differentiated service levels in spare parts supply
TRANSCRIPT
© Wärtsilä DBAD948347 - PUBLIC
DIFFERENTIATED SERVICE LEVELS IN SPARE PARTS SUPPLY ISLA Service and Logistics Summit 2016 Benedikt König
27.4.2016 [Presentation name / Author] 1
© Wärtsilä PUBLIC DBAD948347 -
Differentiation is a complex undertaking when being applied consistently in a modern supply chain
• The supply chain from Wärtsilä spare parts offers complexity • Various customer groups have different requirements • Today we translate customer classification and order situation into a priority level • The priority level leads to various differentiations along the supply chain • Some differentiation cannot be done in the existing business model – but requires a new
business model • The implementation of the differentiation took time • During the implementation we learned a lot • Q&A
4/27/2016 [Presentation name / Author] 2
CONTENT
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The supply chain from Wärtsilä spare parts offers complexity
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INTRO
We serve 12,000 customers
115,000 deliveries, constituting more than 900,000 line items, packed in 134,000 packages
In one year: 16,300,000 kg of parts, with a total volume of 46,700 m3
117,000 unique materials stored
66,700 export declarations
Around 106,000 transportations making use of roughly 150 carrier modalities
We maintain knowledge and skills for 350 different product types
Our 3,600 field service professionals perform 100,000 field services jobs
We provide 20,000 technical answers
We maintain 450 installations under long-term contract
...One promise to the customer: We offer expertise, proximity, reliability and responsiveness for our customers in the most sustainable way
Wärtsilä Corp. 2015 sales of EUR 5,029 million with an EBIT rate of 12,2%
Wärtsilä Services 2015 sales were EUR 2,184 million
© Wärtsilä PUBLIC DBAD948347 - 4/27/2016 [Presentation name / Author] 4
Various customer groups have different requirements
CUSTOMER
Preventive solutions Responsive solutions
Optimizing solutions
Willingness to in-vest in certainty
of operations
High
Low
Willingness to use external
expert support
High Low
Customer need = What we offer
Cus
tom
er v
alue
cat
egor
y =
H
ow w
e se
ll an
d se
rve AAA
AA
A
Partners Balancers DIYs OEMers Savers
KAM customers
Customers most likely to be satisfied with Wärtsilä core
service level
Customers most likely to choose “full service”, i.e.
advanced modules
Customers most likely to choose at
least one advanced module
© Wärtsilä PUBLIC DBAD948347 - 4/27/2016 [Presentation name / Author] 5
CUSTOMER
Today we translate customer classification and order situation into a priority level
KAM P2AAA P3AA P4A P5Other P3
Quotations
Priority setting based on Customer Category and Delivery Service Level
Based on analysis of Sales and history, this will result in following priority level split
regarding part sales and deliveries
Other = Customers without category value and Wärtsilä companies
Emergency(S1)
Accuracy(S6)
Open(S2-S4)
Unclear(S5)
KAM P1 P1 P2 P3AAA P1 P2 P3 P4AA P1 P2 P4 P5A P1 P2 P5 P5Other P1 P2 P3 P4
KAM P1AAA P1AA P1A P1Other P1
Advanced Service Support
Spare parts orders
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The priority level leads to various differentiations along the supply chain (I)
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DIFFERENTIATION
Quote Order RFQ Support Customer Contact
Identify Customer Dedicated resources Differentiated detail of asset available
Priority by customer category Qualification of contact persons
Priority in Tech ID, alternative execution Depth of investigation
Priority by customer group / priority level Verification of lead times / expediting
Priority by customer group / Priority Level Verification of lead times / expediting / order correctness Reconfirmation response times
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The priority level leads to various differentiations along the supply chain (II)
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DIFFERENTIATION
Distribution & Invoicing After Service Supply Picking & Packing
Depth of lead time verification Priority of parts in stock Priority / extent of supplier expediting Inbound delivery Priority in quality inspection / tuning / reclassification
Priority in Priority level and delivery date Usage of fast lane
Priority by priority level and delivery date Utilization of express delivery, Special support Customs support
Priority by customer group / Priority Level Support for non conformities (Wärtsilä caused or not) Response times for immediate corrective action Feedback level of preventive actions
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Some differentiation cannot be done in the existing business model – but requires a new business model to fulfill those customer needs
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DIFFERENTIATION
• Old engine base require to maintain • Spare parts stockings • Technical competence • Sourcing competence • Manufacturing competence
• Old engine base do not offer
• Volume • Similar margin (on average)
• Old engine base have the risk
• Scrapping of old stock • Self alimentation of resources • Upsetting customer base
QuantiParts offers you OEM parts for classic Wärtsilä engines The best technical know-how, 24-7 parts services and cost-efficient solutions. QuantiParts is here for you and your engine
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The implementation of the differentiation took time
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PATH
2012
1. Profitability anaylsis 2. Blueprint 3. Resourcing 4. Customer value category.
1. Portal planning 2. Parts development 3. Tech request development 4. Customer verification.
2013 1. Understanding of impacts 2. Finetuning of parameters 3. Cause / Impact adjustment 4. Continued people training 5. Regional center roll out
2015
1. Account management model 2. Portal pilot 3. Parts pilot frontline 4. Advanced Services model pilot 5. Regional centers
2014
2016
1. Roll out model 2. Renegotiation of accounts 3. Parts implementation along supply chain 4. Knowledge base priorisation 5. ASM roll out 6. Regional center roll out
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During the implementation we learned a lot • We spent quite some time on the market analysis, customer segmentation, getting
commitment from the organization
• Once marketing has decided what to do – they expect to implement. However it is a long way from powerpoint bullet to a detail requirement definition of the sytems, to the SAP implementation, to the people training / understanding
• Do not underestimate the impact of master data
• There is a clear difference on topics that customers claim to be mandatory and customers are willing to pay for (sales people are willing to charge their customers)
• Sometimes the effect of a differentiation is different to what one would expect to see. If you differentiate e.g. by customer you should not forget that also their ordering behavior is different – which may turn out disappointing results. Fine tuning is still a journey
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LEARNINGS
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LEARNINGS
Q & A