to guarantee a better future for organisations.

These financial benefits all culminate in enhanced competitiveness within the industry, and 87% of respondents agree that the automatic collection and utilisation of asset service data will have a positive impact on their organisation’s ability to remain competitive in their sector.

This is crucial because the more that organisations across the globe begin to realise the value that this process can bring the more that asset and service data will be used, explaining why the vast majority (86%) of respondents agree that the more asset service data is used, the more value it brings to the organisation.

A success loop will inevitably be created, opening the door for those who are brave enough to take those initial steps to get a jump on the competition and put themselves out there as leaders in their industry.

 

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The not-for-profit knowledge sharing group the Service Community, has announced their next event will hosted by GE Power at their new Stafford Location on the 16th October 2018...

The event will run from 11.00 – 16.00 and include a light lunch.

You can sign up by emailing us at info@service-community.uk

 

Agenda

 

• Meet 10.30 for 11.00 Start
• Welcome & Service in GE
  • Service Challenges in GE Power
• Creating Service focus in a successful product business - Ross Townsend – Business Manager Ishida
  • Ishida is already a successful packaging equipment business. Ross will share his experience of the challenges of developing advanced services in an environment where the product is king. We will have an opportunity to discuss what is working, but also what is not, so this should be a great conversation for those driving change in product orientated businesses
• Networking Lunch
• Selling Service Value - Leon Sijbers Service Director at GE Power
  • One of the biggest challenges of selling business is to identify and quantify the pain points in your customers. Leon is an expert in identifying these pain points and then selling value to close the service deal. He will share with us his own approach which he has developed over the past 10 years in service sales.  An excellent session for anyone developing a service sales team
• Buying Advanced Services and the relevance of a new Service Standard
  • This session will provide insights from one of the most sophisticated buyers of services such as a availability contracts, as to how services are bought, and why the recently published British Standard ‘Through-life engineering services – Adding business value through a common framework – Guide’ (PAS280) is a must read for all professionals involved in servitisation of industrial businesses.
• Networking break
• Assets & Service Data Gravity - Mark Homer: GE Digital
  • Vanson Bourne recently carried out a research programme on behalf of ‘ServiceMax from GE Digital’ aimed at understanding on the importance of service data in managing assets. Mark Homer will share the results and the insights learned.
• 16.00 Meeting Close

 

Field Service News will be in attendance to report from the event and we hope to see you there also!

Find out more about the Service Community @ www.service-community.uk

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Rolls Royce’s Andy Harrison has been playing a pivotal role in the Through Life Engineering Services Centre’s work in putting together a blueprint for how organisations can establish advanced services capabilities - a topic he recently discussed at this year’s Spring Servitization Conference. Kris Oldland sat down with him to find out more...

When the topic of servitization comes up it is usually only a matter of time before Rolls Royce and Power by the Hour is mentioned. Indeed, Rolls Royce alongside a select number of other organisations such as Caterpillar and Alstom have essentially become the de-facto poster boys for all things advanced services.

Who better then, to lead a multi-organisation committee created to help distil the complexities of servitization into a meaningful framework than one of one of their key service executives, Andy Harrison, Engineering Associate Fellow - life cycle engineering?

But what exactly is the Through Life Engineering Services Centre, which Harrison heads up?

“For a number of years here in the UK we have had a group of companies get together around through life engineering services. In essence, a sort of working club made up of people working in the services space and in particular services around complex long-life engineered products,” he explains.

“For a number of years, we had struggled to get a framework diagram around what we meant by that this particular space. Then in mid-2016 the EPSRC Centre for Innovative Manufacturing Through Life Engineering Services, which was run out of Cranfield and Durham Universities, issued a strategy paper which called for the creation of a national council - something we have subsequently created.”

So what is the key function of this council?

One of the challenges we have taken on has been to develop a relatively simple explanation of what exactly through life engineering services are“One of the challenges we have taken on has been to develop a relatively simple explanation of what exactly through life engineering services are,” Harrison explains.

“In addition to this, we have also moved onto tackling the question of what a national educational program within this area would look like. If we wanted our engineering graduates to arrive at the doors of organisations already understanding the value of through life support, which we think is 16% + of GDP, then what would that involve?”

It’s an ambitious project, but one that is absolutely critical as we see economies both in the UK and beyond become increasingly more service-centric and Harrison has played an integral role in fulfilling the council’s vision, which is now coming together at pace.

“I’ve led the working group that has put that framework diagram and the education program that goes around it. That is in the process of being embodied into a publicly available specification by the British Standards Institute and it is due for publication sometime very soon,” he comments.

“Essentially what we’ve got is a framework diagram that outlines the topics that make up this thing called Though Life Service, then dividing those topics into further subheadings with information and direction as to what a company would need to know to understand each of those sub-headings.”

In fact, one of the highlights of The Spring Servitization Conference, held this year in Copenhagen, was when Harrison very eloquently and concisely walked the attendees through this framework.

“Basically, the framework diagram is essentially setting the scene when we talk about this space,” Harrison explains.

It’s a way of thinking about the big picture and breaking it out into commonly described terms so that when the industry practitioners review the academic material they have a frame of reference“It’s a way of thinking about the big picture and breaking it out into commonly described terms so that when the industry practitioners review the academic material they have a frame of reference - they can look at it and say ‘OK so this is addressing this part of the equation.’”

This is a huge part of the discussion that needs to come to the fore if the worlds of academia and industry are to fully align around the concept and strategies of servitization - a common language is essential. This is also why the bringing together of a number of different companies from disparate sectors to work on this project alongside Harrison and his team at Rolls Royce is also imperative.

“The fundamentally important part of this is that if you let any one organisation try to write this they would do it in their own language in their own context. It might work for them but it is unlikely to work for a broad range of companies,” Harrison explains.

We have deliberately forced ourselves to argue how to get this down to a small number of items“We have deliberately forced ourselves to argue how to get this down to a small number of items,” he adds.

Within the framework itself, the group has essentially identified three core areas of activity.

“Firstly, there is the business context where the sub-elements are all centred around if and how you understand your customers. Can you identify with them the value opportunities are - and this can be either getting more work out of a machine or spending less money obtaining that work,” Harrison begins.

“Do you have the organisational set up to deliver these benefits and do your customers have the right set up to receive those benefits? Do you have all of the underpinning capabilities that are required such as the consumable elements you need to deliver this level of service - for example, can you model x and predict y? Can you gather the data required? Do those things exist and do you have them within your organisation? We then have to consider what are the service value streams that you have to offer? We divide that up into four streams which are avoid, contain, recover and convert.”

The road to servitization is challenging and the journey for every company of course slightly different reflecting the unique needs, processes and goals an organisation may face“Avoid is can you change the reality of how much damage the product is accumulating and the likely consequences of that? Contain is about an organisation's ability to step in and make the decisions around when and what to do as intervention activities -  so there is no physical activity in this step, it is all around decision making. Recover is your ability to re-inject life back into the asset, through overhaul, repair and inspection. Finally Convert is about your ability to take the experience that you gain in the other three and to generate additional value out of those.”

“The final dimension is the basic life-cycle of the product and the service which talks about the need for planning throughout the life-cycle, the creation process of your products and service, standing up ready for operation, the operational activity of making the products and delivering the support service and eventually the retirement phase of the downturn of the supply chain, the de-commissioning of assets and the eventual retirement of the entire of service offering around them.”

The road to servitization is challenging and the journey for every company of course slightly different reflecting the unique needs, processes and goals an organisation may face.

However, the framework Harrison and his peers have put in place does an excellent job of signposting the way, to help companies navigate the path successfully.

 

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 UK manufacturing is re-inventing itself with services as a core element of companies' growth strategies.  In an industry-led initiative, business leaders are seeking input from a wide variety of of companies to help develop a National Strategy for Manufacturing Services.  UK businesses can add their voice to the discussions via a series of free workshops.  Nick Frank, Frank and Partners, explains the strategy and how to get involved.

It is now widely accepted that technology and manufacturing impacts our economy far more than the 10% GDP often quoted. There is another 10% to be found in manufacturing services and probably a lot more, when you look at the full supply chain of support required to keep industry working. With digitalisation starting to enable dramatic changes in business models, products sales are slowly being replaced by services; ‘Power by the Hour’ being the well-known example with jet engines.

But manufacturing and product related services are also facing a chronic skills shortage, which will stifle future growth. If the UK is to prosper, then it must re-think its definition of manufacturing, the skills required and the value it brings. Critical is inspiring a new generation of our best young people to choose a career in industry because they see it as ‘sexy’, fulfilling and lucrative.

These are some of the reasons why leading UK companies such as Rolls-Royce, Bombardier Transportation, Siemens, BAE Systems and Babcock International are pushing for a National Strategy for Manufacturing Services. They are not alone, having teamed up with Ministry for Business Innovation and Skills, industry trade bodies as well as well as thought leaders from Cranfield, Aston and Cambridge universities. The fact that this initiative is led by industry is critical. Industry sees that with the mainstreaming of IoT technologies and the coming of a new millennial generation, which is more technology savvy and attuned to collaboration and networking, a new way to compete needs to be found.

As Dave Benbow, Head of Engineering for Services at Rolls-Royce and co-chair of the initiative passionately puts it;
“Collaborative development of capability in through-life engineering services will be key to future success in a world where technical innovation is demanded in both products and services.”

The truth is that we have to re-invent manufacturing in order to compete in the global market. Recently an excellent article in the Economist, ’How does Deutschland do digital?’ highlighted how Trumpf, a leading global supplier of machine tools, is building a new business vision based on ‘software and data’. The global market for what some call ‘through-life engineering services’ and others would describe as ‘making things work better for longer, delivering lifetime value from products, assets and infrastructure’, is worth over £1 trillion and the UK is estimated to only have maybe 5% of this share. It is clear that this sector will be key to manufacturing productivity and high value jobs in the circular economy of the future.

 

A recent study by Cranfield University revealed that in this market segment, the salaries are generally 55% higher than the UK industrial average! It is clear that with a bit of imagination, Manufacturing has the potential to be very attractive to young people with an incredibly diverse range of evolving well paid careers.

However it is also clear that if the UK wants to do more than just compete, it must be far more ambitious at a National level. As a nation we need to:

• Develop skills and behaviors that encourage the multi-functional and collaborative needs of the future work force
• Innovate better tools and techniques for data integration and analysis
• Create formal standards that enables knowledge transfer across industries and through the supply chain
• Revolutionize the supply chain to adapt to the circular economy

In short we need a National Strategy for the UK, where thinking and language on the specific actions the UK needs to succeed are aligned across the nation. Solutions to this challenge have become possible as the key stakeholders combine behind one initiative to develop manufacturing services as a driver for growth.

Now in a series of workshops led by the EPRSC Centre for Innovative Manufacturing at Cranfield, a series of free workshops are being held across the country to gain your input. We want businesses from the wide variety of industries that make up the UK’s industrial fabric, to talk and describe their needs. You will have a chance to mix with leaders in Services and learn about the business models developed by some of the leaders of UK’s industry. We need your feedback to develop a strategy that is truly representative of UK industry.

If you would like more information on this initiative you can contact Nick Frank,  a member of the steering group, at nick.frank@frank-partners.com or you can sign-up directly on the Through-life Engineering Services website.

 

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September is a busy time for conferences, and if you are in the UK there's an opportunity to attend two very down to earth events.  Here’s a preview by Nick Frank,  who also reports on the latest developments in a campaign to re-invent manufacturing and service in the UK.

30th September: The Service Community

Hosted by the Aston University in Birmingham. A very different event for service industry professionals. We are expecting over 40 participants to discuss and debate how Big Data is being used to affect customer outcomes. Practitioners from Rolls Royce, Pitney Bowes and Inca will be discussing their personal experiences.  In addition we will have a view of the future from Andreas Schroeder of the Aston Business School. This event is unique: there are no sponsors, no hidden agendas, just professionals talking to professionals…a true community. To sign up see the Service Community website

6th October: Creating Value through Service.

A one-day conference hosed by the Cambridge Service Alliance . Although a paid conference, I always find the CSA events well worth going to as they present ideas that are on the leading edge of services development in industry.

Something up in UK manufacturing

There is something up in the UK which will have tremendous implication on field service in the future. I was at the House Commons with Professor Raj Roy and his team from Cranfield as well as senior leaders from some of the UK’s leading manufacturing and engineering companies when they presented a case for a National Policy for Through Life Engineering Services to MPs.

Through Life Engineering Services can be described as ‘Engineering for Life’ – making things work better for longer; delivering lifetime value from products, assets and infrastructure

Cranfield’s EPSRC Centre for Innovative Manufacturing has been working on the engineering expertise that underpins the ability for companies to provide their customers with AVAILABILITY and/or OUTCOME based contracts. These contracts reflect a world where customers no longer want to purchase the asset, but are redefining their needs in terms of outcomes - Rolls Royce’s Power by the Hour is one of the best known examples.

Research has shown that the TES market in the UK generated £23bn revenues for the UK. The exciting thing for the UK is that politicians, technology and industry are starting to realise that manufacturing must re-invent itself, if it is to be sustainable and competitive. They see that manufacturing is no longer just about the product. With the IoT, data and analytics it has become much much more fuzzy. This has tremendous implications for field service. A National Policy will speed up this change and hence the new skills sets required to effectively operate in these re-defined business environment. We will return to this subject at a later date.

Welcome back from summer!!

 

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