Executive Briefings

Utilizing Analytics for Profit Generating Service Business

For the majority of companies, service parts have much higher margins than the original equipment and are crucial for the success of the organization.

Utilizing Analytics for Profit Generating Service Business

The number of parts and services to be planned and managed is usually very high due to the need to support not just the current generation of equipment, but also previous generations. Other driving factors include customer service level expectations, shelf-life limitations, and obsolescence.

The question is what is a successful approach to create and sustain high profit margins? Far too often, we see that when companies grow rapidly, the service business is suffering: margins are going down, service quality deteriorates, inventories grow, customer satisfaction declines, and suddenly overall growth rates decline - the service issues are impacting new product sales.

Since the vast majority of service businesses are run as cost centers, defining, planning and managing service delivery costs is the key operational task. In turn, Service delivery costs depend on the chosen service strategy: Who are your customers? How is your product's part of your customer's value proposition? What and how many products do your customers have? Where are your products installed?

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The number of parts and services to be planned and managed is usually very high due to the need to support not just the current generation of equipment, but also previous generations. Other driving factors include customer service level expectations, shelf-life limitations, and obsolescence.

The question is what is a successful approach to create and sustain high profit margins? Far too often, we see that when companies grow rapidly, the service business is suffering: margins are going down, service quality deteriorates, inventories grow, customer satisfaction declines, and suddenly overall growth rates decline - the service issues are impacting new product sales.

Since the vast majority of service businesses are run as cost centers, defining, planning and managing service delivery costs is the key operational task. In turn, Service delivery costs depend on the chosen service strategy: Who are your customers? How is your product's part of your customer's value proposition? What and how many products do your customers have? Where are your products installed?

Read Full Article

Utilizing Analytics for Profit Generating Service Business