Transforming business models with digital tools and advanced technology will be profitable in the long run
Service companies have experienced and undergone numerous challenges and changes in 2022. Supply chain disruptions, inflation, and growing expectations from customers are some of the biggest challenges. However, these challenges also accelerated digital transformations for many organizations. The major learnings can be divided into five key themes and the learnings from these themes are noteworthy for service companies to have a successful 2023.
Supply Chain
The supply chains of a service company are the most prone to disruptions as uncertain global and local events directly impact them. For example, the price of fuel and political unrest can cause supply chain activities to come to a halt. Supply chain teams are just as important as the marketing and sales teams of a company. This is why substantial planning is required to meet the growing customers' needs and demands. Companies are now prioritizing digitization, resiliency, and sustainability of their supply chains. Companies are investing in technology to identify and predict crises before they occur, remote diagnostics as part of digitization, and repairing and refurbishing equipment to ensure sustainability.
How to adapt to supply chain challenges:
Technician inventory: Companies are keeping track of stock held in various customer locations, technician vehicles, and other inventory factories and stocking locations. They have a better insight into where is what which helps them to transfer materials to areas of need from areas of surplus.
Local partnerships: Maintaining local partnership plans are a great risk mitigation strategy. These partnerships keep companies disciplined and serious about parts and inventory in stock and returned.
Order processes: Having excess stock in inventory can cause more money and resources to be wasted. Hence, companies are investigating why there is a surplus and how they can ensure that surplus orders are not made in the future
Loaner and rental return: Companies prefer owned assets to be brought back in-house for repair, and rental assets to be provided to customers. This way there is a circle of running operations where assets are distributed mindfully.
Artificial Intelligence: Companies are making the most use of advanced technology to predict which parts or equipment will need to be purchased or repaired. They dispatch orders by making data-backed decisions with the help of artificial intelligence software.
Asset data and asset centricity with digital transformation
Most organizations are collecting, storing, and tracking data. However, most of them do not know how to leverage those data to impact their field service operations. Employees require training and awareness on how they can leverage digital transformation. At the same time, for a successful digital transformation organizations need end-to-end data across the customer experience to enhance their products and services. These asset data need to be made available and ensured they are used by all the teams to make data-backed business decisions.
Outcome-Based Models and Product-as-a-Service Models
Companies need to reshape and revamp their marketing, sales, and financial models to transform to an outcome-based model or product-as-a-service model. For this, they need to ensure asset centricity and make changes to their infrastructure to support such models. Business owners are concerned about the cost of making such changes to their models. However, transforming business models with digital tools and advanced technology will be profitable in the long run.
Recession
Recession and inflation are beyond a company’s control. A country’s economy can be stable one day and volatile the next. Hence, businesses are finding ways to become more efficient and productive to handle these unpredictable situations. Here are some useful tactics to stay competitive in difficult times:
Self and remote service: The pandemic caused many businesses to resort to remote services. Successful businesses that survived the pandemic showed how the shift to self and remote service can enable companies to improve efficiency and reduce costs.
Predictive maintenance: Predictive maintenance ensures less journey time for customers, more accurate part ordering by businesses, reduced customer wait time, and increased customer satisfaction. Businesses can leverage Artificial Intelligence for predictive maintenance to ensure companies are prepared and made aware of parts that need maintenance ahead of time.
Usable asset data: Many companies have poor data quality and systems of record as they have not opted for digital transformation. If companies want to stay competitive, ensuring actionable and organized data assets should be a top priority.
Circular Economy
Business owners think if their products are long-lasting they will cause reduced revenue and sales, and profitability in the future. This is because if their customers end up using their products for over a decade, they cannot make recurring sales. In this digital age, we now see more software-enabled products. If the products are software-based, businesses can design long-lasting hardware while making a profit by selling new software features as downloadable upgrades. Service companies are hiring engineers for producing and maintaining innovative products of the future.
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