Executive Summary
Is your Service Supply Chain in need of a digital transformation? Many businesses are racing ahead and creating a competitive advantage for themselves thanks to service revenue. But you need the solutions to do this, and that requires some up-front investment.
In a traditional business case related to the purchase of software, the output is almost always solely financial, as if the only stakeholder to convince is the CFO. Of course, a financial perspective is essential because businesses run on finance, and the economic impact of a project should be your fundamental consideration. But once you’ve assembled a rock-solid financial business case, it may serve you to zoom out and contemplate other perspectives.
What if you could bring so much more to the table than financial projections? What if you could speak to all of the stakeholders through your presentation of the value associated with the project? Imagine transcending organizational levels and areas of expertise to show everyone how life is better when partnering with your company.
In this article, we will discuss what is crucial to retain from the traditional financial business case, as well as how to go beyond that and augment it with areas that a wider variety of stakeholders will value.
The Traditional Business Case
Some of the key metrics involved when it comes to aftermarket service parts include inventory optimization by reducing excess stock. This generally lowers expenses and improves debt-to-asset ratios.
Higher fill rates at customer-facing locations means less spent on expediting costs and return visits. Depending on the project, a few other elements may arise but cost savings due to inventory optimization comprise the core of the traditional business case. Start by ensuring you have a full understanding of these financial benefits and can clearly communicate their short and long-term implications.
Then, it’s time to think more creatively about the other advantages of your project. Over time, even “soft” business benefits will translate into concrete financial gains and can be attributed to your Service Supply Chain.
The Best-In-Class Business Case
When done well, the business case will speak to all levels of stakeholders in the organization and address their unique areas of concern. It begins with gaining an understanding of the challenges that each individual faces. These can vary greatly depending on the stakeholder.
C-level executives are often driven by top-line revenue gains, market share, customer churn, and higher-level financial metrics like debt-to-asset ratio and net cash flow. Often, they are compensated on EBITDA targets or other high-level metrics and KPIs.
Aftermarket professionals tend to follow service-specific items, such as first-time fix rate, average time to resolution, replenishment lead times, as well as inventory balances and inventory turns.
Planning managers look at workflow processes, parts managed per planner, overtime incurred, personnel turnover, forecast accuracy, parts on stockout, OOPS (out-of-position shipments), and other items of a blocking and tackling nature.
Planner superusers will consider ease of use, eliminating the mundane aspects of planning, finding a balance between the art and science of planning, and making their lives easier.
The challenges can vary, and a team that looks to understand these challenges will come at the final value solution from a much more informed viewpoint that allows you to relate to your new partner in confidence–not only during the sale, but throughout the implementation and your ongoing business relationship.
How Baxter Planning Helps Make the Case
Once we’ve worked with our clients to uncover the most salient financial implications of a project, we help them determine and document their business challenges across teams. Then, we identify the downside, or loss, of leaving them in the status quo. In many instances, challenges left unchecked will just grow, and we can project the nature and extent of these costs and revenue drains going forward.
This is important because you will never appreciate the solution unless you know what it is saving you from.
The understanding gained to this point will allow the thought leadership on the team to look at the realm of the possible and determine what your aftermarket service organization could look like with the best tools at its disposal. There will be an opportunity to pursue, and the nature, the extent, and the timing of these steps can be orchestrated to maximize the magnitude and timing of value realization for you.
With a clear vision of the possible, your team can begin to look at the tools necessary to move the organization from the status quo to the optimal state. These can be tools offered by our company or third-party tools, even tools already owned by your company. Together, this recommendation will form a solution that will resolve, or at least mitigate, the challenges identified at the beginning of the process. There will also be a step-by-step value roadmap tying the value realized to the tools implemented each step of the way.
As a part of the best-in-class business case, evidence will be provided to back up the assertions in the various areas of the business case. The business case should show plans to mitigate implementation risk throughout the process, as well as monitor and maintain results throughout the business relationship. Customer references should be offered and introduced to answer any questions about partnering with the company and the outcomes realized.
Bottom Line
Following a process such as this best-in-class business case will enhance the traditional approach by allowing a wider range of stakeholders to identify the relevance of the project in addressing the challenges they face to meet their goals, both corporately and personally. Once they participate in this process, they will be able to follow the resolution of those challenges through the entire value lifecycle.
