In one of the most memorable scenes from the 1967 movie classic “The Graduate,” Mr. McGuire takes the graduate, Benjamin Braddock, outside to the pool and says to him, “Ben, I want to say one word to you. Just one word: Plastics. There is a great future in Plastics!”
If that scene occurred today, and Benjamin announced he would be a Service Executive and Mr. McGuire knew something about our business, then Mr. McGuire would have said, “Uptime.” And that would have been killer advice.
Why is “uptime” today’s answer?
People buy your equipment because they want to create value for both their customers and their business by operating the equipment. And this can only happen when the product is operational – up. When the equipment is down, it cannot create value, and the people in the company begin to feel stressed and frustrated. Your role is to generate uptime for all the equipment you support. If you are successful, the customers feel very good about their purchase and about your company.
The cost of equipment downtime
Customers are always telling us that unscheduled downtime costs them a lot. But how much? The answer is sometimes complicated to quantify. However, it can be done, and let me look at it to show you how.
- In the late 1980s, my customer, the New York Stock Exchange, said that if the Exchange’s network were down during trading hours for greater than 15 minutes cumulatively over an entire year, then he would have to send a report to the Congress of the United States and he would receive no bonus for that year. Neither punishment sounded particularly pleasant, and that was because uptime was so critical to their business.
- Last week I was at O’Hare Airport immediately after a one-hour ground hold due to heavy rains. I saw hundreds of people trying to change flights to get out earlier than the rescheduled departure schedule. How much did all that work cost, and how many planes flew with empty seats because people missed connections or canceled their trips? How many customers trying to book flights gave up and called other airlines because all the operators were busy with the rebooking? Again, big money.
- In the semiconductor manufacturing industry, where production is a 24/7/365 process, downtime is frequently estimated to cost well over $250,000 per hour in lost revenue.
- A 2018 report from Aberdeen Research reported that 82% of companies that have had unscheduled downtime over the past three years lost an average of $260K per hour! And when it lasted over 4 hours, the cost was as much as $2M.
- Downtime in a medical imaging facility frequently results in rescheduling one or more patients. The cost may be measured in hundreds or thousands of dollars. But what about patient outcomes, Medicare scoring, or lost business?
- Even with “commodity” products, the cost of production downtime quickly adds up. This week I learned that people who bag salt, a widely available compound, figure that the cost of downtime on their packaging line is in the neighborhood of $10K per hour. The salt does not degrade, but the customer can quickly move to another packer if the company cannot satisfy its orders. And they may stay with the new company until they have a problem, and then the buyer shifts back. In that case, the cost of a lost business can even lead to the business going bankrupt.
- I live near a bustling gas station. At least one of the four pumps has been broken for the past week. That is two hoses. Today I pulled into the station and headed for one of the empty spots only to find a yellow bag over the handle. Since all the other pumps were occupied, and I hated to wait, I pulled out and went to a different station, where I filled up my car. That small piece of business was lost and will never be recovered.
- And, of course, the news is full of the sad saga of the downtime for the Boeing 737 Max. Boeing has not delivered a new plane for two months or booked a new order simultaneously.
Things the service executive can do to increase customer uptime
As in most business challenges, short-term and long-term actions can be used to turn a challenge into an opportunity. The opportunity is to create value for your customer by reducing potential downtime and charging for your efforts in a fair exchange. The following lists are incomplete; they highlight many vital actions you can take to improve customer outcomes.
Short-term actions (less than one year)
- Ensure you use the “time from problem notification until fixed” as a key performance indicator. Remember, the product is fixed only when the customer says it is fixed! Set a goal and work towards achieving it 100% of the time and when you do, improve the plan, and start over again.
- Ensure that your spare parts inventory has been updated to have minimum stock sufficient to handle all likely circumstances. Also, returned parts must be repaired and replaced in time to support your inventory plan while avoiding stock outages.
- Create or use root-cause analyses to identify the causes of product failures. Identify fixes and deploy them in a way that helps the customer see an increase in product uptime.
- Review the onboarding and training for all customer-facing employees to ensure they are adequately prepared to deal with likely customer issues. Retrain if necessary.
- Update your FAQs and supporting content and ensure all customers know about them. When talking with customers, remind them that the FAQs can help reduce downtime.
- Look into AR (augmented reality) to reduce 1) the need for a dispatch by remotely working with the customer to fix a problem and 2) making it easier to use less skilled field engineers and supporting them with highly skilled techs.
- Send a one or two-question survey to customers after service actions. Ensure you do not survey the same customer twice within three months. Also, follow up on all received surveys with a short note either commenting upon or, better yet, indicating the actions you have taken as a result of their response. Share these responses and activities with the service people involved in the service delivery.
- Identify holes in your software system that make it difficult or impossible to identify and correct problems. Get IT or vendor support to rectify the issues.
- No matter your department’s success level, get on the CEO’s agenda at least once per month. You will need her support going forward.
Long-term actions
- Predictive maintenance! Please work with your development and marketing teams to determine where to include new product sensors and how to retrofit them to customer units. Also, decide on a platform, dashboard, notifications, and all the other challenges around IoT. Ensure that customers are included in the planning so that what you offer is what they want to buy.
- Create an upgrade program with a clear value proposition, including costs, prices, and use cases. Test the whole package with some customers assisting your company in moving forward.
- Train all your customer-facing teams to ensure the IoT rollout is smooth and customers immediately see value after receiving your invoice!
- Update all your service contracts to include new pricing and SLAs.
- Make sure your AR system is yielding the results you expected. If not, fix the problem (probably internal to your group.)
- Look at where your FSEs are based. If you have more than enough in a location and frequently fly someone to another site, consider relocating someone and reducing travel time.
- Recalculate the MTBF of all your products and ensure they are all improving. Look at all the root cause analyses done and ensure that each has been actioned. Share this data with your customers.
- Make sure you have a Retention strategy and process in place, and it provides you actionable insight as to why customers have moved on.
Key takeaways
You must keep reminding your team, leadership, shareholders, and customers that customers do not buy contracts because you service the equipment. They accept agreements to maximize uptime and control costs. A rising MTBF and equipment availability metric proves their investments have been valuable.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization improve your equipment’s uptime, please get in touch with us or check out some of our free articles and white papers here.