Global economic volatility is the new reality. Escalating costs, changing technologies, complex regulations, unpredictable markets and record deficits are impacting businesses around the world and have created new challenges in meeting shareholder expectations. Aftermarket Services (AMS) have become increasingly important as manufacturing organizations look for ways to generate profits, reduce costs, differentiate themselves and drive overall enterprise growth in these market conditions. However, a robust AMS program can be challenging to develop and implement. This paper identifies six strategies to help AMS service operations become globally effective, in turn driving higher customer satisfaction and better business outcomes.

1. MANUFACTURING
Six ways to boost service VK Gopalakrishnan (Gopal)
Vice President & Global Practice Leader, Genpact
profitability and
customer satisfaction
Global economic volatility is the new reality. Escalating costs, changing technologies,
complex regulations, unpredictable markets and record deficits are impacting businesses
around the world and have created new challenges in meeting shareholder expectations.
Aftermarket Services (AMS) have become increasingly important as manufacturing
organizations look for ways to generate profits, reduce costs, differentiate themselves and
drive overall enterprise growth in these market conditions. However, a robust AMS
program can be challenging to develop and implement. This paper identifies six strategies
to help AMS service operations become globally effective, in turn driving higher customer
satisfaction and better business outcomes.
Aftermarket Services (AMS) have become a priority for CEOs and Common barriers to a successful AMS program include:
CFOs, who recognize AMS’s contribution to top- and bottom-line
• Insufficient CXO focus on service functions
impact and customer loyalty. Previously, customer or field service
functions were responsible for driving after-sales customer • Broken or bad processes across the service fulfillment cycle
satisfaction, and service supply chain functions were responsible for • Multiple technology systems (legacy, web based)
reducing service operating costs.
• High spare part inventories
The economic landscape is much more challenging now.
• Warranty and service billing leakages
Companies are witnessing declining sales and customer attrition;
price and product features are no longer significant market • Low installed base contract coverage
differentiators, and operating costs remain high. To drive enterprise growth, senior executives need to focus on
Barriers to Achieving Greater Effectiveness the entire service lifecycle, including customer service, warranty,
service contracts, field service and parts. The process must be
AMS has the potential to help manufacturers power a more
enterprise-wide and drive operational efficiencies. It should include
intelligent enterprise, one that is more competitive, profitable and
outcome-driven effectiveness projects, removing bottlenecks at
differentiated in the marketplace. However, it can be challenging to
the sub-process level or at functional interfaces, and deploying the
develop and implement a robust AMS solution or program.
right technology.

2. Six Effective AMS Commandments for Powering Intelligent Real Life Example
Manufacturing Enterprises
A leading aircraft engine manufacturer achieved improved
A well-crafted AMS solution helps manufacturers become more forecasting accuracy and turnaround time of deal pricing by
“intelligent” by optimizing field service operations, driving supplier 30-40% through the provider’s ability to see across operations
recovery, improving the parts planning and management process, and connect the enterprise with better, more timely data, which
and driving a positive impact on service costs. Through our global increased the win rate of service contract deals.
experience in managing the service lifecycle for manufacturing
As part of major sales campaigns, the provider has helped win
companies, Genpact has identified several ways of improving
more than $1 billion in deals, and supports periodic review of
aftermarket service operations that can:
the contracts to validate the forecasting and pricing
• Significantly improve service revenue: Up to 25 percent assumptions, thus helping the client remain competitive and
• Cut costs: Up to 20 percent adapt quickly to changing conditions.
• Improve customer loyalty: Up to 10 NPS (Net Promoter Score1)
3. Enhancing Contract Coverage
points
Installed base analytics increases service coverage,
Improvement areas can be categorized into two broad areas;
resulting in 15% incremental revenue
service revenue opportunities and service cost optimization
opportunities. In addition to contract revenue, many manufacturers are
realizing the importance of the Installed Base (IB) data in rolling
Service Revenue Opportunities:
out targeted campaigns to specific customer segments. It is also
1. Enhancing Capacity more lucrative to track yield on IB (revenue generated through
Centralizing the service support desk releases 20-25% of a contracts), rather than IB coverage (percentage of IB covered
field engineer’s capacity through contracts). Key challenges include knowing where the IB
data is, whether it is in use or not, and identifying the current
A key challenge field operations teams face is increasing their
servicer. This is where IB analytics can help, including:
capacity to service more clients in order to drive higher service
business growth. The expensive and limited pool of experienced • Analyzing customer data, service history, etc. to identify
field engineers and technicians should spend their time on potential customer segments based on the need for this type of
service problems rather than engaging in non-value-add service
administrative or analytical activities such as debriefing, • Defining segment strategies and service plans with high
correcting or closing service requests. Genpact’s analysis shows probability of conversion
that these non-value added activities can take up to 30% of field
• Developing and executing holistic programs that include resellers
engineers’ available time.
and distributers
Real Life Example
• Running proactive campaigns to improve IB contracts coverage
For a major healthcare equipment company, instituting an
Real Life Example
innovative change to service operations helped to drive higher
service growth without increasing the size of the field team. A For a major equipment manufacturer, implementing process
centralized and scalable field service support team handles all changes, web-based technology tools and process rigor
non-value-added activities, freeing up 21% of field capacity, improved installed base data accuracy from 54% to >80%,
thus boosting customer face time. leading to faster revenue recognition, reduced cost leakage and
an improved targeted contract renewals program.
2. Maximizing Contract Value
Service Cost Optimization Opportunities:
Implementing contract pricing analytics helps identify key
levers, resulting in 10% increase in revenue 4. Optimizing People Costs
For many equipment-manufacturing segments, service contract Consolidation of field engineer dispatch and parts order
revenue is as important as the initial equipment sale. Long-term teams drives 15% savings
service agreements are a win-win for both parties. This makes While metrics like MTTR (Mean Time to Repair) or FRT (Field
the pricing of the contracts critical, both in terms of ensuring Response Time) are good efficiency metrics, customers are driven
deal conversion and profitability.
1
Net Promoter is a customer loyalty metric developed by and trademarked to Fred Reichheld, Bain & Company, and Satmetrix. It is a management tool used to
gauge the loyalty of a firm's customer relationshipsby asking customers "How likely is it that you would recommend our company to a friend or colleague?"
Based on response, customers are categorized intoPromoters (9–10 rating), Passives (7–8 rating), and Detractors (0–6 rating). The percentage of Detractors is
subtracted from the percentage of Promoters to obtain a Net Promoter score (NPS).

3. by the First Time Fix Rate (FTFR). A field visit without either the Incorrect extension of warranty to non-entitled customers or
parts being delivered on time, the wrong parts being delivered, non-eligible claims leads to revenue leakage and adds as much
or arriving without the right tools results in lost money and adds as 10% to the warranty cost. While accuracy of claims
to service costs. processing can be driven up significantly through detailed
matching of contract terms with warranty claims, it is the claims
Consolidating the field and parts support teams has the
audit process, backed by an analytics-based reasoning code
potential to deliver savings of up to 15% of field cost. Additional
matrix, that can reduce leakages by 8-10%.
savings of 1-2% can also be achieved through a consolidated
field trip for preventive or regular fix visits. Additional savings of Once the warranty is paid out, it should be recovered from the
up to 5% can be achieved through consolidation of remote suppliers to whom it is attributed. The root causes leading to low
monitoring teams, leading to better coordination and response cost recovery are usually non-identification of the right suppliers
time and reducing emergency field dispatches. or dependency on the failed parts that ought to reach the
suppliers before the credit note can be generated.
5. Optimizing Parts Costs
Real Life Example
Bill of Materials (BOM) drill-down analysis, dynamic
forecasting and accurate triaging of parts result in a A leading equipment manufacturer faced high mismatch
further savings of up to 10 percent between the warranty claims paid out vs. recovery from
suppliers whose parts failed within the warranty period.
Spare parts and component assemblies are a significant cost
Implementing an intelligent approach to reconciling claims
component of the service supply chain. Normally, capital
through a blend of smarter processes, adaptive technology and
equipment includes spare parts kits. BOM drill-down analysis of
detailed analytics delivered supplier cost recovery of $10 million
the kit and linking it to the kit’s usage patterns can optimize kit
and a 47% reduction in the parts return cycle time.
configuration, leading to cost savings of 5-6 percent.
Dynamic forecasting based on spare parts usage and pooling of How to Power an Intelligent Manufacturing Enterprise
parts at warehouses, all utilizing Lean inventory methods, can
Companies across all industries have a set of common, core
lead to savings of another 2-3%. In addition, during the service
enterprise-level processes that determine how they acquire new
fulfillment stage, accurate triaging of parts across regions or
customers, retain them and grow existing relationships, hire and
warehouses and efficient returns processes result in additional
retain their workforce, develop and distribute their offerings and
savings of 1-2%. This also increases response time and reduces
manage their supply chains. What differentiates the leaders from
obsolete inventory.
the laggards is how they view processes as a key component of
6. Optimizing Warranty Costs business outcomes.
Supplier recovery can improve by 10-15% through By looking at a manufacturing enterprise’s entire service lifecycle,
accurate data matching and driving the parts returns cycle. and by focusing on achieving greater efficiency and effectiveness
Another 8-10% in warranty leakages can be plugged by across the entire spectrum of processes, it is possible to achieve
disallowing invalid claims and audits significant and sustained business impact of up to 10-15%.
The Genpact Value Proposition 3-4% 10-15%
2-3%
2-3%
2-3%
1-2%
Current Customer Service Warranty Field Parts Projected
Service Service Contracts Force Service
Profitability Profitability
To learn how Genpact can help you drive profitability and effectiveness in your services, and improve customer loyalty, please contact VK Gopalakrishnan at
vk.gopalakrishnan@genpact.com

4. About Genpact: Author Profile
Genpact, a global leader in business process and technology management services, uses
process to help its clients power intelligence across their enterprise to run smarter Gopalakrishnan VK
operations, make smarter decisions and use smarter technology. Genpact’s Smart Vice President and Global Practice Leader
SM
Enterprise Processes (SEP ) framework, its unique process thought leadership combined
Gopal V K leads After Market Services for Genpact, a global
with deep domain expertise in multiple industry verticals, results in better business
leader in business process and technology management, where
outcomes. Genpact’s Smart Decision Services deliver business insights to its clients
he is responsible for strategy, growth, and P&L. Gopal has held
through targeted analytics, reengineering expertise, and advanced risk management.
various leadership and advisory roles in multi-country
Making technology more intelligent by embedding it with process and data insights,
engagements encompassing consulting, process, and IT. He also
Genpact also offers a wide range of technology services. Driven by a passion for process
held key roles in the manufacturing industry. He is an
innovation and operational excellence built on its Lean and Six Sigma DNA and the legacy
entrepreneur and a recognized thought leader in the supply
of serving GE for more than 14 years, the company’s professionals around the globe
chain and aftermarket services, in demand as a speaker at
deliver services every day to its more than 600 clients from a network of 58 delivery
leading conferences and forums. Gopal holds a masters' degree
centers across 17 countries supporting more than 25 languages. For more information,
in Business Administration and is a Mechanical Engineer, and
please visit www.genpact.com, Follow Genpact on Twitter, Facebook and LinkedIn.
freely shares his knowledge on his blog at http://slmhub.com
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For more information, please write to supplychain@genpact.com