Research firm Aberdeen recognizes ABB's spares inventory successes
San Mateo, CA — November 28, 2005 — For ABB, a $21 billion provider of power and automation systems for the automotive and diversified manufacturing industries, selling and servicing its critical equipment for customers' production lines was historically a reactionary and transaction-based process.
Typically, customers would wait for parts on robots and other automation equipment to fail and then call ABB for replacements. Nowadays, after implementing SeeControl Inc.'s data collection and item management platform, it is an automated process that enables users to not only immediately access the necessary part, but also predict the future and foresee when they may need the part.
Both companies were recently featured in an in-depth Service Success Case Study from Aberdeen Group that highlighted the rewards ABB and its clients are seeing through its partnership with SeeControl.
"By redirecting its spare parts business to focus on customers' unique requirements, ABB has been able to bolster profit margins, drive top-line revenue, and improve customer satisfaction and retention," said Mark Vigoroso, Aberdeen's vice president, Service Chain Management Research.
ABB needed to improve part availability for its customers to help them decrease mean-time-to-repair (MTTR) and increase productivity.
"Prior to its relationship with SeeControl, ABB did not have a codified process for stocking spare parts and lacked visibility into its spares inventories totaling $25 million in the United States alone," said Tony Wisniewski, vice president and general manager of aftermarket services for ABB. "When a part failed, someone at the customer's site had to manually sign out a spare part and the process was long and arduous, and the resulting downtime could cost $20,000 per minute or more.
Today, he said, the SeeControl solution, or SmartSpares service as known inside ABB, has increased worker productivity, decreased inventory and associated carrying costs, streamlined warranty management, and enables the company to track product reliability, ultimately saving the company millions of dollars to the bottom line, which have been passed directly on to customers.
In addition, ABB had to change the way it approached customer interactions. Since customers only called after equipment broke or when they needed replacement parts, ABB traditionally treated customer orders as one-off transactions rather than as relationship-building opportunities. This hindered ABB's ability to offer differentiated service and to grow its customer base.
"ABB is demonstrating why they are a leader in service and clearly differentiating themselves from their competition," said Garrett Gafke, president and CEO for SeeControl. "ABB foresaw that to increase revenue within its service business and increase its competitive advantage, it would need to re-engineer its inventory management process and adopt a more proactive approach to customer service.
Gafke added that ABB has already realized more than $1.5 million in incremental service revenue while reducing inventory. We look forward to working with ABB well into the future and effecting ABB's global impact of SmartSpares service with SeeControl's product suite," he said.
One critical takeaway from ABB's technology implementation is that the company approached it with a clearly stated business objective: Provide customer-service solutions rather than one-off transactions. Now, ABB is in the business of building customer relationships. As a result, the company has gained competitive advantage in its core product sales.
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