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The German printing-equipment maker Heidelberger Druckmaschinen (Heidelberg) has experienced a back-office dynamic aoc leveling that can occur when manufacturing companies move into services. In France its customers currently choose one of two ways to maintain their printing equipment: pay-as-you-go, in which case Heidelberg sends an invoice for parts and labor each time a field technician responds to a customer’s call; or a full-service contract, in which case customers have access to a help desk, remote monitoring, and preventive maintenance. The trouble is that full-service customers call for assistance twice as often as pay-as-you-go age of conan goldcustomers. And because those customers have no reason to monitor costs, Heidelberg’s field technicians replace spare parts on their printing presses much more readily, make on-site visits to them much more frequently, and are likelier to schedule those visits poorly or to forget essential equipment, necessitating yet more visits. (The technicians, for their part, tend to assume that all costs are covered by the hefty full-service fee.) aoc leveling All this erodes Heidelberg’s margins on the full-service contracts, making them less profitable than pay-as-you-go.

There are three ways companies can prevent delivery costs from eating up their service-offering margins. First, they can build flexible service platforms that meet customers’ varying needs while relying on common delivery processes, much as good manufacturers create distinct product models age of conan power leveling  based on standard product platforms. One of our interviewees explained, “We offer six different types of maintenance contracts. Eighty percent of customers fit into one of these boxes. The customer can look at these offers and see which of them best matches his situation.”

Second, the successful firms in our study continually monitored the costs of their processes to identify profit drains. Air Liquide appointed an executive with specific responsibility for trying to standardize aoc power leveling services in the organization. Backed by top management and supported by an internal task force, this executive taught managers and frontline employees in operational units how to systematically take costs out of service production and delivery processes while making sure that customers still got what they expected. For example, Air Liquide regularly mailed gas-consumption reports to its customers. But when the standardization team reviewed this aoc gold  practice, they found that some customers made no use of the information. By discontinuing that part of the service package for those customers, Air Liquide was able to reduce its costs to serve selected customers while maintaining the perceived value of the service provided.

Third, successful companies are quick to exploit process innovations made possible by new technologies. The Swedish bearings manufacturer SKF helps customers extend the service life of their equipment by enabling off-site access to an electronic monitoring tool via a secure internet browser. Vibration-analysis data, for instance, can alert a customer early about potential machine failure. Such smart services allow the age of conan gold  company to perform first-level maintenance without deploying field technicians for on-site visits

Switching services from free to fee clarifies the value of the assets involved for both managers and customers. The French gas provider age of conan gold Air Liquide also took this tack. The company had traditionally purchased millions of cylinders in which to transport small quantities of gas to industrial customers. It charged customers only for the gas delivered, supplying the cylinders free. Consequently, customers took no special notice of how many cylinders they had accumulated, and the company was stuck with considerable floating inventory. Starting in the mid-1990s, however, Air aoc leveling Liquide charged a small rental fee of €5 to €7 per cylinder per month. Not only did this turn a profit drain into a profit engine, generating several hundred million euros a year in fees, but it created customer awareness. Once the gas cylinders had a price tag, customers wanted to optimize their inventories. As a result, Air Liquide was able to sharply reduce its floating inventory, transferring cylinders from customers that didn’t need them to customers that did.

Large companies can uncover profitable existing service offerings simply by comparing billing practices across their operating units. age of conan gold We found that at Nexans, the world’s leading cable manufacturer, subsidiaries in some countries were charging customers a fee for cable drums, whereas in other countries they were not. Nexans holds large inventories of high-voltage cable in order to ensure rapid delivery; applying the fee across the whole company represented a significant opportunity to recoup its investment in working capital.

Smart companies will put a senior executive in charge of looking at practices in other business lines to uncover hidden services. He or she can then start crafting a forward-looking strategy for services on the age of conan gold  backs of early wins. By giving the process an owner early on, companies can ensure that their service initiatives are not just opportunistic ideas developed by individual business units but part of a strategy to capture best practices and roll them out across the organization. Schneider Electric, a French electrical-equipment company, chose this route. Early in its move toward services it created a strategic deployment and services division whose executive vice president was charged with auditing existing services across the age of conan gold organization and then creating a coherent strategy for offering new services. An executive board member with 20 years of experience in the company was named to the post.

2: Industrialize the Back Office

Manufacturers are accustomed to stable and controllable production processes. But when they venture into value-added services, they may find front-office service customization turning into a delivery-costs nightmare. Unless they can prevent this, their service margins will suffer age of conan power leveling  One of the managers we interviewed explained, “To earn money in services, you need to industrialize the back office. Companies like GE and IBM really are process freaks.”

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