Study: Medical Manufacturers Focus on Improved Postsales Service 21711

The report, Industry Traction of Strategic Service Management, is based on surveys and interviews with executives at more than 600 enterprises in the high-tech, discrete and process manufacturing, telecommunications, utilities, and other industries. According to the report, 93% of medical equipment manufacturers surveyed are targeting improved customer satisfaction and retention through strategic service management. Additionally, 86% are looking to service management as a source of increased profits.

“A well-coordinated service program assures customer satisfaction, which will drive customer equity and long-term retention,” says Troy Taylor, vice president for worldwide customer technical services at Ortho-Clinical Diagnostics (Raritan, NJ), a Johnson & Johnson company. “Without the benefit of a well-coordinated program, such companies will struggle to do well. In companies where the capital sale is joined with some form of consumable, the financial outcome of highly effective service is less visible but equally important. In such cases, excellent service offerings and delivery may not drive operating profit as directly, but they certainly support the sale of the all-important consumable for customer lifetime value.”

“An effective aftermarket service program can add incremental service revenue, as well as identify product deficiencies, which in turn may help contain overall costs,” says Warren M. Gitt, executive director of Hill-Rom Biomedical Services (Phoenix). Hill-Rom offers service for its own manufactured and rented products, and also operates as a third-party repair entity for companies that outsource their service functions. “End-users demand that critical medical equipment meet performance expectations, and both lives and financial performance may hang in the balance. All else being equal, customers will buy from those companies that routinely provide dependable service.”

“High-tech manufacturers have notoriously based their branding, sales, and marketing strategies on product functionality,” reads the Aberdeen report, written by Mark W. Vigoroso, vice president of service chain management research at Aberdeen. “Now, with these products under increasing commoditization pressure, the manufacturers are looking for ways to win customers based on service levels. Due to the dynamic nature of the high-tech supply chain, senior-level acumen will be required to successfully integrate service into corporate strategies for growth and profitability.”

According to the report, 38% of high-tech manufacturers, including medical device companies, have service executives at the senior vice president level or higher.

The report finds that one area where leading service organizations are leveraging emerging technology is in the implementation of machine-to-machine systems, which enable companies to remotely monitor the status of equipment and determine when it will need servicing. The systems can also allow companies to conduct remote repairs, deploy technicians, and trigger parts orders. Commonly used among utility firms, machine-to-machine technology is increasingly being implemented by healthcare, life sciences, high-technology, manufacturing, and other sectors to improve postsales service operations, according to the report.

“The level of technological implementation is a function of size and scope, customer expectations, the nature of the market being served, and the sophistication and serviceability of the equipment being serviced,” Gitt says. “Some equipment, such as laboratory equipment used at both the hospital and alternate site, lends itself to remote monitoring. Life-sustaining equipment now includes both onsite service as well as remote monitoring and upgrading.”

Such technological systems, however, can be expensive. “It is true that many of these capabilities involve large, multi-year investments in people and systems that simply aren't financially practical for a small company,” says Stephanie Wells, vice president of marketing for the clinical laboratory division of Ortho-Clinical Diagnostics. “In these cases, the company must rely upon superior individual performances rather than technology. The unfortunate aspect of superior individual performances is that they tend to be less repeatable. With the technology investments available to a larger company, the superior results become more consistent.”

The report identifies key challenges facing the medical equipment manufacturing industry's service performance, including manufacturers' lack of sufficient metrics to monitor service performance, as well as insufficient awareness and support among executives of the impact of aftermarket service. Another challenge identified is disjointed processes and communications across the manufacturing, sales, marketing, and service functions—a challenge shared by all surveyed industries.

In addition to seven overall suggestions for building a strategic service organization in any industry, the report specifically recommends that medical equipment manufacturers focus on forging stronger ties between their service and manufacturing operations. “Nearly three-quarters of polled companies see only ad hoc collaboration at best between their service and manufacturing organizations,” the report reads. “Unfortunately, this has prevented valuable insights—gleaned from the field regarding product performance and serviceability—from making their way back into product design cycles.”

Regardless of industry sector, the report also recommends that companies do the following.

• Leverage existing and new technology to synchronize service information and systems.

• Address process deficiencies before deploying new technology.

• Promote service executives from within the company.

• Define requirements and success criteria before evaluating technology solutions.

• Leverage partnerships with service and logistics providers.

• Involve stakeholders in transformational processes.

• Track both operational and customer-centric metrics to measure aftermarket service efficacy.

© 2006 Canon Communications LLC

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