giacomo squintani, ptc presenation at spare parts 2013
DESCRIPTION
"Spare Parts:from undervalued challengeto profit-boosting opportunity" Giacomo O. Squintani, Marketing Manager from PTC presentation at Spare Parts Business Platform 2013. Find out more http://www.sparepartseurope.com/TRANSCRIPT
Spare Parts:from undervalued challengeto profit-boosting opportunity
Giacomo O. SquintaniMarketing Manager
Stockholm, February 8, 2013
22
Agenda
All content is Copyright © 1999-2013 PTC, Inc. All rights reserved.
• PTC: An Introduction*
• Service Lifecycle Management: The Theory– what the analysts are saying
• Service Lifecycle Management: The Practice– what OEMs have achieved
• Q & A
* very short, I promise
3
$100
$125
$150
$175
$200
$225
$250
$275
$800
$900
$1 000
$1 100
$1 200
$1 300
2009 2010 2011 **2012 Guidance
8%
16%
8%
Americas: 37%
FY 2011 REVENUE BY REGION
Europe: 40% AP: 23%
FY 2011 REVENUE BY VERTICAL
Life Sciences:4%
Industrial Products:29%
Federal, Aerospace& Defense:19%
Electronics &High Tech:
16%
Automotive:12%
Retail & Consumer:
7%
Other:12%
* This presentation contains non-GAAP financial measures. A reconciliation between the non-GAAP measures and the comparable GAAP measures is located in the “Financial and Operating Metrics” document on the Investor Relations page of our website at www.ptc.com. ** Represents FY12 guidance range.
Total Revenue ($ millions)Total non-GAAP operating profits* ($ millions)% = YOY growth
PTC: A Large & Successful Global Company
All content is Copyright © 1999-2013 PTC, Inc. All rights reserved.
<what’s our strapline?>
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you may well be thinking: “That’s great guys, but…”
SO WHAT?WHY SHOULD I CARE?!?
6
Service Lifecycle Management Business Challenges
Fragmented Service Organization
• Silos of people, processes and technologies
• Increasing product and service complexity
Internal Pressures
• Growth and profitability center
• New sources of long term competitive differentiation
• Competition for executive mindshare
• Talent retention and management
Immature Service IT Infrastructure
• Disconnected data & processes
• Homegrown systems lack scale and innovation
• Service extensions from other enterprise systems (e.g., ERP+)
ExternalPressures
• Global economic difficulties
• Customer expectations for faster, better service experience
• Increasing product and service competition globally
• Smart Products
• From Product & Service to Product as a Service (PaaS)
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Service Performance Challenges Today
~80%First-timeFix Rate
25% of the time, service parts are not available or are wrong
Service errors resulting from outdated service information
Only
~56%Service Worker
Productivity
Low
Too many disparate sites for critical service content
40% of time looking for information
2-9%Revenue Lost to Warranty
Annually
Warranty data is not analyzed to identify trends for early corrective action
Suppliers are not traceable for supplier recovery
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you may well be thinking: “Look, I know all that…”
BUT STILL MY BOARD DOESN’T CARE!!!
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Shareholder Value
Profitability
Invested Capital
Revenue
Costs
Working Capital
Fixed Capital
Impact of Service Lifecycle Management
• Part Sales, SLAs, PBL Agreements, Maintenance, Labor, Warranty Contracts
• Purchases, Transportation, Labor, Repair, Handling, Customer Acquisition
• Inventory, Repair WIP
• Warehouses, Vehicles, Assets, Tools
Sources: Harvard Business Review, University of Michigan
Companies with High Customer Satisfaction Have Consistently Outperformed the S&P 500
Services Drives Shareholder Value
ACSI:+94%S&P 500:+4%
Service Focus Creates Shareholder Value
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Service Lifecycle Management: The Theory
All content is Copyright © 1999-2012 PTC. All rights reserved.
11
“Most companies have a fragmented service information technology infrastructure. This inhibits advancement in maturity because it prevents the efficiencies gained through improved visibility, scalabilityand collaboration.”
Supply Chain Transformation: The Service Life Cycle Management Maturity Model, Gartner (March 2011)
“After‐sale service… operationsthat really add value – thatenhance customer satisfaction,contribute significantly tocompanies’ revenue and profitgoals, and promote rigorous costefficiency – are rare.
The most important characteristicof a Service Value Chain is its clearintegration with all functions thatinfluence a company’s ability toprovide service to its customers.”
The Service Value Chain (February 2011)
What GARTNER and ACCENTURE Are Saying
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Service Lifecycle Management (SLM) optimizes the
system of people, processes and technology
employed by manufacturers, service providers and equipment
operators and ensures that their customer achieves maximum
value over the entire serviceable life of a product.
True SLM enterprise solutions provide a strategic view of
service by connecting planning, delivery and analysis to
increase service revenue, profitability and customer value.
We Believe Those Problems Can Be Solved
the PTC definition of SLM
All content is Copyright © 1999-2012 PTC. All rights reserved.
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Product Lifecycle
Management
RequirementsProduct
Optimization
ReleaseTo
Manufacturing
SystemsDesign
Service Part Pricing and
Planning ServiceInformation
Delivery
Service Knowledge
Asset Tracking& Management
WarrantyProcessing & Analysis
Field Service
Depot Repair
Products & Service
PerformanceAnalysisDetailed
Design
Reliability & Maintainability
Analysis
Service Network
Optimization
Manufacturing Planning
ServicePlanning
& Information
Issue Analysis& Corrective
Action
Service Lifecycle
Management
Closed-Loop Lifecycle Management
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Service Lifecycle Management: The Practice
All content is Copyright © 1999-2012 PTC. All rights reserved.
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AVAYA
Challenges:• Achieve a consolidated global view• Integrate with legacy systems & ERPs• Improve first-time fill rates• Manage central and field stocking locations
Results:• Reduced inventory by over $90m / >10%• Avoided $5m in service parts repair costs• Avoided purchases through rebalancing• Improved first-time fill rates by over 30%
DELL
Challenges:• Meet the needs of >2m same-day SLAs• >200,000 part:location pairs• Decrease inventory & maximize customer
experience
Results:• Improved customer satisfaction• Record service levels (99.5%) with reduced
inventory• Grew same-day service business globally• Implemented new 3PL strategies• Improved partner labour utilisation
Sample Results
small toys
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HONEYWELL
Challenges:• Required a quick implementation with
minimum IT resources and integration with legacy systems
• Had to improve customer service whilst reducing inventory
• Needed to support the unique needs of the aerospace business across disparate business units
• 150,000 part numbers• 14 R&O shops
Results:• Increased service levels to 91%• Reduced supplier lead times by 15%• Improved on-time delivery by 40%
KOMATSU
Challenges:• Lack of visibility at the dealer level• Inability to take into consideration part
lifecycle• Need to reduce overall inventory• 3 months to implement price books• Required a solution that would optimise
aftermarket pricing utilizing market data, insurance claims information and build “what-if” scenarios which predict market response to price changes
Results:• Reduced global parts inventory by 18%• Improved service levels• Increased profitability by nearly $150m• Improved customer satisfaction• Priced new parts in less time
Sample Results
big toys
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• world leader in the production and distribution of electron microscopes, including scanning electron microscopes (SEM), transmission electron microscopes (TEM), DualBeam™
Case Studies: FEI & a Major Manufacturing Company
overview • 600 locations
• 120 countries
All content is Copyright © 1999-2012 PTC. All rights reserved.
• >10,000
• >€3bn
staff
2011 revenues
• 2,000
• €604m($826m)
Manufacturing Company
≠
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Case Study #1: FEI Company
All content is Copyright © 1999-2012 PTC. All rights reserved.
19FEI Confidential
Spare Parts Planning at FEI
P DCA
10/24/12 19
20FEI Confidential
2 Pillars of Spare Part Planning
Global supply chain footprint
• 3 hubs – covering 100% of all parts
• 22 warehouses –covering 75% of all parts
Part Segmentations
• Segmentation based on popularity and cost
• Safety stock A parts is highest, for C parts lowest
P DCA
10/24/12 20
21FEI Confidential
Daily Planning Cycle• Two global planners
manage stock levels in all hubs & warehouses.
• If the stock level is below the required level, global planner will initiate an order
P DCA
Replenishment orders
• Inventory will be shipped from hubs to local warehouses
Purchase orders
• When levels in the hubs drop below re-order point, a supplier purchase order will be initiated
10/24/12 21
22FEI Confidential
Weekly Performance ReviewPerformance analytics focuses on 4 areas
ADPC
Client• Client A always scores below targeted fill rate• Part segmentation should be re-assessed
Supplier• Supplier B underperforms• Critical parts list is used to get supplier to focus on supply of
certain parts
Region• Region X over performs resulting in high inventory cost• Safety stock levels should be adjusted
Process• Inventory in warehouse Y is not booked properly • Retraining of staff is required
10/24/12 22
23FEI Confidential
Service fill rate has increased significantly since implementation in Q4 2011
The Results
10/24/12
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Case Study #2: Manufacturing Company
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25
A journey to industry-leading level of aftermarket pricing sophistication begins
•Pricing tool RFQ, selection and project started•Co-operation between business areas, regions and central services expands
2007
2008
• Initiated a Spares optimization forum•Following Bain study increased focus to pricing
•Stop negative margin trade•Spot 90 % increase in cost of hydraulic parts via margin erosion
•Currency reviews performed for certain assortment where neglected for years
.......
The quick wins justified the investmentto a pricing tool to increase the scopeof pricing work
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PRICING ENGINEDemand
Current Cost
Current Price
Recommended
New Price
Competitor Data
Location Attributes
MarkupInputs
Part Attributes
ChannelDiscount
CustomerDiscount
Net Price
Inside the PTC Pricing Tool Outside
• Price Alignment & Tiers• Market Adaptive Pricing• Elasticity• Cost Plus/Markup
Scoping and Setting Expectations
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The PTC Tool provides market level visibility to:
• Cost and price data – consolidated margin
• Transaction and discount data
• Market data entry, storing and usage
• ...and allows advanced pricing policy setting and simulations
• Segmentation of parts to separate buckets based on technical, commercial, market, business and etc. attributes
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Market-adaptivepricing
Between-marketalignment of pricing
Attribute-basedprice setting
Intelligent cost-plusand optimization
• Compare current price and competitiveness, to market offering
• Set prices to position competitively at market place
• Act based on fact based information
• Aim to have aligned prices between markets
• Enable professional handling of multinational customers
• Prevent cross border trading
• Set price of spare parts based on physical and performance characteristics
• Prices between items make sense for customer
• Key is finding the right drivers
• Making competitiveactions relative to market share and additional business
• Understanding hit rate, and lost sales
• Mark-up factors based on modeling
70x Value Index 51
Piston Diameter
x Importance 7
1410x Value Index 92
Stroke Length
x Weight 10
< 50x Value Index 55
Rod Diameter
x Importance 0.0
Attribute
Value index
Category
Importance
Application of Appropriate Pricing Techniques
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Insights concerning a pricing project
• For operating a pricing tool the requirements for data format are strict, and lot of attention needs to be put to securing correct output
• Dedicated and empowered implementation team that works from one location will secure success, and speed up problem resolution cycle
• Via benchmarking we found the Servigistics/PTC pricing product to be structured, versatile and flexible
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Benefit realization of pricing systemand pricing strategy implementation
• Financial targets have been achieved to date according to plan
• Information available about transaction, customers, prices and etc globally on detailed level in real time, which also enables much more than pricing alone
– Of course this information would be available otherwise as well via ad hoc reports, but continuous ad hoc work is not the way to go...
– This can support e.g. sales, tendering, discount structure design, and etc.
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That’s How Value Is Added!
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Strategy Coordination
Operational Coordination
Supply Chain &Manufacturing
Master DataProject Accounting
PurchasingLogistics
Supplier QualityProduction Scheduling
Production Control
Service SchedulingService DeliveryParts Logistics
Warranty & Contract Management
Systems EngineeringHardware EngineeringSoftware Engineering
Product Validation
Supply Chain DesignCost ManagementRisk Management
ManufacturingProcess Engineering
Tooling Design
RequirementsApplication Engineering
Service EngineeringParts Planning
Service InformationFailure Analysis
PTCOptimizes
Strategy
ERPOptimizes
Operations
Sales & ServiceHardware & SoftwareEngineering
Product Advantage Service Advantage
Transforming How Products Are Created And Serviced
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Service KnowledgeManagement
Warranty & ServiceContracts
ServiceLogistics
ServiceParts
Management
Field ServiceManagement
Technical Information
Customers & Products
Addresses the Needs of the Global Service Network
With a SingleSystem for Service
PTC’s Single System for Service
All content is Copyright © 1999-2013 PTC, Inc. All rights reserved.
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“Leaders in service management… are likely to depend less on ERP to handle parts and
service, since ERP systems often struggle in areas such as forecasting, managing
distributed inventories and aligning resources with specific service or maintenance events.”
The Service Value Chain (February 2011)
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One Final Perspective: Accenture
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“After a lengthy and rigorous evaluation program, we concluded that the
Servigistics [now PTC] solution had a strong European infrastructure that could
handle high levels of complex data, increasing the visibility and efficiency of
our service parts operation”
Bernhard Weigl, Eurocopter
OK, one more…
Thank You for Attending
Giacomo SquintaniMarketing Manager
+44 7977 068176
www.ptc.com
THAT is why your Board needs to care!
…any questions?