Efficient outsourcing in the Service production
Are you delivering the right service to your customers to meet their expectations - and do you remain competitive?
A good and efficient service business is a competitive factor for most businesses. The service business is fundamental when you want to ensure the longevity of your products and make sure that they live up to customer expectations. The service business is part of the company's overall value chain, but it has its own, intrinsic value chain that also needs to be effective. One of kaastrup|andersen's customers decided to outsource the production of special spare parts to external partners and established a project with the aim of creating the right framework for an outsourcing that did not fit into the company's normal procedure for outsourcing.
Read the case description below and gain insight into how kaastrup|andersen helped one of our customers outsource the production of spare parts to external partners, thus ensuring the continuity and cost-effectiveness of the profitable service business.
One of kaastrup|andersen's customers, a large size production company, faced a challenge: They needed more production space and efficiency in their production internally for new products. Therefore, they had decided to outsource production and packaging of spare parts to external partners within a given timeframe.
The outsourcing meant that the service organization had to find new suppliers/partners for the products that cannot be classified as serial production. These spare parts are typically used for complex, older versions of the product, they are not to be mass produced, and they require specialist knowledge when produced. These special characteristics meant that the process of outsourcing and the agreements to be entered with partners was different than in case of a normal outsourcing process in the company.
The time aspect and the uncertainty with respect to the need and demand was the biggest challenge for the company as a success criterion was that customers would keep getting their spare parts on time, and would not experience delays caused by the ongoing outsourcing activities.
The main success criterion for the project was to ensure the overall supply chain's efficiency and robustness in the service area: Uninterrupted supply of spare parts to customers worldwide. This could only be achieved by prioritizing outsourcing of the most critical spare parts first, and therefore the initial focus was on setting prioritization criteria in collaboration with the customer (the end user) internally in the project. This was the premise of scope of the project, and of how the project would work.
After that, the framework for cooperation with the external suppliers as well as internally between the various departments had to be defined and established. This was done through workshops both internally and externally, where the end-to-end process was outlined and subsequently tested on a single product. The Project Manager wanted to establish a visible and transparent way to show and measure progress. For this, the project implemented a Scrum setup with a kanban board for daily follow-up, and the project manager spent time before each grooming session to ensure that prioritization of spare parts was in place.
At the same time, the project focused on constantly learning from mistakes, implementing improvements to processes and getting more efficient. This meant that regular 'lessons learned' sessions, both internally in the project team and together with the external suppliers, became a central part of the process. The constant focus on learning enabled the project to continuously identify and implement best practice and thereby achieve the best possible progress, motivation, and impact in the project.
The project succeeded in establishing and implementing a strong cross-organizational cooperation internally and with the suppliers that became the strategic partners for these products. The results are tangible and means that the first production of spare parts has now been transferred from the company's own location to the external partners.
The prioritization criteria make it possible to ensure that the most critical spare parts can still be delivered without interruption to the company's customers. The transparency, which is created through a clear and well-implemented process from start to finish, makes it easier to outsource parts in a continuous flow from the company's own production going forward. The mechanisms set up by the project in the form of visible follow-up and the 'continuous improvement' mindset make the entire team including the external partners more effective in both the short and longer term.
The project succeeded in enabling and even streamlining an already profitable service business and at the same time increased end customer satisfaction by strengthening the delivery capacity that the customers were already accustomed to.
kaastrup|andersen was responsible for the project management of the project.
Do you also have a specialized business that requires a customized approach to, for example, outsourcing parts of your Supply Chain or other kinds of business development? kaastrup|andersen has experience in both uncovering and realizing potentials and gains in all parts of the value chain in a wide variety of industries. Contact us and let us together look at how we improve your business and help you to future growth.