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Sunday, January 5, 2014

Reaching New Customer Service Peaks in Manufacturing

Art Work: Dr. Murad Abel
The world of manufacturing is changing and new methods of competing are important to ensure that companies are staying competitive. Companies can incorporate additional concepts related to service and service metrics into their manufacturing operations to help encourage higher levels performance that are more reflective of market needs. Research by Visnjic, et. al. (2013) helps decision makers find new ways of adopting higher service oriented operations.

Just like Americans went through a shift in their manufacturing management toward Japanese models in the past they are now moving toward new customer service oriented values. They are seeking to tie their products more closely to the needs of the customer and this requires a new way of thinking. As the system changes, so will the measurements of success and the accounting of financial revenues.

Metrics are important markers that help guide strategic decisions. The previous product-based performance measurement systems are inadequate to understand the service dynamic. Organizations are seeking to update their measurement mix in order to create higher levels of relevant data used to guide the organization to higher levels of performance.

Companies often rely on a few measurements and try to replicate them in other places, other nations, and at different times. Because measurements are supposed to give one the ability to take a snap shot of what’s going on in the market a single measurement skews this the accuracy of this picture. It is beneficial to ensure that measurements are chosen for their well-rounded image so trends and changes can be discerned.

The researches completed a three-year case study of Atlas Copco a multinational equipment manufacturer to come to their conclusions.  They looked at both qualitative and quantitative data to understand their measurement systems.  They have a presence in 100 companies and 14,000 employees that makes them adequate for a global case study.

They found that moving services from a support function role to a revenue stream helps encourage better decisions.  Conflicts between production and service should rectify by developing and catering new performance measurements that can bridge the gap. Companies should seek both breadth and depth in their customer service penetration.  Capitalizing on the new service oriented dynamics makes companies more responsive to market trends and raises their potential revenue generation.

The report does provide some information on bringing forward concepts as they relate to changing the perception of customer-oriented processes within manufacturing. Having the right data metrics is important for analyzing and making strategic decisions. Implementing service components into the manufacturing processes takes some time, as it is a new way of thinking. As the implementation process continues, the mindset of employees and decision-makers will change with it.

The relationship with the customer tells us every day how well we perform and, for sure, keeps us alert to all the changes in the market.”—Ronnie Leten, CEO Atlas Copco Group

Visnjic, K., et. al (2013). Steering manufacturing firms towards service business model innovation. California Management Review, 56 (1).

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