Is Your Service Organization Turning a Profit? It Should Be

By CHRISTA PROKOS | Published: NOVEMBER 4, 2011

“I’m sorry, that part is not in stock. We’ll have to order it.”

“Our service center is closed. Please call back tomorrow.”

“A door latch is malfunctioning. We’ll have to move you all to a different plane. Thank you for your patience.”

Sound familiar? These are just some of the customer service phrases echoing around the globe—in all languages—and into the ears of all types of consumers from business travelers to homeowners to heavy equipment operators.

No one wants equipment downtime, whether it’s a plane, a washing machine, or a crane. For the traveler it’s an inconvenience. For the homeowner it’s the reputation of the brand at stake. For the crane owner it’s lost time and money.

You could say the same for all – it’s a costly pain that affects not only the customer, but the manufacturer as well.

Customer satisfaction levels directly impact the bottom line. When a manufacturer loses a customer it loses the opportunity to generate revenue through repeat purchase, up-sell and cross-sell.

In fact, improving service profitability has become a board-level initiative and a chief concern of most executives. The quality of customer service is only part of a much larger picture. Their goal is to strategically improve the entire service organization to ultimately drive revenue.

Sumair Dutta, Service Management Research Director at the Aberdeen Group, explains it this way: “Manufacturing executives look at service strategies to differentiate themselves from their competition and to ultimately drive profitability within the services side of their business.”

In his recent keynote at Aberdeen’s Chief Service Officer Summit, Dutta pointed out that “fifty three percent of manufacturing companies manage service as a profit center, and 63 percent of companies generate a profit margin on service.” He noted that, “this is a significant trend if we look back five years to when companies were purely cost-centric in service and now they’re profit-centric.”

In fact, 30 to 50 percent of a company’s profits can come directly from service part sales.

Manufacturers are investing in improving the quality of their service information—which includes parts information, user guides, warranty plans and maintenance manuals. If this information is out-of-date or hard to access, there is a direct correlation to product support issues and profit loss.

Winning manufacturers must improve information accuracy, provide configuration specific information and communicate with a product support ecosystem that often spans geographic boundaries. They must invest in advanced service information solutions which can give everyone the right information, at the right time.

Improving the quality, accuracy and usability of service information is a key strategy service organizations are implementing to drive profits. How is your company getting the right service information into the hands of those who need it most?

The Truck that Peterbilt: Designing and Fabricating Classic Models

By DAN MAROTTA | Published: NOVEMBER 2, 2011

Take a cruise on any major highway in the United States and at some point you’ll likely feel the approaching rumble reminiscent of a 3.0 magnitude earthquake. You investigate by peering at your rear-view mirror, and the reflection is immediately consumed by a massive chrome grill. As it screams by, you realize by its red oval monogrammed logo, it’s a Peterbilt truck.

Peterbilt Motors Company, a name synonymous with long-haul trucking, has reigned as America’s premium quality heavy-duty truck manufacturer since the company was founded in 1939.

Based in Denton, Texas, Peterbilt’s mission is “to build custom engineered, superior quality trucks, with unparalleled style, fuel economy, and performance.”

It is the dream of every trucker [and non-truckers alike] to own a Peterbilt. And I mean that, literally.

To say Luca Bordin is a Peterbilt fan would be an understatement. This northern Italy resident likes the big hulking American trucks; non-characteristic of its European counterparts. I assume it’s because American trucks won’t fit down the narrow Italian streets. “European trucks are small and dull in comparison,” Bordin says.

Bordin, you might say, is a Peterbilt fanatic. He’s spent many months designing, fabricating and assembling his own Peterbilt; one-fourth the size of the real deal.

The replica looks and sounds like the real thing. But that’s where the similarities end. Powered by a 750-watt electric motor and weighing in at just around 400 pounds, the remote-controlled cab lights up with the help of hundreds of LEDs. A fog machine, more commonly found in night-clubs, spews puffs of smoke to simulate the exhaust. A pair of speakers reproduce the roar of the diesel engine and a mini air compressor belts out the very distinct trucker horn.

Bordin doesn’t stop there. He’s constructed a 16-foot Nascar-branded trailer equipped with a 22-inch LCD flat screen and a 1,200 amp audio system. Don’t worry; the trailer’s roof is outfitted with solar panels to recharge the battery so power is rarely a concern.

When asked why he went to such length’s to recreate the Peterbilt 359 and if he has any advice for others looking to build a model of this magnitude, Bordin answers, “I built it for personal satisfaction. It’s an indescribable feeling of accomplishment every time I look at it. You must have a great deal of patience, perseverance and the right set of tools like a 3D CAD system. It helps in getting the details just right and allows you to visualize the dimensions and simulate the mechanisms before the build.”

To see the 1:4 scale Peterbilt 359 from concept design to production, check out Bordin’s YouTubechannel and Facebook page.

Billion-Dollar Upgrade for British Army’s Warrior Vehicles

By BIMAL DHARSI | Published: NOVEMBER 1, 2011

The British Ministry of Defense (MoD), is awarding Lockheed Martin UK a £642m ($1.02bn) contract as part of the Warrior armored vehicles project.

The move was revealed by British Prime Minister David Cameron and Defense Secretary Philip Hammond on a visit to Lockheed Martin UK in Bedfordshire.

“As a key step towards meeting our requirements for Future Force 2020, the upgraded Warriors will give commanders and their soldiers greater flexibility and firepower.” Hammond said. “Not only is this fantastic news for the Army, it also represents a great boost to British industry—sustaining jobs, skills and capability within the UK’s armored vehicle sector.”

The Warrior will continue to be at the heart of the UK’s combat capability which will extend the service life of the military vehicles through to 2040 and beyond with state-of-the-art firepower and electronics.

This contract is good news for the British Army and the British economy, and more so the supplier chain networks which will benefit greatly from jobs within the design, engineering and maintenance sector.

The New Era of Do-It-Yourself Manufacturing

By NANCY PARDO | Published: OCTOBER 31, 2011

Anyone who’s seen the movie “Flash of Genius” will be familiar with the story of Robert Kearns, the inventor of the intermittent windshield wiper. Kearns initially brought his concept to Ford Motor Co., which openly dismissed him, and yet by ‘coincidence’ began using the wipers on its own cars in 1969.

Big industry—and Ford is a good example—ruled the roost from the early 1900s until fairly recently. Innovation was owned by a few all-powerful Oz-like companies and mass-production was the normal. But things may be changing.

There’s been a fundamental shift in how we go about innovating, designing and manufacturing. For starters, the democratization of innovation is being realized by small companies such asQuirky.com. Quirky is a site where inventors can propose their ideas for fabrication and community members vote on whether a product should be made or not. If the product is made by Quirky, the inventor gets a cut of the profits.

But it doesn’t stop there. The development and availability of relatively low-cost digital fabrication devices like laser cutters, CNC routers and milling machines, as well as computer-controlled 3-D printers, provide small-scale manufacturers and individual inventors the ability to design, customize, manufacture and sell their own products.

According to a recent article in Strategy and Business, companies that produce digital fabrication tools report that 40 percent of their customers use digital fabrication to manufacture not just prototypes, but end products and parts.

Although digital fabrication tools have limits—good for 1,000 items or less—they can produce highly customized products quickly on demand.

And this new trend isn’t just reserved for wanna-be inventors. The medical industry, for instance, which tends to require highly customized products, is a huge buyer of 3-D-printed devices.

According to independent consulting group Wohlers, 2009 revenues from 3-D-printed medical devices was $157 million. British manufacturing expert Phil Reeves says more than 10 million 3-D-printed hearing aids are in circulation worldwide (it takes just an hour and a half to fabricate one), along with more than 500,000 3-D-printed dental implants.

For those who don’t have ready access to fabrication tools, but would like to bring their ideas to life, there are a number of companies that offer fabrication services at affordable rates. One such company is Paris-based Sculpteo. Customers of Sculpteo can upload a digital design and receive the corresponding physical object by mail a few days later.

Some companies are also connecting digital fabricators with potential customers, allowing customers to post job requests that are then bid on by individual fabricators. A customer may submit a request to a group of “makers” and have the community work together to design and build the best possible product.

This kind of crowdsourcing is common in the “maker” culture. The open-source manufacturing business model encourages inventors to publish their plans and specifications (under an open source license), which allows others to copy, adapt, and learn from the designs, always with credit and mutual access to ideas—think Creative Commons on Flickr.

If the future of manufacturing lies in diverse, widely distributed, smaller-scale manufacturing shops, how can traditional centralized manufacturers adapt?

Strategy and Business recommends that traditional large-scale manufacturers start to participate in fabrication-oriented supply-chain networks, leasing out excess capacity to smaller manufacturers or startups or using those customers to diversify their existing business.

Perhaps traditional manufacturers should also consider mixing mass production with individual production. Listening to customers and allowing them to make improvement and customizations to products may seem overwhelming and unwieldy for some, but digital fabrication tools make it much easier to swap in new features, change the production line, or restart production of old products if demand resurfaces.

In this new model for manufacturing product development becomes much more fluid. Rather than designing and manufacturing separately launched objects there’s a continuous flow of collective information, incorporation and adaptation up and down the product development stream.

And digital fabrication could also offer improvements in sustainability. Because this type of manufacturing is confined to smaller workshops and these shops have more flexibility on where they locate (close to the buyer) then this could make them less susceptible to national and global economic forces—think Detroit.

The ability to manufacturer on an as-needed basis could also reduce fuel consumption, pollution and surplus waste.

Finally, if we are able to customize and repurpose products to our needs, and even repair objects ourselves, this could potentially increase the products’ lifecycle.

Do you think digital fabrication will play a greater role in manufacturing over the next 10 years? Is your company already invested in digital fabrication and has it been successful?

Managing Nuclear Knowledge – Last Cold War Bomb Dismantled

By LINDSEY CHRISTENSEN | Published: OCTOBER 26, 2011

The National Nuclear Security Administration (NNSA) is dismantling the last of its Cold War era nuclear bombs. As you would imagine, the process is a complicated and dangerous one. The work is being done in a Texas plant dedicated to disassembling the nuclear bombs, and they are finally down to the last one – a B53.

The B53 ‘bunker buster’ weighs 10,000 pounds and is 12 feet in length, 50 inches in diameter. Accord­ing to the Fed­eration of American Sci­entists it is 600 times more powerful than the atom­ic bomb dropped on Hi­roshima, Japan, at the end of World War II. Blast effects would be sufficient to collapse most residential and industrial structures within a 9.3 mile radius; within 3.5 miles virtually all above-ground structures would be destroyed and blast effects would inflict near 100 percent fatalities.

The possible devastation from separating the bomb’s 300 pounds of high explosives from the nucle­ar ma­te­rial is jarring and requires best-in-class engineering teams to ensure safety. A big hurdle for these teams has been the loss of intellectual property (IP) from the time the original engineers created the bomb in the 1960’s. The weapons were created using older technologies and processes by engineers who have long since retired or died.

Today, knowledge preservation is a hot topic of discussion in engineering-intensive industries. Industry—particularly aerospace and defense—is facing the realities of an aging workforce and the challenges that come with it—most notably the recruitment/training of the next generation of personnel as well as the loss of crucial intellectual property. In the unique field of nuclear technologies, there is special emphasis on documenting knowledge for safety reasons.

In 1957 the International Atomic Energy Agency (IAEA) was set up as an independent international organization within the family of the United Nations to promote safe, secure and peaceful nuclear technologies. Since 2006, the IAEA has created a program called Nuclear Knowledge Management (NKM) which seeks to define:

• How nuclear knowledge management can contribute to maintaining the core knowledge that must be in place to operate existing plants safely
• How nuclear knowledge management can help achieve gains in economic and operational performance
• How nuclear knowledge management can help preserve existing knowledge and channel it towards future innovations
• How nuclear knowledge management can help assure the smooth and effective transfer of the knowledge of today’s generation to the next generation

What kinds of systems are needed to manage, retain, and transfer crucial knowledge to next-generation workers? Fortunately, today’s design teams have the opportunity to use technologies that can capture full product data, including the full history of version/iteration changes without worrying about this knowledge gap.

Working with the right Product Lifecycle Management (PLM) solution can help companies maintain a “single source of truth” for full digital product definition and content.

A robust PLM solution allows the capture of full design intent and all the intellectual property behind the development of a product. So, when the original engineers on a project retire or move on, an organization doesn’t have to invest extra time, money and resources in tracking down people, parts and tools, or even worse, be forced to make dangerous guesses and assumptions.

Is knowledge management an important part of your business? If so, what tools and best practices does your company use to preserve knowledge?

Lost Your Car Keys? There’s an App for That

By NANCY PARDO | Published: OCTOBER 25, 2011

This winter I’ll be taking a trip to Colorado. I remember the first time I made this journey. My flight landed late at night and by the time I got to the car rental facility it had begun to snow, hard. After picking up the key to the car, I couldn’t find an attendant to show me where my vehicle was parked. I walked in circles for what seemed like an eternity until I finally spotted the numbered parking slot with my car, only to discover the key didn’t fit.

On that January night, what I really needed was to find the correct car quickly without requiring assistance and without having to worry about keys. Enter Germany-based Continental AG. Continental—one of the top five automotive suppliers in the world—has designed a virtual car keythat’s controlled from your cell phone device.

The virtual cell phone car key is in fact a data packet stored in encrypted format on your cell phone’s SIM card. The actual access authorization is checked and exchanged between cell phone and vehicle via a wireless interface (Near Field Communication – NFC). A transmitter in your phone talks to a NFC reader in the vehicle, and a receiver in the dashboard verifies the digital key in the cell phone when the car is started.

This has obvious benefits for car rentals. A customer can select a vehicle online and the digital key from Continental and the drivers profile is loaded onto the cell phone’s SIM card via a secure data link. At the same time, the cell phone receives the license plate number and the location of the car.

This technology also makes car sharing easier. Car sharing—popular in Europe and catching on in the United States—offers a way to cut back on traffic congestion and pollution.

Massachusetts-based Zipcar already offers a smartphone app which allows you to quickly find and reserve a Zipcar, scan a Zipcard and then tap the key fob in the app to unlock the car doors.

With Continental’s cell phone device you can program in your every driving need. Individual settings for favorite radio stations, popular navigation destinations or preferred internet applications are connected with the key. And, for folks like me who can never remember where they parked their car, Continental has included an app which will record the location of your parked car automatically.

From smart homes to smart cars, today’s innovation often revolves around the consumer electronics industry. Do you see software playing a greater role in the automotive world?

Steel Industry Weighs In on Green Policy

By NANCY PARDO | Published: OCTOBER 24, 2011

When we think of a product’s environmental impact we often fail to consider its entire lifecycle. How is a low-carbon-emissions vehicle manufactured? Where was that biodegradable packaging sourced? You can’t have a truly “green” product unless you consider the whole picture—from design and raw materials sourcing through manufacture and reuse.

Let’s apply this principle to the auto industry. Because of regulations aimed at fuel economy and CO2 reduction car manufacturers have largely focused on producing lighter cars with reduced tailpipe emissions. But regulating for the vehicle’s use phase alone tends to encourage the use of low-density, greenhouse gas-intensive materials (like carbon fiber) which add to the overall footprint of the vehicle’s total lifecycle.

In the auto world, it’s vital we begin to consider the total lifecycle of a vehicle, especially as we move towards more advanced car engines and cleaner fuel sources and material production accounts for a larger percentage of total lifecycle emissions.

This is the argument put forward by the steel industry earlier this month. Without a doubt, steel producers have their own agenda here, and let’s not forget that the steel industry itself accounts for eight percent of the world’s carbon emissions, according to consultants McKinsey. But consider the argument.

On the heels of its new FutureSteelVehicle (FSV) project, WorldAutoSteel claims that carbon fiber, aluminum and magnesium give off “five to twenty times more greenhouse gases during manufacturing than steel.” Therefore, when car manufacturers use these materials in their vehicles instead of steel, they are increasing their carbon footprint from a total lifecycle perspective.

WorldAutoSteel’s FutureSteelVehicle project focused on developing fully engineered, lightweight steel-intensive designs for electrified vehicles that reduce greenhouse gas emissions over the entire lifecycle. The steel body structure designs, WorldAutoSteel states, reduce mass by more than 35 percent over a benchmark vehicle and reduce total lifecycle emissions by nearly 70 percent.

WorldAutoSteel claims that based on its new steels’ light weighting capabilities, steel is the only material to achieve reductions in all lifecycle phases.

The steel industry is in part reacting to the gaining popularity of carbon fiber in auto manufacturing. Carbon fiber—found in race cars, airplane wings and super-expensive mountain bikes—is gaining more attention in the car industry because it’s extremely lightweight—30 percent lighter than aluminum and 50 percent lighter than steel. It’s also very strong, when carbon fibers are woven together and mixed with resin they can produce a part that is stronger than steel.

Auto manufacturers looking to get into the electric car business—think BMW—are investing in carbon fiber technology as an alternative to steel and aluminum. And in crash tests, BMW says, its non-corrosive carbon fiber vehicles beat out traditional aluminum car frames for safety too. As of last week BMW and Volkswagen are both considering buying shares in carbon fiber producer SGL.

However, the process of making carbon fiber is labor-intensive and slow, and for most car manufacturers used to cutting steel body-parts in a few seconds, carbon fiber is not yet proved practical for high-volume production.

What about recyclability? Steel and aluminum is easy to recycle (30 percent of all steel production comes from recycled scrap) but carbon fiber is not. Carmakers are working with aerospace firms on ways to do it. BMW reuses carbon fiber offcuts by breaking them up with heat and turning them back into raw material. This process only produces carbon fiber half the strength of brand new fiber. However, carbon fiber is non-corrosive so the overall life of a vehicle could potentially be increased, with less need for maintenance and repair.

WorldAutoSteel argues that a lifecycle assessment approach assists automakers in evaluating and reducing the total energy consumed and the lifecycle greenhouse gas emissions of their products.

Is your company concerned with the entire lifecycle of its products? Is it possible to keep tabs on every aspect of a product’s lifecycle, and if so, how can this be achieved?

Sustainability: Thinking Outside the [Shoe]box

By DAN MAROTTA | Published: OCTOBER 20, 2011

Many consumers focus purely on the products themselves, not giving much thought to the packaging that contains them. Little do they realize designing packaging can be just as involved as the product design process.

PUMA—which designs and develops footwear, apparel and accessories—is one of the world’s leading sports lifestyle companies. Its long-term mission? To be the most desirable and sustainable in its markets.

At PUMA, they despise waste. Shoeboxes alone account for millions of tons of waste. Just think of the heavy corrugated cardboard each box is made of and all the bunched-up tissue paper stuffed in each shoe. In its efforts to be sustainable, PUMA began to look at ways to reduce packaging for its footwear line. A reduction in packaging translates into fewer raw materials to ship and dispose of and less energy consumed. For PUMA, this meant a drastic change to the shoebox as we know it.

PUMA spent 21 months thinking up the smartest shoebox ever. After testing, research and a complete life-cycle assessment of over 2,000 ideas and 40-plus packaging prototypes, it decided on no box at all. Enter the “Clever Little Bag.”

The switch from the signature red shoebox to the Clever Little Bag saw immediate measureable results. PUMA saved:

• 8,500 tons of paper
• 20 million mega-joules of electricity
• 1 million liters of water
• 1 million liters of fuel oil
• 500,000 liters of diesel

In addition:

• Reduced cardboard use by 65%
• Reduced carbon dioxide emissions by 10,000 tons
• Not to mention the bag is re-usable and biodegradable

Although PUMA hasn’t ranked as one of the world’s most sustainable companies, we can all agree the innovative Clever Little Bag packaging solution is one step closer to topping the list.

Other Notable Mentions:

Nike Inc. – Considered Design – Ongoing commitment to design without compromise; either tn performance or the planet.

Dell – Bamboo – It’s local. It grows quickly. It’s strong and durable. It’s a friend of the environment.

Coca Cola – Reduce | Recover | Reuse – Optimize products and quality, reduce waste, and improve efficiency and traceability across the product lifecycle.

Starbucks – The Betacup Challenge – A design contest to tackle the overwhelming amount of coffee cup waste accrued each year.

What is your company doing to be sustainable?

Is Your Global Supply Chain A Disaster Waiting to Happen?

By KANDACE PROUD | Published: OCTOBER 19, 2011

Mother Nature has been tough on us this year. The recent floods in Thailand are just another example of how she can wreak havoc. With the flood waters in the Nava Nakorn Industrial zone currently at two meters, 250 factories—including Western Digital, Toshiba, Nestle, Toyota, Seiko and Casio, as well as many others—have suspended operations.

In today’s age of global supply chains, when disaster strikes, it’s not just local companies that are impacted.

Knowledge & Skills: These disasters are felt on a local and global scale. In Japan, 15,824 people died in the earthquake and tsunami earlier this year—more than five times the casualties of September 11th. How many of the victims were product or service experts or skilled workers? How many workers fled the country? In addition to the devastation of lost life and property, years of knowledge and expertise may also have been lost.

Competition: As the hard disk drive (HDD) industry (which supplies PC makers) recovers from the earthquake in Japan, it’s facing new floods in Thailand. The rising waters are creating havoc for Western Digital Corp and Seagate, the two largest providers of HDD’s. Sixty percent of Western’s drives come from Thailand and this isn’t the only factor hitting the HDD market. With the current shortage smack in the middle of the upcoming holiday season and rising prices, this could provide an even bigger window for competitors—think Apple—to gain an advantage.

Manufacturing: In March, US auto manufacturers started to run out of parts made in Japan. The disasters in Japan are forcing the auto industry to re-evaluate. Suzuki Motor Corporation has decided to spend serious money to relocate facilities away from earthquake and tsunami zones as well as nuclear power plants.

With global manufacturing comes the heightened risk of disruption. Companies need to think about how much stock they should have on-hand and whether multiple vendors can supply the same part in case one supplier is suddenly shut down. Do we need to reevaluate just-in-time delivery?

Product Quality: Disruptions can cause all types of repercussions. When supply is limited, prices increase, products are not in stock and your customers look to the competition.

Product quality may suffer as companies scramble to get orders out the door after a disaster. Poor product quality could tarnish your brand for years to come.

In global sourcing, flexibility and planning is becoming much more important. Is your company ready for the next curveball?