The Service Innovation Imperative
Written By: Leslie Paulson
3/1/2022 Read Time : 5 min.

Globally, original equipment manufacturers (OEMs) are vying for competitive advantage, differentiated value, and customer loyalty. Having customers define products or services as imperative is the ultimate goal and accolade. This road to producing an imperative product or service requires a commitment to excellence and an innovative mindset in product design, manufacturing, and optimized service delivery across the ecosystem.

Outcome-based services and the shift from ownership to usage require realignment and tighter collaboration across all ecosystem partners’ engineering, manufacturing, procurement, and service functions. Design anywhere, buy anywhere, build anywhere, sell anywhere, and service anywhere model of OEMs to drive down costs and access markets can build stickiness with innovative services that leverage data science. Early adopters and industry leaders have proven that solutions rooted in advanced data science deliver higher value.

OEMs will need to be agile and quick to innovate to thrive over the next few years. New research from PTC and TCS, co-authored by myself and Mohan Gatta, which includes numerous case studies, demonstrates how digital thread plays a crucial role in helping OEMs achieve service innovation for the best outcome and maximum asset uptime and readiness. (To read the article in PDF format, click here.)

Weaving innovation in manufacturing

Typically, in manufacturing, information is managed in silos across multiple enterprise-wide systems such as product life cycle management (PLM), enterprise resource planning (ERP), supply chain management (SCM), and customer relationship management (CRM). Field service, technical publications, connected product usage, service parts planning, and warranty administration have separate systems. The digital thread connects such enterprise systems with multiple service systems. Such connectivity allows for real-time information flow and analysis across engineering, manufacturing, and service functions inside the enterprise and among suppliers, distributors, and partners. This helps manufacturers reimagine the way products are designed, manufactured, and serviced for better business outcomes. With contextualized closed looping of systems enabled by the digital thread, manufacturers can analyze and improve processes within business functions and across the value chain in real-time or near real-time.

Case in point

To illustrate how a digital thread can close the loop between the real and physical worlds, consider a power generation equipment manufacturer that wanted to improve outage planning and equipment uptime for its customers. To help its customers quickly look up parts, their prices, availability, and lead times, the manufacturer created a commerce portal with parts catalogs. However, updating the parts catalog took months. The manufacturer relied on a digital thread for engineering, manufacturing bill of materials, and parts catalog information and data. The catalog build and updation was automated which not only reduced the catalog updating time from months to a few days but also helped customers plan proactive replacement with the right parts, improving equipment uptime. 

Service lifecycle: A critical contributor to digital thread

Engineering and manufacturing data are the foundation for service, and this information is used by every service provider in every transaction, every single day. Drawing insights from this gold mine of data can positively impact the top and bottom line for OEMs and their customers. The service life cycle is also about ten times larger in volume, revenue, and profit than engineering and manufacturing combined. An engine is designed and manufactured once and serviced for the rest of its life, which for some products can be for decades. This provides enterprises with immense opportunities to gain a larger share of customer lifetime value through service innovation and prepare for the shift to outcome-based services and new business models.

Case in point

To illustrate how data can power the service lifecycle, let’s look at a global leader in high-performance power systems engineering and aircraft engines. It leveraged engine sensor data and its expertise in engine repairs in developing new service contracts, which assured uptime and in-service availability of engines to customers. To deliver the services, product performance data was analyzed with engineering physics, operating conditions, and then based on findings, parts, rotables, and service engineers were planned in advance. The iconic brand was able to generate revenue and profitability through new revenue streams and build loyalty.

Helping organizations knit data and solutions together

When challenges arise, it is natural to get a quick win by solving the immediate issue through point solutions with a narrow scope. While useful in the short term, this perspective can debilitate an enterprise in the long term as point solutions and data become scattered across the enterprise. Streamlining the processes and incentivizing cross-function collaboration can help break down silos. OEMs can effectively solve this challenge by analyzing systems, internal and external processes, and strategic initiatives to capitalize on the digital thread and deliver high-value outcomes.

It becomes imperative for teams and business segments inside the enterprise to collaborate, determine data capture priorities, and identify the data that can benefit the organization. An enterprise-wide assessment is useful for determining which organizations and processes could benefit from that data.

Case in point

A global truck OEM wanted to improve truck uptime and customer loyalty. Repairs of the trucks were done by dealers with OEM parts. Service information such as issues, scheduling, parts availability, and repair times from dealers were obtained in real-time by integrating with dealer systems for advanced analytics and insights. These insights helped the OEM and its partner ecosystem to improve uptime through proactive intervention in the partner network.

Succeeding with service innovation

Today, customers demand much more from the products and services they use – they want outcomes. They demand quality service that would help them operate more effectively and efficiently. Although service was considered necessary in the past, and more emphasis was given to designing and manufacturing quality products, times have changed now. Today, OEMs are unleashing the full potential of customer-centric service to provide increased revenue and profitability by leveraging advanced digital technologies. They need a foundation of digital technologies (digital core) to make the most of it. There are many technologies worth investing in to transform service and optimize service delivery. OEMs can leverage augmented reality (AR), IoT, artificial intelligence (AI), or machine learning (ML) to create exponential value by enhancing the capabilities of physical objects with digital intelligence.

Case in point

A US manufacturer of filters for engines and industrial units wanted to raise their bar of service innovation by tracking system performance and predicting maintenance needs. With IoT technologies, today, they are a one-stop-shop for smart filter services, offering real-time monitoring and more predictive operations for customers, thereby generating new subscription-based revenue.     

Getting it right the first time is crucial

Still, when investing in these emerging technologies, OEMs should not forget this unmistakable aspect of service delivery – having the right service parts in the right place at the right time. The single greatest leading indicator of repeat purchase is — when the asset required service, was it fixed the first time? Guided troubleshooting with diagnostics, trained technicians, AR-enabled manuals, and the right parts enable maximum asset uptime. Customer loyalty erodes quickly when asset uptime drops and service collapses.

Case in point

A heavy equipment manufacturing leader with loyal and devoted customers offers an industry-leading connected aftermarket program that optimizes the service supply chain to ensure the right parts are in the right place at the right time. When service is required, the company responds decisively to deliver service and bring the equipment back up and running. Fixing equipment fast the first time leads to high customer satisfaction, fueling brand loyalty.

Leading with service innovation

Manufacturing enterprises worldwide are realizing greater business value through service innovation. The business climate for OEMs is volatile and ever-changing. Creating better products, faster, and optimizing service delivery is a high-level blueprint of success. Investing in digital thread and service innovation will pave the way to deliver imperative assets and fortify the enterprise, creating a safeguard against major industry and market disruptions. From automotive, construction equipment to medical device manufacturers and shipbuilders to aviation industry innovators, OEMs are capitalizing on the digital thread to use their resources better, driving cost reduction and enhanced efficiency. 

The Service Innovation Imperative A look at how digital thread can help manufacturers deliver peak service outcomes Download Now
Tags: Servigistics Aerospace and Defense Automotive Electronics and High Tech Industrial Equipment Life Sciences Oil and Gas Retail and Consumer Products Software and Technology Connected Devices Digital Thread Digital Transformation Digital Twin SaaS Improve Customer Satisfaction Improve Service Efficiency Increase Asset Efficiency Maximize Revenue Growth AR Workforce Efficiency AR Reduce Cost & Waste AR Improve Customer Experience AR Drive Revenue Opportunities Reduce Operational Costs Reduce Service Costs Sustainability Initiatives Service Lifecycle Management (SLM)
About the Author Leslie Paulson

As General Manager of the Servigistics Business Unit, Leslie has responsibility for worldwide sales, marketing, business development, customer success, and research and development. She brings a wealth of experience from her 29-year career at Caterpillar, with 16 years as a member of executive management teams. Leslie is known for her passion and focus on driving change to deliver customer value and growth. She has a superior command of disruptive technology and its impact on service operations. She has brought her vision and experience to Servigistics and is leading an era of rapid innovation, further fortifying Servigistics as the industry-leading service parts optimization solution. 

Leslie has degrees from Southern Illinois University, Carbondale (MSME, BSME, Engineering), Bradley University (MBA) and Stanford (Executive Program).