August 6, 2013 | Written by: Leonard Lee
3D Printing – Transforming Service Operations
By Leonard Lee
July 10, 2013
In the second post of my series on 3D printing, we began to explore the benefit case for the Software-Defined Supply Chain (previously referred to as “Digital Supply Chain”) for the scenario of a service organization. Specifically, we looked at the case of repair depot operations. In this post we will examine the use case and benefit hypothesis of Software-Defined Supply Chain as it pertains to a company’s field service operation with the goal of identifying how the Software-Defined Supply Chain and 3D printing can yield value and transform field service as we know it today. I recommend that you read my prior posts for background before proceeding with this article.
After market service is increasingly an important factor in shaping a customer’s experience with a company’s offering, whether that offering is a product, itself a service or a “solution.” Service is also becoming a big business that can yield big margins and big profits. We see this trend well in progress across numerous industries including electronics. As industries move from being product-centric to service-oriented, companies are challenged with delivering service with excellence, which is increasingly critical to be competitive. Field service is an important part of the customer experience equation, especially for businesses that deal with an installed base that needs to be serviced in the field. Think white goods and capital equipment.
“Traditional” Field Service
The key challenge for the field service operations of a company is to provide competitive service levels to customers for warranty as well as out-of-warranty issues occurring in the field, while minimizing transit costs. Global field service organizations commonly use a mix of in-house and 3rd party service providers with the hope of delivering quality, consistent repair services to local markets. Though I would argue that the cost of service inventory has less weight in the Field Service scenario than the Repair Depot scenario that we explored in my last blog post, the management of service inventory and associated cost for global companies is far from a trivial consideration. Tracking and counting inventory consigned to a global network of 3rd party service providers can be difficult, and result in lost inventory and financial loss to the company.
But, nothing irks a field service manager more than not being able to resolve a case on the first visit due to a stock out on a critical part. Ideally, the field technician will have the parts they need to get the job done the first time out since the in-transit labor cost, fuel and the wear-and-tear on transportation assets of a second trip can eat into margins. It’s no wonder that field technicians often lug around a large and varied inventory of parts needed to fix statistically common issues. It’s a fine balancing act between the cost of carry and the cost of that second trip.
The Software-Defined Supply Chain & Field Service
In the first of my series of blog posts on the topic of Software-Defined Supply Chain we established that the Software-Defined Supply Chain model has three elements that drive the benefit case:
- Locally based 3D manufacturing – provides economy of scope with its ability to fabricate a wide range of parts on demand,
- Advanced robotics – provides labor-less assembly using smart, learning robots that can perform human tasks,
- Open source electronics – provides a standard set of programmable electronic components that can be leveraged across a wide range of applications.
We might assume that the effect and impact of Software-Defined Supply Chain on the Field Service scenario would be the same as in the Repair Depot scenario. There is a twist. The curveball thrown by the Field Service scenario is associated with the fundamental logistical difference between repair depot operations and field service. In the Field Service scenario, the field technician may not know what the problem is with a faulty unit in the field and, consequently, does not know what parts are needed to repair the unit until they get on site to diagnose the problem. In the Repair Depot scenario, the problem unit is shipped to a repair location where the unit is diagnosed, prepped, repaired and then returned to the customer – no risk of incurring the costs of a second trip due to unavailable parts. In short, the Field Service and Repair Depot scenarios represent two different journeys, which result in two different Software-Defined Supply Chain business cases.
Competitive Advantage – The Right Part Anytime, Anywhere You Need It
The benefit hypothesis for the Software-Defined Supply Chain suggests four key opportunities to reduce cost and risk associated with the “traditional” supply chain model as it relates to field service operations.
Firstly, the potential for 3D printing to change the inventory mix from finished goods or parts to raw materials can reduce the overall cost of carry throughout the service operation supply chain. In addition, the cost of carrying parts purchased from a supplier as finished goods can be deferred by fabricating a part or component when and where it is demanded using a connected 3D printer. However, “optimal” benefit would be realized if the 3D printer was mobile and could minimize the need for a follow up trip in the event of a stock out. This idea is not far-fetched. In 2012, the US military developed, deployed and piloted mobile field labs that 3D print replacement parts for equipment used in the Afghan theatre of war.
Additionally, analytics and condition monitoring of a self-diagnosing product could enable the predictive fabrication of parts needed for repair so they are available before the field technician departs on their service call. In fact, the number of products that are intelligent, instrumented and able to express and communicate their condition is growing very fast. We can only expect more smarter products as the Internet of Things rapidly expands and evolves. Consequently, we can also expect field service operations to leverage increasingly deeper insight (foresight?) into the condition of their installed base in order to accurately anticipate the parts they need to take into the field.
Secondly, the Software-Defined Supply Chain has the potential to take out a significant amount of transportation cost from the service operations supply chain of a global company by enabling the cost-effective fabrication of replacement parts at local field service depots (though preferably at the location of service) using locally sourced raw materials. Tactically speaking, the Software-Defined Supply Chain can reduce overall transit cost by minimizing the number of follow-up trips to a customer site due to parts availability issues. In other words, first-visit resolution rates would improve. Fabrication lead times and mobile production of parts may be important enablers/attenuators of this benefit.
Field service organizations will be able to leverage a third benefit of the Software-Defined Supply Chain – economies of scope in the fabrication of a wide range of replacement parts from a set of 3D printers located in a field service depot or installed in a service vehicle. The ability for a 3D printer to fabricate any variety of objects within its working parameters enables companies to realize relative cost efficiencies and tremendous flexibility in the fabrication of replacement parts versus procuring parts from a portfolio of suppliers. Field technicians may even have the option of placing a part order with a 3D print shop in close proximity to the job site for pick-up. UPS has recently launched a pilot program to provide 3D printing services at select locations in San Diego.
Finally, companies can further leverage the benefits of additive fabrication (the fabrication technique used by 3D printers) to reduce the cost and waste associated with scrap that would otherwise be incurred by the company or passed on to them by suppliers using non-additive means of fabrication.
The benefit hypothesis for Software-Defined Supply Chain as it pertains to the Field Service scenario differs enough from both the Manufacturing and Repair Depot scenarios to warrant special treatment and consideration. Advanced robotics does not seem to be a critical factor in the Field Service scenario unless components are being assembled in bulk at field service depots. The benefit hypothesis diagram above provides a comparison of a “traditional” supply chain cost structure for the Field Service scenario with a hypothetical Software-Defined Supply Chain cost structure. The hypothetical net benefit of the Software-Defined Supply Chain comes from the reduction in four cost categories: cost of transit (field service route), cost of distribution, cost of carry (inventory cost), and cost of service parts (components).
Software-Defined Supply Chain has the potential to improve your field service operations, especially if you are able to go mobile with your 3D printing, and are able to leverage analytics to enable predictive fabrication of spare parts/components based on condition data provided by smart, instrumented products. Admittedly, the benefits case for Software-Define Supply Chain for field service is comparatively difficult to nail down. You will need to analyze your portfolio of service parts and your field service model to determine how much value Software-Defined Supply Chain and 3D printing can deliver to your field service operations. But, if you have faith in the Internet of Things, you can rest assured that the Software-Defined Supply Chain will change field service as we know it today,…. and for the better.
To find out more about the Software-Defined Supply Chain check out the newly released IBV study on the topic by Paul Brody, VP and Global Industry Leader for Electronics, and Veena Pureswaran, researcher with the IBM Institute of Business Value.
IBM Website-The New Software-Defined Supply Chain
Read part one of my series on 3D Printing – Transforming The Supply Chain.
By: Leonard Lee
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