Service Lifecycle Management can unlock hidden margins

October 17, 2011: One of the most important area which is being untapped by most of the manufacturers is Service Lifecyle  Management is Post-sales service. Manufacturers have started to pay attention to post-sales service as it has significant impact on the bottom line.

According to Gopalakrishnan V K, vice president at Genpact, even though the growth of revenue slowed down for many of the companies during the last recession, the revenue from service of existing systems continued to grow. He said that the fact that service is critical for sustained growth is being agreed by most of the CXOs.

The center for Services Leadership at Arizona State University says that offering quality product doesn’t guarantee business success any more. It also states that this necessitated traditional product oriented companies to look for new sources of income.

Service Process Improvements

Recent trend shows that manufacturers have started to invest highly on service process improvements. Most of the manufacturers have started to organize and bring component service business process under Service Lifecycle Management (SLM). It is similar to what companies have done in the case Supply Chain Management and Product Lifecycle management.

SLM is an effective means to ensure that the product perform as promised after sale. It is aimed to optimize the various service activities across the service network. The various services will include call center management, remote diagnostics, service parts management and depot repair.

The service executives should focus on improving the whole service network rather than focusing on parts of the service network. In order to improve financial returns from post sales service the company should have a better look at the cost involved in service, threats to customer loyalty.

Under the SLM, various groups have different goals and objectives and the problem arises when these groups operate independently. This reduces the profitability from post sales service. Top companies have brought these goals under one group so they operate for the same cause.

What if service process is not integrated?

According to Aberdeen Group, this is what happens if the service process is not integrated:

  • Repeated visits for 24 percent of the dispatches
  • Unavailable parts contributed to 42 percent of the repeated dispatches
  • Improper diagnosis formed 25 percent of the repeat dispatches
  • Since technicians are not clear about the parts that are needed, 25 percent of the orders had multiple parts.

After sales service helps in improving customer satisfaction and thus help in increasing the revenue and profit of the organization. The success lies in integrating various activities under the Service Value Chain so that customer satisfaction can be enhanced.

SLM will help any company in achieving cost efficiencies and bring about positive impact in revenue and profit. This will help in achieving customer satisfaction and thus to effectively compete in the market.

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