Strategic Service Management

Fuel shortages. Credit Crunch. Wall Street Crisis. Congress in Chaos. Who can even think of service at such a time?

We just got off the phone with a reporter from the Atlanta Business Chronicle who’s writing an update on several of Atlanta’s 50 Fastest-Growing Private Companies. He wants to how local business is adapting to the current economic climate and whether or not fast-growing companies can continue to grow.

While sales cycles are indeed slowing down due to additional scrutiny of capital expenditures, today’s economic weakness has created an opportunity for Servigistics’ solutions, as manufacturers and other businesses scramble to obtain cash and reduce operating costs. In many parts-intensive businesses, companies often over-stock millions of dollars worth of inventory. With a Service Parts Management solution in place, companies can free up millions of dollars by reducing inventory without sacrificing part availability. For example, Sun Microsystems saved more than $40 million by reducing inventory and eliminating purchases while still achieving high service levels. In addition, reduced amortization spend by $10 million

per quarter.

Furthermore, on the flip side, when end-users slow spending on new purchases, they often shift attention to servicing the ones they have. For example, my best friend was going to purchase a new washer and dryer, but due to cuts in her husband’s bonus structure, she’s going to save that money and repair the ones she has. So, companies may not make the profit on the front end, but now they have an opportunity to profit from service, as long as that service is efficient, low-cost and excellent.

That’s the value proposition of Servigistics. According to a recent AMR Research report, post-sale service represents 50% to 70% or more of company profits.

The reporter said that sounds like a solid opportunity, but in the meantime, most companies have a “wait and see” attitude.

Perhaps if Congress acts expeditiously, business can begin again “as usual” and there will be less waiting and more seeing.

This entry was posted on Monday, September 29th, 2008 at 9:17 pm and is filed under Post-Sale Service. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.