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Using digital transformation to advance from value-based, digitally-enhanced service models (servitisation) to unleashing the ’Moment of Service’ should be the goal for all businesses, and especially in manufacturing.
The Moment of Service is a transformational process delivering outcomes that impress customers so deeply and continuously that it supercharges loyalty and delivers long-term boosts to revenue. But the advantages are much broader, achieving the twin goals of increased customer satisfaction and significantly improved sustainability.
We can see how this is playing out in a major company like Rolls-Royce, which pioneered the service model and moved from a distant third in its airline engines market to a position where approximately 50 per cent of wide-bodied aircraft now use its engines on a “power by the hour” model. Its Moment of Service enables hundreds of thousands of passengers to get where they want on time and at any point in the day. In addition, by using data intelligently, it has reduced the amount of carbon burned in the transportation of aero engines around the globe for overhauls and maintenance.
But unleashing the Moment of Service involves many factors all of which an organisation must orchestrate effectively. Achieving that Moment of Service demands fresh technology and a new end-to-end approach. The focus is on customers, their experiences, their challenges and the outcomes they want – for which the product or the service is the means, rather than the end.
It starts with leadership teams, which must engage process-owners and customers by using value assessment tools that pinpoint opportunities to streamline and increase revenue-growth. This is a new form of change-management, using data to gain a revelatory understanding of what exactly customers want.
Delivering the Moment of Service requires a single platform approach
In most organisations, however, it is necessary to bridge internal data silos and divisions that inhibit the Moment of Service. More specifically, businesses need to assess how they can use asset intelligence to create value and deliver outcomes that transform efficiency and revenues for customers. Unifying line-of-business applications including enterprise resource planning (ERP), enterprise asset management (EAM) and field service management (FSM) solutions, will deliver multiple gains, ensuring improved working capital and a better quote-to-cash timeline, for example.
Organisations must pull together customer insights with assets, people, equipment and data onto a single platform, enabling engaged workforces to excel at pivotal points in the customer relationship. Businesses need more of the composable elements to drive business value and decrease total cost of ownership, move faster and innovate. In manufacturing, for example, more companies need to think about maintenance and service differently, taking inspiration from examples such as Rolls-Royce.
After-market services have huge potential. The international professional services giant Deloitte foresees after-market parts and services will continue to deliver more than 50 per cent of a manufacturer’s profit on an upward trend. Global management consulting company McKinsey estimates that in industrial equipment, companies with significant services businesses can realise margins up to four times higher on services than is typical in their field. To tap into this rich seam of new and sustained revenue, organisations must examine how they can drive forward intelligence and automation such as predictive maintenance and asset predictive planning. Even telecommunications and utilities companies, which are already heavily servitised, must consider how to use their assets in new ways and put technology at the heart of people in the field, which places a heavy emphasis on expertise in FSM and EAM into the future.
How this is working already in major businesses
This is already delivering major gains in the food and beverage sector. A global food and beverage company operating in 156 countries with 22,000 employees (6,000 of them in field service roles), has made its Moment of Service the provision of food that is safe and available everywhere, including in some very challenging countries. In terms of outputs, this company continuously provides 190 billion Moments of Service every year.
It uses digital technology to simplify processes and services as part of its transformation on the packaging and equipment side. It is moving to outcome-based services directly relating to line performance, waste and emissions reductions. This is full servitisation, selling equipment, materials and services priced on a litre produced or packages output.
But the Moment of Service is not static. Technology is the key – it delights customers by extracting value from assets but constantly evolves. Rolls-Royce has achieved its remarkable transformation by analysing data streaming from aeroengine sensors – its “Blue Data Thread” – for reduction of overhauls, increased sustainability and better customer outcome through lower costs, less downtime and improved risk management.
Through multi-variable forecasting, the company provides a very accurate predictive maintenance deadline right down to individual part number. It is committed to 100 per cent availability. It has already achieved a 48 per cent increase in the time an engine is operational before its first removal for overhaul.
In another example, the Jotun Group paints every fourth ship in the world. Over a decade, it has moved from manufacturing paints and coatings to using data and insights to focus more services around physical products, rather than more making more products. It now delivers hull performance and has robotics to clean hulls for efficiency, reducing customers’ fuel consumption. Its vision includes providing customers with data to reduce resistance on vessels, with data inputs from propeller sensors.
In both of these cases, we can see how the Moment of Service delivers on sustainability targets, which in the contemporary world has the major advantage of making an organisation demonstrably greener to do business with.
Change that affects the whole business
However, these are still relatively early days for the Moment of Service. Many organisations have not yet thought through how to bridge their application and operational silos and are still embarking on digital transformation initiatives. The end-to-end approach requires organisations to incorporate insights from the voice of the customer, mobile workforce management, contract management, product lifecycle management and supply chain optimisation. It also requires employee engagement and human capital management solutions.
Yet the benefits available from implementing the Moment of Service mean companies should take these steps now. They need to unify their end-to-end view in a holistic, single platform approach. Having disjointed data and poorly-integrated solutions is a recipe for failure, loss of revenue and weak sustainability performance.
Moving from a cost-based model to a value-based one also requires a shift in attitudes led from the top, focusing on understanding customers and knowing exactly the outcomes they want. Digital transformation should be a business-led process focusing on delivery of these outcomes.
High-performing organisations that fully and successfully implement the end-to-end approach will achieve major competitive advantage and continue to evolve their Moment of Service for sustainable revenue increases.