Companies will respond differently to this recession.
Everyone is shouting. That’s often how it feels when talk of recession is coming from every angle, the IMF, the Bank of England, the World Bank and World Economic Forum. It’s a cacophony of noise that can be very distracting and, in some quarters, lead to knee-jerk reactions. Traditionally this has taken the form of cost cutting exercises, but cutting budgets is only one part of the solution. As we saw during the ‘great recession’ of 2008, what may have worked in the 80s and 90s is not necessarily right for the globally connected economies of the 21st century.
A 2010 article in Harvard Business Review titled Roaring out of recession was quite revealing in how businesses fared during this time. It found that firms that cut costs faster and deeper than rivals didn’t necessarily flourish. They had the lowest probability—21%— of pulling ahead of the competition when times get better.” Buccaneering businesses that tried to spend their way out of recession didn’t do much better, standing a 26% chance of becoming leaders after a downturn. So who did get it right?
WHO GOT IT RIGHT LAST TIME?
It tended to be the businesses that struck a balance that did the best. In other words, striving for operational efficiency while continuing to invest in marketing, R&D, and new assets with a multi-faceted approach to ensuring the business remained competitive and in-line with the needs of customers. This becomes more pronounced when you consider the interconnected nature of companies today, the increased reliance on ecosystems and the often critical need for machines and devices to be running, or at least available, 24/7. It is, after all, equipment assets and machines that keep the world running today.
Field service maintenance is now an integral part of customer service and customer experiences. Its role within business planning can also be more central, at least for those companies that have a digitized, data-driven field service function. Through customer knowledge and product intelligence, field service teams have the ability, and the data, to help inform decision making. These field service teams know how products are being used, which parts tend to fail the most and which customers need upgrades. It’s this level of intelligence that has been key to servitization and finding efficiencies in field service provision. As Deloitte suggested recently, “by digitizing field services, companies efficiently anticipate better to problems and are better able to predict logistics engineers, locations and timeframes.”
For customers, this also becomes increasingly valuable in knowing where they too can find operational efficiencies, especially in product use and energy consumption. In sectors such as healthcare, for example, where you would expect demand for medical devices to remain at a level, finding operational efficiencies could come down to managing the uptime of those devices. How can these organizations utilize devices differently? How can they transition from leaving a machine
on 24/7 to only having it on when it’s needed? The automotive market offers a different challenge. Often considered an economic bellwether (although this is perhaps a little out of date in modern economies), this industry usually sees demand drop sharply in a recession only to be hit by a spike during an economic recovery. It’s a difficult scenario to plan for, how to manage production lines, knowing which lines are profitable and which need to be put on hold until demand returns. Field service data has a role to play here too. Machine sensors can determine machine efficiency and help feed digital twins where overall production intelligence can lead to more accurate production decisions. This is not without its challenges of course (deploying
sensors, often on legacy machines and devices, for example) but a connected, smart factory can help leaders find operational efficiencies, with field service engineers a key component in the overall mix.
SQUEEZING MORE LIFE OUT OF THE MACHINES
Undoubtedly, an economic downturn will mean a change in procurement strategies for most industries. Expect an increase to the ‘fix and reuse’ approach. How can customers squeeze more life out of their existing kit? How can they avoid spending money on new machinery? Understanding when to stick or twist on machines should come down to field service expertise. If engineers can use the data to identify a decline in machine performance, for example, it would be possible to predict a point at which that machine would start to cost more to the customer than the actual cost of replacing it. The good news, at least according to Gartner, is that just 7% of CFOs plan to decrease customer service spending over the next 12 months. The message is loud and clear. Businesses do not want to stop looking after their customers because of challenging economic conditions. They want to keep servicing customers, look after their products and ensure positive experiences.
Asset intelligence, customer knowledge and machine learning are helping organizations to prioritize investment and efficiency measures in ways they never imagined back in 2008.
Field service teams are a key part of this and any business that doesn’t want to repeat the mistakes of past recessions should take note. This recession will see a different response from organizations across the board. Of course, there will always be some that revert to a blinkered strategy of only cutting costs, but most businesses understand that sacrificing any kind of service – whether that’s equipment maintenance, uptime and reliability or customer experience – is a false economy. When you know better, you do better. Here’s to all of us faring better through this recession.
