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From just another after sales provider

to a leading service champion

Barkawi Management ConsultantsMunich • Atlanta • Moscow • Shanghai • Vienna

After sales service:Turning service opportunities into profitable business

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Authors

More publications by Barkawi Management Consultants

Carena Barkawi, Founder and CEOFor many years, Carena Barkawi has been CEO of the award winning consul- tancy Barkawi Management Consultants in Munich. Barkawi Management Consultants is part of the Barkawi Group, where Carena Barkawi is CEO of the Holding.

Dr. Andreas Baader, Managing PartnerDr. Andreas Baader heads our After Sales Service, Spare Parts Management & Technology division. Before joining Barkawi Management Consultants in 2000, Andreas Baader held various executive positions at SAP AG, most recently mana-ging the Application Design Sales Support division there. Andreas Baader studied engineering and wrote his doctorate in the field of aerospace technology.

Technology Transformation: How to become a digital champion Amazon and their peers show us how it is done: better, faster, bigger product range and often even cheaper thanks to digitization and a perfectly networked supply chain! Innovative supply chain champions collaborate with completely in-tegrated service providers – connectivity and collaboration are the magic words!32 pages, chock-full of information, case examples and proven measures for a successful technology transformation!

Oliver Bendig, PartnerOliver Bendig is in charge of the After Sales Strategy & Operations division. He has been advising technology and industrial goods companies for more than 20 years, focusing on service, price and growth strategies. Numerous of his clients have been able to double or even triple their after sales turnover with his help, and develop it into the most important mainstay of their company.

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After sales service:Turning service opportunities

into profitable business

INDEX

Introduction 4

1. After sales service strategy 8

2. Customer interface management in after sales service 10

3. Perfect repair management in after sales service 13

4. Spare-parts management: The heart of after sales service 16

5. Workforce management in after sales service 20

6. Warranty management in after sales service 23

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A perfectly equipped testing workshop in the USA. Throughout the day, the staff put various diesel

models of the Golf, Scirocco, Tiguan, Jetta and Polo vehicles through their paces. They all pass the air pollution inspection prescribed by the American environmental authority EPA with flying colors. Not much later, it becomes known that a cheat soft-ware is behind the test results of the supposedly so modern, innovative and environmentally friendly technology. Top in the tests, flop in the rest – because on the road, every one of these vehicles emits a multiple of the permitted exhaust limits.

And so it was in September 2015 that a business thriller of unimagined dimensions ran its course, to the great vexation of stakeholders, shareholders and customers. Up to 11 million motor vehicles are invol-ved around the world. They all have to be recalled to the workshop – the old-fashioned way. That costs time and money, and not only for Volkswagen!

Introduction

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Volkswagen has already put aside 6.7 billion euros in provisions for recalls, to say nothing of damage to its image, the freefall of its shares on stock markets, financial penalties and damages claims that reach into the billions.

A ‘recall‘ entails identifying affected customers, con-tacting each one of them individually and asking them to make an appointment for their vehicle in the workshop, to take it in and to have the damage rectified there. That equates to an average of around 1,100 motor vehicles for each of the round 2,200 authorized workshops in Germany. Although in many cases only a small software update is requi-red, the recall will drag on for months and give rise to costs, resentment and long waiting times for customers.

After sales service in the age of digital transformation

Drive to a workshop for a software update? In the age of cloud computing? With today‘s possibilities of networking and remote access to machines, this kind of after sales service feels like an anachronism. Tesla, for example, the technology leader when it comes to electric motor vehicles, overs service ‘over-the-air‘. This Californian premium manufacturer provides a comprehensive interconnection of its vehicles and equips them with remote service data exchange functionalities as a standard feature – for example for software updates.

With that capability, the world would look comple-tely different for Volkswagen, and more especially for Volkswagen customers: identifying the owners, writing them a letter, making and keeping work-shop appointments to execute the tedious recall would be a thing of the past. Instead, the software would be updated remotely: quickly, easily, cheaply and without hassles – effectively overnight for the customers. That is modern after sales service in the internet age!

You could even use some product improvements to dynamically, innovatively polish up your image. Apple leads the way on that front. They claim that each update makes your Mac computer even faster and better: no one notices that what they are often doing is getting rid of software bugs. On the contrary! The customer even does part of the service work for Apple by obediently downloading the updates – and feels good doing it!

Service – and in this case repeatedly updated soft-ware – is after all an integral part of the innovative products and cutting-edge image of the Apple empire. It is inconceivable that Apple would ask customers to drag themselves to an Apple Shop for every update.

With this strategy, Apple sells the world‘s most expensive mobile phones and laptops and has advanced to being the most valuable company on the planet.

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The outlook for After Sales Service 4.0

In the same way as Industry 4.0, Service 4.0 occupies itself with the innovative further development of the classical service business using pioneering technical possibilities that have arisen, or will soon come about, as a result of digitization and networking. Gone is the time-devouring, expensive and ineffi-cient on-site customer service. It is being replaced by perfect, individualized, remote customer service and smart spare parts management using all the options that digitization has to offer.

Digitization opens up fantastic new worlds! The supply-centric approach of the old world is turning into a demand orientation driven by the needs of the customers.

Because the competi-tion is tough – and it is going to keep getting tougher!

The focus of after sales service in the future will no longer be on what the technology or man- ufacturer can handle, but rather on acute customer needs.

For instance, if the production line is at a standstill at AUDI because of a power blackout, the energy supplier needs a plan B fast if it doesn‘t want to catapult itself out of the market; especially when there are other electricity providers ready to pounce on the opportunity to oust it with more innovative, faster and more reliable energy concepts.

Focusing on customer needs while simultaneously individualizing your service range will be key issues and an irreversible development in the service world in the years to come. Digitization opens up enormous opportunities in both of these fields, and in addition to securing massive efficiency improvements, it also provides a competitive advantage that cannot be overestimated – satisfied customers!

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After sales service: driven to new heights by the IoT

One main driver of this development is the Internet of Things. Various elements, such as machines and plants, vehicles, technical equipment, building and logistical components, are being fitted with sensors and control elements and made able to communi-cate with each other and human beings via digital broadband networks and mutual interfaces and standards. Readable data carriers serve as a digital product memory throughout the entire life cycle.

Cloud architects provide the possibilities that are required to store the rapidly increasing data volumes, in such a way that external partners with differing approval rights can also be connected up easily. Using big data technologies, the enormous amounts of data that often come from very diffe-rent sources can be woven together, analyzed and evaluated in real time.

The expectations and chances that are being forecast for the economy are unheard of. In a joint study, Bitcom and Fraunhofer IAO 2014 are fore- casting that Industry 4.0 will lead to a 30 % increase in value generation by 2025 in the German machi-nery and plant construction and electrical equip-ment industries.

New sales potential is being opened up, while costs are at the same time being reduced, so the net

effect is huge! And service can be expected to make a significant contribution to that. While the profit contribution of service is today around 60 %, it will soon rise to up to 80 %.

If these levels are to be achieved, the opportunities offered by after sales service have to be recogni-zed and integrated into a comprehensive concept, while not underestimating the challenges arising as a result of the changes being made by the compe-tition!

Up to now, digital developments have been dri-ven largely by the technical side, with the focus on control and transparency issues. Service then often follows the product as an added extra. But very few companies are strategically considering redesigning their service business model as an integral part of their product development. A change has to occur in this mindset.

How? Find out on the next 24 pages, jampacked with information, examples from the real world of busi-ness and steps that help you transform successfully from being just another service provider to a customer-centric service champion!

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Spare parts delivered quickly and reliably over-night, right into the technician‘s vehicle, so that

he can go straight to the customer first thing the next morning with everything he needs. That is modern after sales service!

For many companies, after sales service is the quint-essential growth driver. While many new products are sold with little or no profit margin, after sales service offers the opportunity to generate attractive profits. And yet many companies fail to exploit that potential.

The Barkawi After Sales Service Pyramid illustrates a structured approach with which you can become the number on in service – the service champion, so to speak!

After sales service ambition

Clear goals and a precise strategy help you steer your company in the desired direction. Do you strive to be the innovator that provides its customers with after sales service based on the latest technologies and tools? Or do you want to position yourself through price leadership? For service champions, after sales service accounts for up to 35 % of their sales, and that with margins north of 20 %! What are your ambitions for your after sales service in 2018?

1. After sales service strategy

Ambition

How to succeed?(Service Transformation)

How to win?

How to enable?

Where to play?

Servi

ce gr

owth

Service Growth Path / Quick Wins / Mobilized teams

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‘Where to play‘ – Where do you want to position your after sales service?

Should you concentrate on after sales service for products you have sold, or should you also offer the service for competitor products? What customers should you focus on? And which services should you offer for which products in which countries?

Service elements defined in an after sales service catalog enable you to show the diversity, availability and price structure of your range.

‘How to win‘ – What is your strategy for success?

If service offerings comprise internally standardized service elements that are easy to describe and implement and that the customer feels are tailored to its individual needs, they offer true added value!

Polished sales processes help your sales team sell premium after sales service to your premium custo-mers! You should be able to offer your after sales services with standardized processes, and fully utilize the capacities of your service network in a well-balanced fashion.

‘How to enable‘ – How do you put your company in a position to implement the service strategy?

Leading after sales service organizations clearly define the separation of responsibilities between

the equipment and service organizations. In nearly all cases, companies have to build-up their service capacities, service sales, field technicians and sup-port staff, introduce the right KPIs and use them to steer their organization.

Global or regional functions and a select network of partners form their after sales service operation and help them deliver excellent service that sets them apart from the competition.

‘How to succeed‘ – How do you transform into a perfect service organization?

Even when companies recognize the enormous potential that lies in growing their service business, the challenge still remains of transforming the com-pany into a perfectly functioning service organiza- tion. All the actions that are required to do so have to be well planned and allocated the necessary budget – but they also have to be executed efficiently and in the right order of priority.

A key component for their success is getting staff and management behind the project and establis-hing an after sales service culture in the company.

Our After Sales Service Excellence Pyramid is a proven tool that we have used to help many enter-prises multiply their customer-care business and service sales, and to become a service champion in their field!

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The new mobile phone is all the rage! But then, all of a sudden, unexpected problems arise with the battery. The customers storm the company website and the homepage collapses under the traffic. So they reach for their telephone to make a complaint – but the call center isn‘t geared for peak loads! Cases like this cost sales, customer satisfaction and can damage your image for a long time to come.

Perfect after sales service, on the other hand, can manage to leave a good impression and satisfied customers even in the event of annoying product defects, recalls or even larger-scale damage!

After sales support in various different channels

Companies are today faced with the challenge of having to offer individually tailored after sales support to different customer types and in different

2. Customer interface management

in after sales service

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channels, such as telephone, e-mail, messaging, chats and social media – because expectations are high, regardless of whether the customers are end consumers (B2C) or resellers (B2B).

Providing technical know-how, expert experience and adequate support in real time are today seen as prerequisites to the ideal placement of a product, and they represent a service that plays a signifi-cant role in the purchase decision. Customer care is increasingly becoming an integral part of a product!

Multiple local service centers, or a single central one?

We help you by taking the standpoint of your custo-mers: what after sales service do they want; what media do they want to be served in; what order volumes can you expect, and when? What makes more sense: several local service centers or one central one? Do you really need trained product specialists, or could you use less expensive emplo-yees if you had a modern knowledge-management system?

We help you make changes to your after sales service measurable by implementing a compre-hensive KPI system, so that your customer care perfectly complements your product and helps move purchase decisions in your favor, while keeping your costs lower and your customers happier than those of your competitors!

Twitter and service training manuals for satisfied customers

Driven by growing customer demands and growing cost pressure, an internationally successful company – one of the world‘s largest makers of consumer electronics – set itself the goal of reorganizing its call centers around the globe. The biggest challenge here was how to offer better service without increa-sing costs?

The starting point for our project was marked by the questions: what after sales service needs do the company‘s customers really have? How do they actually use the Customer Contact Center? And how do the Centers react to service requests? After analyzing the available data and several visits to the call centers, we identified five factors that showed us the direction our optimizations had to take to provide the new, perfect after sales service:

1. Channel structure

The company only responded to customer inquiries by telephone and e-mail, while ignoring channels like the Facebook pages and Twitter accounts for customer service, despite their high usage rates. By setting up the relevant communication options, we were able to reach in particular consumers in the 18 to 39 demographic, and take a lot of pressure off the hotlines.

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2. Workforce management

The organizational structure in the call centers was not tailored to the volume and type of inquiries received. By establishing virtual teams comprising a mixture of generalists and experts, who took care of both telephone and social media queries, we made sure that every after sales service incident was assigned to the right person.

3. Performance management

Strict monitoring of the major key performance indicators of the service, and a set of predefined

measures helped the service center to react quickly when it deviated from its target values. For example, if the first-call-resolution rate fell, operatives were given more training or knowledge-base articles.

4. Knowledge management

The use of modern knowledge-management tools enabled inexperienced agents to gain access to expert know-how in real time, and to pass that expertise on to the customers. Now, consumers no longer have to wait for an overworked service expert to call back, instead they get a rapid answer to their question. Because reaction speed is the name of the game!

5. Use of modern technology

Employing modern technologies enabled us to save working hours, from allocating each call to the right team to reducing the time required for research and documentation thanks to a modern ticketing system, and on to the option of e-mailing standard solution texts to customers. Those hours are now available to the customers for improved after sales service.

These optimization levers led to a 12 % rise in customer satisfaction scores. Without having to employ additional staff, 10 % more inquiries could be dealt with. That is what great after sales service looks like that deserves the name ‘service‘!

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3. Perfect repair management

in after sales service

Everyday business in after sales service: defective smartphones that impatient customers

want to have replaced, wind turbines and machines at a standstill, a production plant that can‘t function because a replacement part is lacking. Or even worse: an emergency medical device in a hospital that could cost lives if it malfunctions – how do you, the manufacturer, deal with that kind of problem?

There is nothing that raises customer satisfacti-on levels more than excellent repair management! Cleverly integrated into innovative service solutions, it also promises high profits.

What to outsource, and what not?

We help you find the best answers to many questions, such as what levels in your end-to-end repair process can you outsource in your after sales service, and which ones can‘t you? Is your front-end solution designed in such a way that errors that aren‘t actually errors at all are ruled out from the outset and don‘t make their way into the repair process in the first place (‘no failure found‘)?

Do you use social media to offer your customers the best possible self-help options? How do you want your ideal repair network to be structured? All these questions and more need answering and the right plans made if you want to create the perfect service!

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Improve availability

We help where help is needed, so that you always have control over your service business and increase your customer satisfaction levels with optimi-zed repair services. That is what happens when your machines have less downtime than those of your competitors, i.e. you are the undisputed

service champion! At the same time you keep the costs of repair and maintenance under control, and often even generate a sales plus with your after sales services.

By the way: Our network of consultants and employ- ees from B2X (another Barkawi Group company!) guarantees that our know-how in the field of repair management is always up to date: B2X offers global repair-management solutions in the fields of tele-communication and consumer electronics. Leading edge customer care, state of the art!

Industry example: Medical technology

The background

An endoscope is made up of complex individual parts: wire winders, pulleys, fiber optics, brake rollers, screws and a micro camera that is as small as a speck of dust. In the event of a technical defect in this highly complex device, and if there is no first-class repair process, the hospital cannot conduct examinations.

The patient then has to wait for weeks for a knee arthroscopy – or go to another clinic – not good at all! And ultimately it is your reputation as a manu-facturer that suffers, while the competition laughs up its sleeve.

So in the worst case, sub-par after sales service damages your core product!

Figure 1: Optimized repair services

Return

Repair

Logistics

Goods received

Before

20 days

After

8 daysIdle time (waiting

for spare parts)

-60% TAT(turnaround time)

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One of our clients was struggling with exactly this problem. At first glance, its heavily decentralized European repair network of workshops close to the customers appeared to be a guarantee of fast response times.

But the reality of it was different: poor parts availability, severe differences in the skill sets of the various service technicians and the resulting cross-shipments of the devices from one market to the other led to massive delays in the after sales service. The costs for equipment leasing skyrocketed.

Our solution

What to do? Together with the manufacturer, we designed an after sales service repair strategy, the basis of which was the introduction of a highly available regional repair hub at a location with qualified personnel in Eastern Europe.

We also defined various repair types: while only an expert can repair a micro camera, simpler repairs like the adjustment of the endoscope sheath angle can be taken care of in a few simple steps by technicians who hardly know the device at all.

More professional, centralized planning and suffi-cient volumes enabled us to significantly improve the availability of parts and thus the entire customer care in the repair hub.

A standardized repair process in after sales service, tailored specifically to the device, reduced the internal processing times. With endoscopes now arriving at the hub from all over Europe, the volume of complex and rare repairs was large enough that the technicians were able to quickly acquire suffi-cient expertise to take care of them. Pooling was the secret to success here!

The bigger distance for sending the devices to the hub could be more than compensated for with in-night deliveries and the time savings achieved in the repair phase itself. High-volume consignments (bulks) that could then be taken care of centrally further lowered the service costs.

We supported this realignment of the customer care from the concept design to its full operation, and it put our client in a position to set itself apart from the competition by offering better service at lower cost.

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A mobile phone for 120 euros, a hospital‘s blood plasma refrigerator for 4,000 euros or a special

machine tool for 700,000 euros – they all have one thing in common: as diligently as they may have been constructed, some of them will probably break down at some point in their life. And when they do, the customer expects the manufacturer to provide a fast and uncomplicated repair. That only works with efficient spare-parts management and perfect after sales service.

The right part at the right place

‘Efficient‘ means having the right part at the right place at the right time. High warehouse costs have to be avoided just as much as long distances between the warehouse to where the repair takes place, or delays in the handling of orders. While a mobile phone can be repaired centrally and it suffices to have the replacement parts available within the space of three days, the parts needed to repair a machine tool have to arrive on site with the technician the very next morning.

4. Spare-parts management:

The heart of after sales service

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The margins that can be generated with spare parts in a well-planned after sales service concept are four times as high as with end products. So if you don‘t have the parts you need at your fingertips, you are missing a big opportunity.

Eyes on all processes

We take a close look at your spare-parts manage-ment and service. On the basis of customer and market requirements and your service strategy, we investigate your procurement, order management, inventory planning and logistics handling, parts pricing, selection and management of service providers and supply chain controlling processes, and ensure that they are all ideally structured and dovetailed within a strategically smart after sales service process, so that your customers get the best possible service at the lowest possible cost.

Better service level for machine tools

Modern machine tools are highly complex plants, specialized, for instance, on producing specific components. It is not rare to have these machines running almost without interruption in a three-shift operation – and they are so expensive that you can‘t just go out and buy a second one.

So downtimes are undesirable: a machine stoppage of one hour can quickly cost the manufacturing company many thousands of euros. What is more, machines designed or configured to customer

requirements also contain many one-off parts. This means that the machine maker has to keep a large store of replacement parts, many of which are seldom or never actually needed. This is a real challenge for smooth after sales service!

The background

Our customer, a leading maker of machine tools in its segment, acquired a number of companies and was faced with the challenge of bringing together the previously independent spare-parts manage-ment operations of three different divisions into one overall service concept. At the same time, it also wanted to make its spare-parts business more customer centric.

Together we examined the performance of the existing spare-parts management in workshops and with customer questionnaires: what did the customers expect from their spare-parts supply? What did the internal stakeholders expect of the service?

Although the three divisions exhibited almost no customer overlaps, it soon became apparent that completely separated spare-parts management would lead to significant inefficiencies in after sales service: three separate warehouses now had to be managed, all in different European countries.

The regional sales organizations, which had already been merged together, thus had three different

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points of contact, each with varying processes and markedly different service promises. Expensive, local spare-parts inventories were the result.

And Logistics and After Sales Service were not able to meet Customer Service‘s desire to offer differen-tiated service products.

Our solution

We agreed upon three main goals for optimizing the after sales service and supply of spare parts:

To improve the internal processes and exploit synergies, the spare-parts management instances in the three divisions were to be brought together.

The warehouse network and delivery of the spare parts to the customer were to be oriented to the customers‘ needs, and finally the processes and management were to be structured in such a way that Customer Service could actively market the spare parts and integrate them into service pro-ducts.

Based on our analysis of the custo-mer needs, we defined the service levels that we wanted to be able to offer the customers in after sales, together with the customer service organization.

It became apparent that we had to make a definition between two custo-mer groups: one that needed fast delivery but wasn‘t price sensitive, and one that was very price sensitive but could wait a little longer for its parts.

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We conducted a network simulation to determine how we could achieve the defined service levels. Because of the broad product range, the plan was to have as few warehouse venues as possible, in order to keep the inventories and the risk of obsole-scence as small as possible. With the right transport concepts the customers from the second group could largely be served from one central warehouse, but the delivery times achievable with that method weren‘t fast enough for the first group.

We decided to set up further local warehouses (Forward Stocking Locations – FSLs) for a limited range of critical products that could be delivered to the machine‘s location within six hours of receiving the order/diagnosing the problem.

In addition to this logistics solution, we transfor-med the order management and inventory planning when optimizing the customer care. The local orga-nizations are no longer responsible for their inven-tories and order scheduling; that is now done by the centralized spare-parts organization.

At the same time, the service technicians and local organizations receive notification of the availability immediately upon placing their order, which now, for the first time, enables the repair orders to be scheduled in alignment with the spare-parts delivery.

Better and cheaper!

The transformation of the logistics, the related process and the overall after sales service concept enabled supply chain costs to be reduced by 22 % per year, while at the same time making sure that 98 % of the customers in western and central Europe got their parts within the requested time. With the support of the network of FSLs, express freight options and flexible order management, critical orders can now be delivered to most of the customers in Germany, Benelux, France, Austria and Switzerland within three to six hours.

For the premium customers this is worth the price – and for the others the price is good.

Figure 2: Cutting supply chain costs by changing your logistics

Before After

A 22 % reduction of supply chain costs

A 98 % success rate within the requested delivery time

Critical orders delivered within 3 to 6 hours

-22 %

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After severe thunderstorms, 500 windpower plants around the country reported faults, and

that during the summer vacation, when the service team – which was chronically understaffed anyway – was further decimated. The technicians of other service providers had no more capacity, because they were taking care of service orders from direct competitors.

And as if that weren‘t enough, the own customers were calling every half hour and demanding that their disruption be remedied NOW – or the next call would be from their lawyer. A true challenge for after sales service!

5. Workforce management

in after sales service

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Rectify unpredictable disturbances

Alongside the more predictable everyday business, there are often also incalculable problems to be dealt with in workforce management. When these extreme situations arise, the individual wheels of call center, spare-part preparation and scheduling of the service technicians all have to mesh together precisely, like the cogs in a Swiss watch. There is nothing more nerve-racking for a customer than not being able to get a machine up and running again because a part is missing, or – even worse – because the technician doesn‘t know what to do.

A bridge between the human being and technology

We scrutinize whether your ‘first-visit completion‘ and ‘cost per visit‘ lag behind those of your compe-titors. We find the optimum staffing of your team, based on your technician profiles, and don‘t shy from questioning longstanding shift and working-hour models. We also build a bridge between the human being and technology, by sounding out the software jungle with a view to your needs.

Are features like the IT interface in spare-parts management, or the real-time retrieval of technician capacities really necessary for you? At the end of this process is your individual, ideal quality standard for your after sales service – with reduced costs, motivated staff and a maximum of customer orien-tation as the result.

Industry example: Manufacturer of windpower plants

The background

Hardly anything is as complex as servicing a wind-power plant: rotor blades, transformer, generator and other components all have to be serviced at regular intervals. To do so, specialist know-how is required, and innumerable labor-law regulations have to be adhered to.

For instance, a service technician without a minimum of training in electrical engineering is not allowed to even switch a windpower plant on or off. Another sticking point are the large geographical distances between the plants.

It is not uncommon for service technicians to have to drive for several hours to get from one plant or wind park to another, which of course means a large share of unproductive working hours. So it isn‘t easy to put together an optimized concept for after sales service!

Our customer – one of the world‘s leading makers of windpower plants – was faced with just this challenge. We analyzed its workforce management together, closely investigating every step of its after sales service, from order acceptance to spare- part and shift planning through to order execution, to then subsequently focus on two main topics that promised particularly large optimization potential:

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the skill levels of the technicians and the shift and working-hour models!

It soon became apparent that teams often compri-sed two highly-qualified technicians that did not complement each other with their skills, but over-lapped. This meant that these service teams could only be commissioned with certain specific service orders, which reduced the flexibility of the enti-re service organization, without the management realizing it. That is not what a perfect after sales service concept looks like!

Our solution

We replaced these teams with mixed-expertise teams. This meant that the technicians could learn further skills on the job from their teammates.

Across the board, the qualifications and competen-cies of the technicians increased, without further training measures being required, and at the same time, the service teams became more flexible with regard to maintenance and repair orders.

For example, the industrial climber could service the rotor blades while the second technician took care of the fault in the gears. We also found that strict shift and working-hour models lowered the efficiency and productivity of the service teams.

Because the technicians often had to cover large distances between the individual plants, a large percentage of their working hours was non-productive. It often occurred that travel times accounted for more than 50 % of the working day.

Furthermore, many service orders were not com-pleted until the following day, because the working- day model forced the technicians to stop in the middle of their work, in full awareness that they would have to spend several hours on the road again the next day to come back to the plant and finish the job. An efficient after sales service is cleverer than that.

So together with the customer, we developed a new shift and working-hour model that reduced the number of working days in the week from 5 to 4, with each day having 10 instead of 8 hours. We also allowed the service teams to build up overtime that they then had to take in time off when workloads were low.

Alone the new shift and working-hour model led to a lasting increase of the productive working hours of almost 10 %. The new overtime rule further improved productivity by more than 5 %! Better and cheaper – that is the win-win of a smart, modern after sales service!

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Three years guarantee for a new machine. ‘Excellent‘ the customer thinks, ‘I don‘t have to worry about the next three years then!‘ But for you the situation is different: it can get costly! Why does your company even offer guarantees? Why aren‘t some components excluded from your manufactu-rer‘s warranty? Is a guarantee purely an obligation for you as a manufacturer – or is there an opportunity in there somewhere?

The main objectives of efficient warranty manage-ment and intelligent customer care are to keep after sales service incidents to a minimum and to deal with them at the lowest possible expense, while keeping the focus on customer satisfaction. Poor utilization of technician capacities, plants that are difficult to service, a lack of upgrades, varying warranty periods or missing spare parts are just some of the many challenges that the everyday business holds in store.

6. Warranty management in after sales service

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Which challenges do you deal with first?

We find out together with you which of these challenges you want to master first – because they drive up your costs! In doing so, we ask whether different warranty periods and terms are really needed in each different country.

We want to know why your best engineers gene-rally work on developing new products, rather than on upgrades or retrofits. And we question why no service technicians are involved in the design of new products (design for serviceability).

In or outsourcing of services?

And you don‘t have to do everything yourself. Many of our custo-mers today put their trust in a clever mix of own and third-party services (make or buy).

This conscious decision is made possible by the fact that our customers have transparency over their geographical tech- nician coverage and the required technician pro- files – and of course the costs they involve.

And that means that you can keep the after sales service promises you make.

Industry example: Agriculture

The background

The waiting is over: the corn is ripe, the weather is dry – the harvest can begin. All the more frustrating it is when the new trailer for transporting the crops chooses now to go on strike.

The farmer goes into a cold sweat and puts pressure on the dealer to get him a replacement as soon as possible. After all, the trailer is under guarantee!

Feed

back Loop Incident / Claim

Systematic Claim

Rule-based

Workflo

ws

Decision

Figure 3: Warranty management

_ KPI / Reporting_ Root cause analysis_ Continuous improvement process

_ Reporting_ Clear decision rules_ Escalation process

_ Clear repair processes_ Clear customer interface

WARRANTYMANAGEMENT

_ Information integrity_ Process integration_ Process adherence

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If you don‘t have good after sales service with strong warranty management in such a situation, things can get nasty.

Among the many challenges for our maker of agricultural trailers was that the starting date of the warranty period wasn‘t sufficiently documented. For the farmer there was no question: from the day he bought it! But the manufacturer only knew the date it delivered the trailer to the dealer.

Nor were there clear guidelines for the price up to which the dealer could offer a swap, or from what price the manufacturer had to be involved in the assessment. To aggravate things further, the Rus-sian dealers didn‘t fully understand the English- language warranty terms.

So all in all, our agricultural machinery manufacturer struggled with high warranty costs and dissatisfied customers, without entirely understanding what it was they were unhappy about. Were the reasons for the many warranty cases to be found in the produc-tion process? Were there quality problems among its suppliers – or was it just that the customer didn‘t know how to use the trailer properly? After sales service simply cannot work perfectly with so many variables and uncertainties!

Our solution

In workshops with Sales, some of the national managers and selected dealers, we succeeded in

designing a three-stage warranty program with a clear strategy, well-defined processes and efficient performance management – a clever overall concept for individually optimized after sales service.

For instance, we defined what the warranty should include – and what it shouldn‘t – and where the dealer had to have room to move for goodwill. We determined IT tools for holistic data integration established simple front-end diagnosis options and defined rapid return options.

By determining KPIs, reports and communication rules, we ensured that problems could be analyzed and eliminated in the future. We also laid out clear guidelines for proactively remedying series errors in machines that have already been delivered.

In addition to a reduced number of warranty inqui-ries and lower total costs for warranty cases, our customer was also able to significantly improve the satisfaction levels of its trading partners and the end customer farmers! With this perfect after sales service, not only the corn is in the bag!

Your excellent product is the basis, and perfect after sales service is the lucrative cherry on the top of the product range! Expanding your service business gives makers of industrial products in all sectors attractive growth opportunities. Depending on the industry, companies can generate more than half of their sales and profits with service alone – and that with constant sales growth!

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Barkawi Management ConsultantsBarkawi Management Consultants Munich is an international management consultancy that focuses on supply chain management and after sales services. Karim Barkawi founded the company in 1994, which today employs more than 200 people and has offices in Munich (HQ), Shanghai, Moscow, Atlanta and Vienna. Among the clientele of Barkawi Consulting are globally active companies with logistically complex business models, like BSH Bosch and Siemens Household Devices, CocaCola, Daimler, Lufthansa, Nokia Networks, Philips and many more besides.

Barkawi‘s hands-on implementation approach can be seen in its own entrepreneurial spirit. Its know-how and entrepreneurship have been the incubator for a number of new business ideas that Barkawi Management Consultants Munich has realized over the years, such as for B2X, an after-sales services outsourcing company.

Today, Barkawi Group encompasses seven compa-nies in various industries that employ almost 1,000 people in 30 countries.

Barkawi Management Consultants – The entrepreneur among consultants!

DisclaimerData contained in this document is not binding and serves information purposes only.

Liability claims filed against Barkawi Management Consultants GmbH in relation to material or intangible damages resulting from the use of this publication shall be principally excluded.

© 2017 Barkawi Management Consultants GmbH. All rights reserved.

Image rights: DHL: Page 8 I Fotolia: Page 23Universitätsklinikum Heidelberg: Page 13 Shutterstock: Pages 1, 6, 10, 15, 16, 18, 20, 28

Barkawi Management Consultants GmbH & Co. KG Baierbrunner Str. 35 81379 Munich

Phone: +49 89 749826-0 info@barkawi.com www.barkawi.com

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We are a management consultancy that specializes in supply chain management and after sales service. In times of falling returns in the new-product bu- siness, excellent after sales service gains special importance. Companies that can bind their customers over the long term with smart, new service and maintenance concepts improve their sales and profits.

Our experienced, expert consultants Dr. Andreas Baader and Oliver Bendig help you build up an efficient service organization with outstanding after sales service and cost-optimized spare-parts logistics.

Your perfect supply chain with excellent after sales service is our goal!

Dr. Andreas BaaderManaging Partnerandreas.baader@barkawi.comTel. +49 89 - 749826 - 712

Oliver BendigPartneroliver.bendig@barkawi.comTel. +49 89 - 749826 - 813

Short communication paths for brilliant after sales service:

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Your excellent product is the basis, and perfect after sales service is the lucrative cherry on the top of the product range! Expanding your service business gives makers of industrial products in all sectors attractive growth opportunities. Depending on the industry, companies can generate more than half of their sales and profits with service alone – and that with constant sales growth!

Barkawi Management Consultantswww.barkawi.com

But most companies currently still generate a maximum of 10 % to 25 % in this way. The lion‘s share of their sales still comes from the sale of products – old school! But what a shame that is, because there is so much potential lying unexploited here, and money going down the drain. After sales service – one of the greatest growth oppor-tunities for the capital goods industry, and you don‘t want to leave that to your competitors!

‘After sales service: Turning service opportunities into profitable business‘ by Barkawi Management Consultants is a pragmatic and practical guideline for companies looking to transform opportunities into measurable results. 24 pages, chock-full of informa- tion, case examples and proven measures for mastering a successful transformation from being just another service provider to becoming a customer-centric service champion!

From just another after sales provider

to a leading service champion