Beyond Asset Management - White Paper

Beyond Asset Management:REAL-T IME PERFORMANCE MANAGEMENT SOLUTIONS

FOR THE PULP & PAPER INDUSTRY

W H I T E P A P E R

PULP & PAPER

P U L P A N D P A P E R : W h i t e Pa p e r

B E YO N D A S S E T M A N A G E M E N T : R e a l - t i m e p e r f o r m a n c e m a n a g e m e n t s o l u t i o n s f o r t h e p u l p a n d p a p e r i n d u s t r y . 1

© 2 0 0 4 I N D U S I N T E R N A T I O N A L

W H I T E P A P E R

WHO SHOULD READ THIS DOCUMENT?

Pe o p l e i n v o l v e d i n m a n a g i n g t h e c r i t i c a l i n t e r a c t i o n s b e t w e e n c u s t o m e r s , s u p p l i e r s ,a s s e t s , a n d t h e s e r v i c e w o r k f o r c e i n a p u l p , p a p e r , o r i n t e g r a t e d f a c i l i t y . I T d i r e c t o r so r m a n a g e r s a n d a p p l i c a t i o n s e r v i c e p r o v i d e r s w o r k i n g w i t h i n t h e p u l p a n d p a p e ri n d u s t r y . C o n s u l t a n t s , s u p p l i e r s o f e q u i p m e n t , c h e m i c a l s , a n d c o n s u m a b l e s w i l l a l s ob e n e f i t f r o m t h e i n f o r m a t i o n p r e s e n t e d h e r e .

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CONTENTS

1. Relentless pressure to reduce costs 3

2. A real-time profit opportunity 4

3. The economics of Service Delivery Management 5

4. Managing the critical interactions in service delivery 7

5. The starting point: A S S E T M A N A G E M E N T 9

6. Next step: C U S T O M E R R E L AT I O N S H I P M A N AG E M E N T 10

7. Next step: F I E L D S E R V I C E M A N AG E M E N T 11

8. Living the strategy—in real time 12

9. Narrowing the gap between equipment supplier and manufacturer 13

10. The need for a comprehensive service delivery model 14

11. For more information 15

12. Glossary 16

2 P U L P A N D P A P E R : W h i t e Pa p e r

SUMMARYInefficient maintenance practices in the pulp and paper industrycan interrupt production schedules in mills and convertingfacilities to a point at which the most sophisticated supplychain planning becomes superfluous. Maintenance and serviceactivities consume as much as 10 –15% of the operationalexpenditures in a mill.

The pulp and paper industry is one of the most capital intensivebusinesses in the world. Production equipment has to befully utilized on a 24-hour basis to obtain a sufficient returnon investment.

Yet, historically, there have been stumbling blocks which havehindered optimization of the field service organization: thesystems to support the information and business requirements,the manual nature of field workforce management, and lack ofvisibility into asset performance or customer relationships are allexamples of these stumbling blocks.

This resulted in “silos” of resources and information that aretotally outside the context of a business process called ServiceDelivery Management (SDM).

The complexity builds as new tools emerge. There is relentlesspressure—from competitors, from shareholders, from macroinfluences, and from within—to reduce costs further. The mantrain business today is “do more with less.”

A well-designed and implemented SDM solution can

impact bottom line economics by:• reducing operations and maintenance

labor costs by 25-35%

• improving reliability and reducing the frequency of unplanned outages by 15-50%

• reducing inventory levels by 15-30%

• increasing calls/service person by 15 -30%

• reducing travel time and vehicle costs by 25%

• improving customer loyalty (increases revenue byincreasing the profitability of service agreements)

To secure these economics, a pulp and paper company mustmaximize the efficiency of its maintenance, repair and operationsactivities and optimize asset usage. From day-to-day maintenance,to planning of expanded production, resources must beprecisely managed to optimize a return on assets. Optimizationmeans the right person, with the right tools and experience, atthe right place, at the right time—working at his/her highestlevel of productivity.

By combining SDM with e-business and collaborative technology,pulp and paper companies can squeeze more productivity, at alower cost, out of their IT infrastructure, their people, and theirvalue chain, while maintaining customer satisfaction and loyalty.

Service Delivery Management solutions must balance the

often-conflicting goals of improving operations while

cutting costs. Service delivery models can be applied to

any of the following scenarios: • from mill to customer

• within the mill (internal customer)

• between OEM service provider and the mill

The last scenario (involving the OEM service provider) isemerging as a great opportunity for manufacturers to focus ontheir core competencies. As outsourcing of non-core activitiesin a mill continues to grow, it offers significant potential forcontractors and suppliers to share in the economic benefits ofan optimized service delivery approach.

The goal of this white paper is to introduce the concept of SDMand document how a fully integrated SDM solution not onlyaddresses the full lifecycle of pulp and paper assets, but alsogenerates increased revenue and dramatic operational costsavings—typically 5–20% of a company’s maintenance budget—while providing a competitive advantage.


1RELENTLESS PRESSURE TO REDUCE COSTSThe new mantra

Business managers in the pulp and paper industry know thatraising prices to improve margins is difficult, if not impossible,today. Pulp, paper, tissue, and board markets are such thatglobal competition prohibits increasing prices at will. Cost-side improvements to the profit margin are seen as the onlyrealistic approach.

That is why there is relentless pressure—from competitors, fromshareholders, from macro influences, and from within—toreduce costs further. Again, the mantra is “do more with less.”

The difficult part is knowing what to do more of—and what to doless of. Where are the real profit opportunities? And, where arethe sinkholes (sometimes labeled as “performance initiatives”)that can rob an organization of its focus, drain critical resources,and undermine management credibility?

What we’re really talking about here is squeezing the mostbenefit out of every asset, every investment, and every resourcethe company has at its disposal. Practical solutions which havethe highest impact on cost savings and service improvementswin. Period.

Doing more what…?Instant and deep visibility into the performance of

an operation—with the right metrics—gives business

managers the basis for making higher quality

investment and resource allocation decisions…• Which assets are giving us the highest return

over the entire lifecycle?

• What additional information do we need to direct and control our operations?

• What spares do we need in inventory to keep criticaloperations running?

• Who are our most productive and valuable servicepersonnel and how can we get others to match their value?

Doing less what…?Likewise, instant and deep visibility into the

performance of an operation provides the basis for

making higher quality cost reduction decisions…• Which assets are costing the most over the

lifecycle and should be retired or replaced?

• Which assets are declining in performance and should be rebuilt or modernized?

• What reports and information can we do without?

• What are the non-critical and least used spares that can be eliminated from inventory?

• Who are our least productive service personnel and what training do they need in order to improve their value to our company?

• Based upon our comprehensive knowledge, would we benefit from outsourcing more of our service delivery functions?

The case for real-time support tools to match real-time operating decisions

Since operational managers seldom have the luxury ofcompiling a historical analysis in order to support the nextdecision, decision support tools must be able to do thisautomatically and still function in real time (i.e., “traveling atthe speed of business” as one logistics supplier puts it).

A major focus of new generation software solutions is theability to collect real-time asset performance information anddynamically use this information to send instant guidance orfeedback to Operations. Actively sharing and proactively usingthis information accelerates decision-making and ensures higherquality decisions.


2A REAL-TIME PROFIT OPPORTUNITYThe difference between aftermarket and afterthought

Maintenance and service have been typically unrepresentedin the corporate boardroom, and largely ignored businessfunctions due to their own peculiar rules. But never has thiscost center become so crucial to pulp and paper companies’revenue and profit margins. Maintenance alone can consumeas much as 40% of an operational budget and yet oftenseems under-funded.

Jack Welch, the now retired Chairman of General Electric,was quoted as saying, “If you consider ‘services” aftermarket,you’re probably treating it as an afterthought.”

Whether your company has upstream or downstreamoperations, or both, the management of assets in the pulp andpaper industry has always been complex. Not long ago,companies were managing their assets manually. This seemshard to fathom considering the depth and breadth of acompany’s assets. For instance, a single integrated pulp andpaper mill can have more than 100,000 different assets. Withlarger companies operating multiple mills and convertingfacilities, or merging a recently acquired company’s assets,the magnitude of managing these assets and the maintenance,repair, and operations supply chain reaches even greaterlevels of complexity.

Broadening the focus from simple maintenance to operationalexcellence will have a great impact on the bottom line. To achieveoperational excellence, organizations must simultaneously attaintop performance in cost control, safety and compliance, andproduction performance and reliability.

Available today are various software solutions, with varyinglevels of sophistication, for managing customer relationships,billing, maintenance, inventories, and assets. Some offer real-time visibility and others are more static in nature. Manyhave excellent economic paybacks as stand-alone systems.

The breakthrough—the real profit opportunity—comes inthe ability to optimize the critical interactions of thesesoftware systems to improve operational performanceacross the entire company. This breakthrough is calledService Delivery Management.

Service Delivery ManagementService Delivery Management (SDM) is a new and innovativeapproach for effectively managing the critical interactions andactivities associated with providing service for customers—internal to the organization or external.

A well-constructed SDM solution integrates three disciplines—customer relationship management, asset management, andfield workforce management. SDM focuses on the businessflows within and across the requirements of the customer, theassets, and the field service organization. It balances thedemands of each with the current supply.

Prior to SDM solutions, standalone systems existed

for the primary functions of:• CUSTOMER MANAGEMENT. Customer Relationship

Management (CRM) systems facilitate all customerinteraction processes in support of high quality and timely service.

• ASSET MANAGEMENT. The essence of Enterprise AssetManagement (EAM) systems is the ability to seamlesslycoordinate maintenance work with inventorymanagement and the procurement process.

• FIELD WORKFORCE MANAGEMENT. Field ServiceManagement (FSM) systems provide real-timeoptimization to ensure that appropriate resources aredispatched with all the required tools, information, andparts in hand at the promised time.

The common thread between CRM, EAM, and FSM is “service”—the ability to efficiently and effectively service your assets inorder to achieve maximum customer satisfaction. Without aseamless supply chain, the ability to provide exceptional serviceis severely degraded.

Not just another “performance initiative”Throughout the 1990’s, employees have faced an onslaught ofchange management programs. By now, they have all seen thepresentation starting with “nothing is as constant as change.”

As true as this is, most employees are skeptical, perhaps evennumb, from the “program du jour” approach to change.

While SDM will almost certainly require process changes insidean organization, it is not “change for change’s sake.” SDMstreamlines many of the workflow functions that might now beperformed manually—automating the collection of data andlinking this data in more effective ways for decision-makingand service delivery. It includes resources other than physicalassets—such as customers, internal and outsourced fieldworkforces, spare parts inventory, tools, and documentation.

Service Delivery Management can be implemented in a step-wise manner for efficient deployment, fewer organizationaldisturbances, and attractive paybacks. New, internet-based toolsare now also available to provide real-time support formanagement of the “supply side” (people, parts, tools, locations,documentation, crew configurations) and the “demand side”(scheduled and unscheduled requests).

3B E YO N D A S S E T M A N A G E M E N T : R e a l - t i m e p e r f o r m a n c e m a n a g e m e n t s o l u t i o n s f o r t h e p u l p a n d p a p e r i n d u s t r y . 5

THE ECONOMICS OF SERVICE DELIVERY

MANAGEMENTFor the most part, services (unlike products) cannot beinventoried or completely standardized. In a way, services are“manufactured” each time a work request is received. Like anycustom-manufactured product, the service runs the risk of costoverruns, performance issues, and quality variances. Thesecosts and risks affect the productivity of the organization andthe profit margin of the company. They represent a very realopportunity for improvement.

Service delivery probably offers the greatest opportunity for abreakthrough in operational excellence because it is the leastoptimized function in most businesses. Maintenance and repairoperations in a pulp and paper mill are rarely boardroom-leveltopics (other than “our maintenance costs are too high!”) and,as such, usually have the least efficient manpower utilizationand the least efficient supply chain process.

Yet, there are huge costs and potential risks associated

with inefficient service delivery:• lost customers

• equipment/plant downtime

• inefficient processes

• warranty work or rework

Manual systems or fragmented legacy systems will do littleto improve the margins in this area of the business.

Michael Moaz of Gartner has estimated that, “profit marginscan be improved from 20% to 60% through improvements tofield service operations and field logistics.”

Capital-intensive industries such as pulp and paper often findReturn On Assets (ROA) a better measure than ROI for gaugingbottom line performance. ROA is more than just a balancesheet item. It reflects the true return from cost savings,economies of scale, productivity, and growth throughout thevalue chain. However, geographical distribution, insufficientinformation flow, variations in equipment and parts, differingregulatory compliance requirements, and a host of otherfactors create formidable challenges in obtaining a good ROA.

For the heavily automated and capital-intensive pulp andpaper industry, any loss of production due to unscheduledequipment downtime severely impacts profitability. As aresult, weekly downtime costs and production schedules areforemost in the minds of senior executives. Both upstreamand downstream operations will react in the same way tocritical equipment breakdowns—“get maintenance out thereand fix it quickly!”

Based upon studies, a company can typically increaseproductivity of the field workforce by a minimum of 30%;expand capacity by 17%, and reduce overall costs by 25%.A pulp and paper company can save roughly $150 millionby reducing its annual $1 billion expenditure for indirectmaterials by 15%.

Companies can find the greatest payback in one simple area—improving the supply chain process for maintenance, repairand operations materials and services. The failure to controland manage spare parts efficiently and effectively, for instance,is a common problem in many mills. Whether a pulping,papermaking, or converting operation, the consequencesremain the same: an increased likelihood of equipmentavailability complications (particularly if parts are notavailable on time and in sufficient quantities), high inventorylevels which result in excess carrying costs (tying up workingcapital); and lower service levels arising from undocumentedspare parts and locations.

The implications to an organization, in terms of lost productivityand profitability, are significant when one considers a $10 partcan result in a loss of up to $70,000 per hour due to equipmentdowntime or a machine shutdown. The solution to maintainingspares can be even more costly when one considers that a typicalorganization might need to track up to 100,000 unique parts.

Maximizing ROA, is not just restricted to equipment, labor,tools, and materials. Arguably, the most important return onassets, from a long-term organizational standpoint, is thesharing of information throughout the company. As much as4% to 8% of total corporate revenue is spent on the creationand distribution of documents. And 15% of that is oftenwasted because the information is out of date by the time itis received. The ability to let employees access informationsuch as work orders, equipment histories, costs, purchases,planning, scheduling, contracts, warranties and preventivemaintenance information, leads to increased work capacityin a field service organization through more productive andefficient operations.

For many customer and asset centric industries, the goal iscollaborating with suppliers in design, sourcing and buying.The more visibility a company can establish across all pointsof service delivery and the sooner this visibility can beprovided to the materials management staff and suppliers, thebetter the response rates, ultimately resulting in improvedcustomer service and cost savings.

Squeezing out costs in a company also means consideringtechnology systems that will further enable that goal. Hosting,accessible via a standard Web browser, helps reduce up-frontcosts and long-term total cost of ownership in a company’s ITinfrastructure. For example, suppliers can host solutionsdirectly for a company, thus removing the headaches ofmaintaining a full IT staff and understanding the intricacies ofevolving technology. It allows pulp and paper companies tofocus on running their business, while being ensured that theirdata is housed on a secure, stable, high-performance managedhosting platform.


Soft issuesSDM is more than hard-nosed procurement and Scrooge-like inventory management. It’s the smooth coordinationof all the demand and supply activities, service activities—work and service orders, material requests, scheduling anddispatching of labor, management of inventory and thewarehouse, generation of documents, forecasting materials,procurement, and invoicing.

An efficient SDM solution synchronizes supply and demand,collaborates outside the boundaries of its organization, and isresponsive to changing market conditions. The technologytrends in Service Delivery Management—inventory management,e-procurement, integration, business intelligence, mobiledispatching, wireless and workflow—make it easier forcompanies to coordinate the flow of supply and demand into acollaborative, efficient network.

Critical to building a collaborative organization is providingend-to-end visibility or transparency in the supply chain.Collaboration is all about creating a broadly connectedworld—from suppliers to producers to customers and to thecustomers’ customers—that can react more quickly tochanges in supply and demand.

Col laborat ion is important because today’s businesspractices do not tolerate “isolated” silos that operate withintheir own physical environments. Reliability is a key benefitin collaboration—but it translates differently for customersand suppliers. For the customers, it involves attributes suchas deliverability, quality, service, and agility. On the supplierside, it can mean providing a reliable forecast and sharingaccurate inventory data with vendors.

SAMPLE RESULTS FROM A SERVICE DELIVERY MANAGEMENT SYSTEMImprove customer satisfaction 10% - 40%

Increase field service productivity 15% - 30%

Reduce field service travel time 20% - 30%

Reduce overtime costs 20% - 80%

Reduce maintenance labor costs 25% - 35%

Improve asset reliability 15% - 50%

Reduce service parts inventory 15% - 30%

Improve SLA compliance 50% - 90%

4


CUSTOMER RELATIONSHIPMANAGEMENT

A S S E T M A N A G E M E N T

F I E L D S E R V I C EM A N A G E M E N T

FOCUS Customers Assets and Workflow Field Workforce

SCOPECustomer interactions and

communicationsAsset information and work

necessary for delivery of serviceHuman resources and tools for the completion of service work

CRIT ICALCAPABIL IT IES

REQUIRED

Ability to manage the customerthroughout the lifecycle

Ability to manage the assetthroughout the lifecycle

Ability to schedule, optimize, anddispatch resources for scheduled and unscheduled service events

MANAGING THE CRITICAL INTERACTIONS IN SERVICE DELIVERY

Service Delivery Management focuses on the business flows andinternal processes regarding the requirements of the customer,the assets, and the field service organization. Clearly, effectiveservice delivery is impossible without optimal processes.

A challenge that most pulp and paper producers face is how tomaintain an operational mill without stockpiling spare parts,highly trained service personnel, or paying high expeditingfees for materials or additional manpower. It is this challengethat is leading corporate boardrooms to examine andimplement technology strategies that will provide them acompetitive advantage.

Today’s managers must look to emerging technologies. Thesetechnologies create opportunities to increase productivity andprofitability. They deliver speed, collaboration, repeatability,and agility through real-time information that is pushedwhen and where it is needed. Fortunately, advancements indata communications have made it possible to provideflawless integration within and across enterprise systems andtechnology solutions.

Organizational “centers”A large part of the answer lies in a company’s ability to manageits organizational “centers:” customers, assets, and fieldworkforce in real time. There are significant and quantifiableeconomic benefits from real-time management and optimizationof these centers.

Unlike individual disciplines which tend to be customer-centered, or asset-centered or field workforce-centered,SDM centers on the business processes. It integrates all threecenters and optimizes the interactions between customers,assets, and the service workforce. Each component of SDMshould be capable of managing the entire scope of its focuswith the additional critical capabilities required.


InformationSDM supports wireless technology for the mobile

workforce and integrates with Web portals and

e-marketplaces. Pulp and paper companies can seamlessly

link from SDM to either e-marketplaces or directly to key

vendors of their choice, for total supply chain

collaboration enabling them to:• Receive service and work requests

• Schedule work

• Track labor (internal and external), equipment and materials

• Document and comply with safety and regulatory requirements

• Forecast the usage of resources

Whether your company operates upstream in the forest, throughmills located across far-flung geographic areas, or downstream,with converting and merchant operations, the SDM solution canintegrate directly with Geographical Information Systems (GIS)and Global Positioning Systems (GPS) so field workers canquickly and efficiently pinpoint locations requiring service.Whether a worker is servicing a customer, inspecting a processarea, or making repairs, assigning personnel by GPS reducesconfusion and optimizes efficiency.

Linking field personnel to an SDM solution also allows them torespond more rapidly to service requests, perform jobs efficiently,and complete more jobs on the first pass, regardless of theirphysical location. Workers can access real-time data and back-office systems from a wireless hand-held device. This solutionempowers a company’s field workforce, optimizes scheduling,increases productivity, and ultimately results in substantialsavings in resources and higher equipment availability.

CoordinationSDM solutions coordinate the structuring, sequencing, andsynchronizing of activities for efficient service delivery—overand over again. Coordination is what results when servicerequestors and service providers are clearly informed aroundall aspects of a service.

ACTIVITY COORDINATION BEHAVIOR

SERVICE REQUEST

• Clear communication of servicerequests to the service team

• Clear communication to customersregarding service responses

• Complete knowledge of asset to beserviced (history, materials required,parts required, procedures)

• Eliminate callbacks

• Eliminate layers or intermediaries

• Complete view of skills, materials, parts, documentation, etc. required to service

SERVICE DELIVERY

• Clearly defined actions andprocedures to be performed

• Visibility of service status available to all parties

• Internal and external service providers in synch

• Customer, dispatcher, and managementhave access to status information

• Service can be decentralized and local

SERVICEMANAGEMENT

• Visibility of all service activities

• Continued knowledge of assetperformance, reliability, availability

• Various metrics to measure andimprove performance

• Control of inventories

• Skill set assessments for service personnel

• Billing data

• Cost data

• Performance reporting and incentives for improvement


5THE STARTING POINT: ASSET MANAGEMENTThe first step in implementing an SDM solution is to gainreal-time visibility into key assets to monitor their health,avoid unnecessary downtime, and shorten planned outages.There are proven software solutions with scaleable, real-timecapabilities available today. Most of these solutions areknown as Enterprise Asset Management (EAM) systems.

Effective control of asset and work management

lifecycles includes processes focused on:• asset definition (e.g., a single pump or a group

of pumps in the bleach plant) and asset catalogs

• bill of materials

• establishing preventive maintenance and/or predictive maintenance programs

• work order planning and scheduling

• analyzing the effectiveness of maintenance control programs

Real-time visibilityThe asset management system should be able to recordcomprehensive information for each asset (descriptions,drawings, inspection readings or limits, cost data, transactionhistory, etc.). It should also collect information during day-to-day transactions such as daily labor returns, work orders,stock issue requests, etc.

Asset management systems provide useful information, in realtime, regarding physical asset maintenance, service and workmanagement, project tracking, capacity tracking, vehiclecontrol, and optimization of assets. These applications provideother useful information including equipment manufacturers’specifications, and historical data such as mean-time betweenfailure and equipment performance history. Asset maintenancehistory is a valuable tool in strategic sourcing since it helpscompanies identify antiquated equipment and analyzeperformance issues. This enables them to make better decisionson future equipment purchases, as well as to improve servicelevels from their vendors.

The application should also accommodate multiple prioritycodes, such as equipment criticality and safety, which canbe used to identify areas of high risk. With this knowledge,companies have an essent ia l tool for logging propermaintenance procedures used in correcting, preventing, andpredicting equipment failure.

Push maintenanceThe most modern asset management applications enable millsto move from reactive and preventive strategies to real-timeasset condition monitoring. Information flows directly frommonitoring devices on the asset and is “pushed” in real timeto dispatch. No time is lost waiting for reports to run or forsomeone to notice a problem. Critical alerts are communicatedthrough a variety of means (e.g., emails, mobile telephones,etc.) to ensure minimal disruption of production. Proactivemaintenance strategies such as these lower operating costs andreduce production stoppages, since the service work can oftenbe performed during the next scheduled production window.

Key Performance Indicators (KPIs)The asset management solution should be capable of trackingand reporting on key measurements affecting asset and workmanagement cycles: work order backlog aging, work ordercost variances, cost of stock returns (by planner and/orcrew), and indicators supporting response times.

1 0 P U L P A N D P A P E R : W h i t e Pa p e r

6NEXT STEP:

CUSTOMER RELATIONSHIPMANAGEMENT

The Customer Relationship Management (CRM) component ofan SDM solution must manage the interactions for all typesof customers, for all types of service and for all charges—regardless of origination or the basis for fees.

Service Delivery Management logically originates with thecustomer (either internal or external). However, many fieldservice organizations take a narrow view of the customerservice lifecycle, viewing customer service as something thatonly takes place in the call center, help desk, or work orderrequest location.

This perspective overlooks the fact that the real opportunityfor improving customer loyalty goes beyond the call center.For example, the customer perspective of quality service iscommitting to work within a reasonable time frame,guaranteeing the timing of the work, and performing thework when promised at the price promised.

Customer Relationship Management within the context ofSDM must focus on all the processes affecting the fieldservice organization’s explicit or implied service levelagreements—reliability, completion of work when promised,and billing accuracy.

Customer loyalty is key to revenue growthWhat would be the impact on revenue if you were able to expandyour best customer relationships to their maximum potential?

We know from research (starting from early academic researchin 1965 to present-day studies) that there is a significant (andcostly) difference between customer satisfaction and customerloyalty. Think back to the creation of the Malcolm BaldridgeNational Quality Award, the TQM movement, and others—alljustified in the name of increasing customer satisfaction—designed to improve the sales of U.S. goods and services.

Companies can have great quality and great customersatisfaction—but not enough sales. For example, The Wallace Co.was out of business just two years after winning the BaldridgeAward in 1990. IBM, the 1992 winner of the George M. Lowtrophy for quality, hit $13 billion in losses between1992-93.

Recent examples conclude that focusing on customer loyalty(inspiring customers to become willing buyers and to tellothers about their experiences) improves a company’s salesand profitability and has a demonstrable ROI.

The actions of each customer-facing employee, especially servicedelivery personnel, have a direct effect on customer loyalty.

Optimization of critical resourcesThe ability to manage all work types as part of a single servicedelivery network is a cornerstone of the SDM strategy. The goalis a single view of all work that needs to be performed, a singlerecord of the asset (its history, its technical requirements, andits associated costs), and a single repository for resource skills.This eliminates the natural tendency to view work in “silos.”

Installation, maintenance, and emergency services are allconsidered on the basis of the skills required to do the work, theprocesses required to complete the work, and the dependencieson parts, tools, and documentation. Doing this today requiresconsiderably more analysis and flexibility in determininghow the components of work should be deployed than mostorganizations are capable of.

Many field service organizations are utilizing a combination ofdirect and contract labor to execute service work. Significantchallenges exist in determining the best combination of theseresources for every work request.

CommunicationsMobile and wireless technologies provide an opportunity fortight links to communicate work to field service personneland receive real-time status reports and updates.

Ultimately, as the costs to gain these capabilities decline,these technologies will become commonplace. However,there is greater complexity to manage in order to receive thehighest benefit from these technologies.


7NEXT STEP: FIELD SERVICE MANAGEMENTThe goal of the field workforce management component ofan SDM solution is to deploy the right people at exactly theright time, with the right materials to complete the job.

Service work optimization balances supply and demand goalswith certain organizational rules applied. The rules must beeasily configurable, and re-configurable, as they guide the fieldservice organization’s responses. Using constraints such asworkload balancing, response time goals, latency goals, servicelevel agreements, and priorities, the field workforce managementapplication automates service response. Real-time integrationwith CRM data improves customer interaction.

Generally, customers and call center representatives initiateservice requests, schedule service commitments, and checkthe status of the work. Updates and changes to the schedulecan be viewed as they happen.

It is possible to include “graphical dashboards” to highlightrule violations, cost overruns, time overruns, and otherperformance indicators. Automatic linking with GIS systemsprovides visibility into where personnel are deployed andhow they can be routed.

Handheld and wireless communications devices can beemployed to enable two-way communications to expediteservice delivery—giving service personnel real-time access toschedules, customer details, and operational response rules.Field technicians can enter, update, and close work ordersfrom the field. GPS devices track moveable and remote assetsand service personnel. Wireless enabled assets can beremotely monitored and proactively serviced with condition-based maintenance.

The field workforce management component should integratewith existing inventory and logistics systems to ensureefficient parts delivery in support of service work orders.

With a single, graphical view of all work assignments, servicemanagement can measure the supply and demand of servicepersonnel, response rates, and profitability against keyperformance indicators to plan and forecast workloads.


8LIVING THE STRATEGY—IN REAL TIME

Real-time operational performance is optimized when everyasset (physical and human) is functioning at the highestpossible productivity level with the lowest possible lifecyclecost. Service optimization, simply stated, is when the bestresults are achieved in terms of customer loyalty at a costthat the customer is willing to pay.

Managing the “constant conflict”Service Delivery Management solutions must balance theoften-conflicting goals of improving operations while cuttingcosts. Successful management of services optimizes the outputof each service person per unit of time while also improvingthe responsiveness of the field service organization.

Two important measures are productivity and latency.Productivity simply divides gross output by the total timeexpended (by all) to produce it. It could take a week, a month,or a year—the productivity is the same.

Latency is concerned with the elapsed time needed to accomplisha specific output, regardless of how many people are involved.A fast response time (low latency) can be accomplished by“throwing a lot of bodies at it,” but this will reduce productivityand be extremely costly.

In other situations, improving productivity can cause latency tosuffer. For instance, performing service tasks one at a time mayensure closure on each task, but contributes to high latency forthe entire job to be completed.

Latency and productivity diverge as a service activity becomescomplex and involves several specialists. Measuring latencygives a good picture of the coordination of effort betweenspecialized workers and indicates how quickly a team completesa service job.

Instruments for daily decisionsLike a custom-manufactured “product,” any given serviceruns the risk of cost overruns, performance issues, and qualityvariances. These costs and risks affect the productivity of theorganization and the profit margin of the company. Theyrepresent a very real opportunity for improvement.

The SDM solution must be designed to provide businessintelligence for people at various organizational levels andacross varying job functions within the organization, as wellas externally with supply chain partners and customers.

The SDM application must be able to produce highly flexiblereport formats, so data can be presented in whatever form ismost consumable to a wide range of information consumers.These people obtain their reports by accessing them on-demand through their Web browsers (Web-based reporting),and by receiving distributions pushed to them via e-mail orprint delivery. What is required is an advanced architecturedesigned to deliver both operational reports and scorecardsas well as dashboards easily from a single platform.


9NARROWING THE GAP BETWEEN

EQUIPMENT SUPPLIER AND MANUFACTURER“Growing service revenue represents the best opportunity for companies to increasetheir top lines beyond the single-digitgrowth that their product-oriented approach limits them to today. The lure is such that the service opportunity is now part of most company strategies, with the equally luring expectation thatservice revenue will grow 40% to 80% over the next three years."

—WITHOUT CHANGE, SERVICE GROWTH IS NOT TO BE AMR Research. March 30, 2004. Marc McCluskey, Dineli Samaraweera.

The impact of outsourcingThe trend toward outsourcing of services is

driven primarily by the need to reduce and control

operating costs. Other reasons cited by the

Outsourcing Institute include:• improve company focus

• gain access to world-class capabilities

• free up internal resources for other purposes

• provide resources that are not available internally

• accelerate reengineering benefits

• provide function that is difficult to manage/out of control

• make capital funds available

• share risks

• infuse cost

The next frontierEquipment suppliers are also looking to “service” as theirfuture revenue source. As such, they will increasingly viewan embedded asset management solution as part of their totaloffering to a customer—and perhaps a key differentiator intheir competitive advantage.

Common goal, common solutionIf an equipment supplier and pulp and paper producer sharegoals and objectives—and a common vision for Service DeliveryManagement—it seems logical that they could also sharecommon systems for asset management and field workforcemanagement offered through integrated SDM solutions.


THE NEED FOR ACOMPREHENSIVE SERVICE DELIVERY MODEL

Did anybody bring a map?Inefficient maintenance practices in the pulp and paper industrycan interrupt production schedules in mills and convertingfacilities to a point at which the most sophisticated supply chainplanning becomes superfluous. Maintenance and serviceactivities consume as much as 10%-15% of the operationalexpenditures in a mill.

Yet, historically, there have been stumbling blocks tooptimizing the field service organization. First, the systems tosupport the information and business requirements foreffective Service Delivery Management did not exist. Softwaresolutions were standalone and fragmented. End-to-end servicedelivery applications (the result of internally customizedintegration efforts) were represented by a seemingly endlessstring of poorly integrated single-purpose applications.

Next, field workforce “optimization” consisted primarily ofmanual schedule boards and the best thinking of the manageron a particular day.

Finally, visibility into the lifetime performance of the assets(the object of the service) was incomplete, offline, or both.And, any interaction with information about the customerrelationship (internal or external) was superficial at best.

Due to the complexities involved, organizational boundariesgrew up around the groupings of assets, tasks, and resources.Not only were there departmental “silos,” but there wereinformational “silos” as well.

The complexity builds as new tools emerge. Yet, hugeopportunities for cost reduction and improvements incustomer loyalty exist with mobile technology, third-partycontractors, differentiated service level agreements andintegrated software solutions.

However, without a Service Delivery Management strategy,everyone will focus on their own silos and priorities. Thecomplexities will continue to overwhelm and the availabletools will go unused.

Eliminating the afterthoughtEarly in the process of evaluating SDM solutions,

a company needs to determine:• What are our core competencies when it comes to

Service Delivery? What activities must be performedin-house (proprietary or critical to business success)and what activities can we outsource to a lower-costservice provider?

• How do we gain visibility into service “supply anddemand?” What services are actually required, whichprocesses can be standardized, and what additionalservices do we need that are not currently provided?

• What are the best practices today in servicedelivery? How are other organizations using the tools?

• What opportunities are there for improvement ofinternal service delivery (employees as customers) as well as external?

The answers to these questions help establish the roadmapfor future and guide the discussions with Service DeliveryManagement solutions providers.

ResultsThe time when companies competed solely on product, cost,or customer service is long gone. The key differentiator nowis optimized service delivery—balancing customer, asset, andproduct demand with supply capabilities.

Results rest on making the supply chain lean, coordinatingservice delivery in real time, and providing Internet-enabledand collaborative information to all responsible parties.

This will allow pulp and paper companies to maintain theirassets at optimal capacity, reduce operating and maintenancecosts, improve worker productivity, increase operationalefficiency, and coordinate a seamless collaborative interactionbetween suppliers and customers where customer feedbackcreates a ripple effect throughout the supply chain.


FOR MORE INFORMATIONThe opportunity for improved performance at reduced cost toyour organization is significant, immediate and real. As aleading provider of Service Delivery Management solutions,Indus helps clients in a broad array of industries optimize themanagement of their customers, field workforce, assets, spareparts inventory, tools, and documentation. The Indus goal isto help you achieve best-in-class performance.

It is Indus’ strategy to be a best-of-breed solutions provider. Formanaging a company’s full lifecycle assets, Enterprise ResourcePlanning (ERP) applications fall short. Enterprise vendors don’thave the expertise to develop the depth of functionality foundin Indus solutions.

Indus builds upon its core competency in asset managementto the business processes associated with Service DeliveryManagement—to improve your visibility into customers, assets,and your field workforce.

We are more than a software provider. We partner with ourclients for mutual success over the long term. The core of thecompany—software research and development—is surroundedby an organizational structure that supports superiorconsulting, education, and training support for clients.

TAKE THE NEXT STEP:

FOR COMPLETE INFORMATION ABOUT INDUSSOLUTIONS, PLEASE CONTACT YOURINDUS SALES REPRESENTATIVE,

CALL 800.868.0497OR VIS IT THE INDUS WEB S ITE:

WWW.INDUS.COM


GLOSSARYSDM – Service Delivery Managementan integrated solution that helps organizations dominate their competitive markets by optimizingthe most critical aspects of their business—customers, assets and field service—to increase bothoperational and financial performance.

EAM – Enterprise Asset Managementan enterprise-wide maintenance management solution enabling asset intensive organizationsto enhance asset performance, increase worker productivity, improve their supply chain, andreduce operation and maintenance costs.

FSM – Field Service Managementan ensemble of integrated applications designed to automate and streamline the planning,scheduling, dispatch, and management of field service in support of effective, low-costservice delivery.

CRM – Customer Relationship Managementa solution designed to help develop profitable customer relationships by accurately managingcustomer information and billing, coordinating sales and marketing activities, and directingincident and service activities.

GIS – Geographic Information Systema system for assembling, manipulating, analyzing, and displaying information that is tiedto a geographic location, allowing visualization in the form of maps and graphical displays.

GPS – Global Positioning Systema satellite navigation system used to pinpoint specific locations and measure speed, distance,time, altitude, and other parameters relevant to the locations.

MRO – Maintenance, Repair and Operationsthe purchases and processes a company requires to keep its operations running smoothly.MRO items include everything from replacement parts for machinery to safety products forworkers and cleaning products for the physical plant.


ABOUT THE AUTHORBruce Kopkin is the Senior Director of Global IndustrySolutions at Indus. His in-depth industry experience inmanaging both hardware and software solutions has provencrucial in optimizing central business processes in diversevertical industries.

With over 25 years of experience in the pulp and paperindustry, Bruce has held sales, operations and managementpositions at Lorentzen & Wettre, Honeywell's Pulp, Paperand Printing business unit, Ahlstrom Machinery, MeasurexSystems and Reliance Electric Company. He holds a Bachelorof Electrical Engineering degree from the Georgia Instituteof Technology.

ABOUT INDUS INTERNATIONALIndus is a leading provider of Service Delivery Management(SDM) solutions, which help clients in a broad array of industriesoptimize the management of their customers, workforce, spareparts inventory, tools and documentation in order to maximizeperformance and customer satisfaction while achievingsignificant cost savings. Indus customer, asset and field servicemanagement software products, professional services and hostedservice offerings improve our clients’ profitability by reducingcosts, increasing capacity and competitiveness, improvingservice to their customers, facilitating billing for services andensuring regulatory compliance.

Indus solutions have been purchased by more than 400companies in more than 40 countries, representing diverseindustries including manufacturing, pulp and paper, utilities,telecommunications, government, education, transportation,facilities and property management, consumer packagedgoods and more.

For more information, visit our website at http://www.indus.com

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