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Its Time for the SAP xApps Program to Die

January 5, 2010 by sapplanningadmin

The SAP xApp program has been a commercial failure. This is good because the xApp program is not much more than a marketing agreement between SAP and smaller vendors. SAP co-opts best of breed vendors, and provides them with more market exposure. It also confuses clients as to what software vendors are doing what and seems to violate the principle that the company doing software development receives the compensation.

The Arrangement

The xApp program is where software vendors agree to give over 40% of their revenue on a software sale in order to co-market with SAP and be brought into their accounts. However, it gets worse. Software vendors that are on the SAP price list have to give over between 60 and 70% of the software license, and furthermore, the money from the customer is first paid to SAP. SAP then is responsible for paying the third party software vendor on a schedule that may not be immediate.

There are a number of problems with this program, and they are listed below:

  1. SAP can and does pretend that it has far more functionality that it actually does. So SAP salesmen can say that “we have that capability through our xApp,” which is another way of saying that they don’t have it at all.
  2. Clients end up getting very confused as to who is doing what. Is the functionality within SAP, is it at the third party vendor? Who is doing what?
  3. The integration is almost always oversold. SAP in fact invests very little in integration process and creates just a basic enough integration to tell customers “the solution is integrated.”
  4. The resulting solution often ends up being less than the best. In order to insert more SAP functionality, some parts of the third party vendor’s functionality and SAP functionality are inserted, not because this results in the best solution but because then a new “product” can be said to exist.
  5. With SAP taking 40% to 70% of the revenues for the software that was due to the creators of the software, the xApp program takes revenues from where the work was done, and gives it to where it was not done, which is SAP. (That is interesting, because I thought we were all about compensating the creators of intellectual property in the US system.)
  6. The xApp program is really just a Trojan horse by SAP. Through “working with” the third part vendors to integrate them to SAP, SAP eventually hopes to replace all of these vendors with their own products, which will work eerily like the software of the third party vendors. I show in this article on the history of advanced planning software much of the APO design appears to be taken from SAP’s joint venture with i2 Technologies in the late 1990’s (listed below). SAP co-opted work from Commerce One before dumping them and effectively ending the company, and after evaluating SPP, I am noticing many concepts that seem directly copied from MCA Solutions. For vendors, partnerships with SAP never last long and often result in bad outcomes for the smaller vendor. Because SAP is so powerful, there is a lot of fear of speaking out against them, so these facts do not tend to get aired in published material or on the web. (If I worked for any of the large consulting companies, I would receive pressure from a senior partner to remove this article.)
  7. Living in the US means being exposed to lengthy and constant contentions regarding the market, and how well the market works. (Europeans who visit here know this, but they mostly try to keep silent on the matter.) Well, this arrangement is decidedly anti-market, and is essentially a concession granted to SAP due to its monopoly position in the marketplace. Its simply unfair to both be subjected toextensivefree market drivel and then also observe the large anti-market conglomerates like SAP engage in monopolistic practices. It would be fair to say that SAP likes the free market about as much as Goldman Sacks does.

http://sapplanning.org/2009/11/24/the-history-of-apo-and-the-influence-of-i2-technologies/

xApps for Inventory Optimization

I believe at one time there some where around 140 xApps. How many there are currently is unknown to us as we no longer hear the term, and the term may have been changed by SAP and the program renamed. The area we know best is inventory optimization where SAP partnered with two firms, SmartOps and MCA Solutions. The 3 year agreement with MCA has now expired. In the example of SmartOps, they provide the inventory optimization and SAP integrates to them. It’s important to understand, that the inventory optimization capability is part of SmartOps’s product and does not have anything to do with any of SAP’s products. Instead SAP integrates to SmartOps, as it would integrate to another application.

The Best Approach When Dealing with xApps

In my view, it’s far better to approach the vendor (such as SmartOps) directly and buy the software from them rather than buying it through SAP. Furthermore, this will allow the software vendor to better service the customer because more of the revenues are flowing to those that actually created and maintain the solution. Intellectual property rights are a huge issue……..when a larger company feels as if their intellectual property is consumed without proper compensation (as the entertainment and pharmaceutical industry lobbying and public relation programs can attest) however, when the perpetrator is a large company benefiting from the intellectual property of a smaller company, all of a sudden the issue becomes more grey, and the relationship gets called “a strategic partnership.” The US intellectual property protection system is where intellectual property rights seem to be relative. Large companies have infinite intellectual property rights (and the right to expropriate IP that they had nothing to do with creating), medium sized companies have medium sized intellectual property rights, and individuals have none whatsoever. It takes a very fancy degree from the best law school to not notice this.

Conclusion

xApps have not done anything positive for the software market or for clients. SAP is asking that companies pay a toll to SAP for a very small amount of work in creating partnerships with software firms. xApps have been unsuccessful in the marketplace, but less for the reasons listed above and more because SAP has a very hard time working with other software vendors. However, the fact the SAP can even attempt such a program leads to the conclusion that SAP has become too big, and like Microsoft is now causing a negative or a smothering effect on the industry. In the US system, this is when the Federal Trade Commission is asked to come in and check to see if any anti-trust rules are being broken. The FTC has been barely active recently as false free market dogma has combined with industry capture of this critical regulatory apparatus, and as the top officials at the FTC have been corrupted by corporate money. However, anti-trust regulation is no joke, and is critical to properly functioning markets. Its time for the FTC to turn its eye to the enterprise software market.

References

For those interested, a basic introduction to US anti-trust law can be found below. Also companies can be reported for violating anti-trust laws at the link below this.

http://www.ftc.gov/bc/antitrust/index.shtm

http://www.ftc.gov/ftc/contact.shtm


Posted in Inventory Optimization | Tagged | Leave a Comment »

The Saturn Service Parts System

November 2, 2009 by sapplanningadmin


In the article Why Auto Service Parts Networks are a Mess,

http://spplan.org/2009/05/16/auto-service-part-networks-are-a-mess/

..we describe why automotive service parts networks are in such a terrible state. However, we recently were forwarded an article that described one service part network that appeared to be functional. It is with an auto company that was willing to try new ways of business, something that many other auto manufacturers and dealers have not been willing to do. As described in the article at Knowledge at Wharton..

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2366

GM dealers have always had to compete not just with other brands like Ford or Toyota, but also with one another. The competition created a boiler-room environment of price-haggling, which turned off many customers but thrilled others. Saturn, on the other hand, had a “no haggling” policy that it backed up with what may have been its most significant innovation: exclusive market areas for dealers. “That was the huge difference,” says Lokey. In a Saturn store, the sticker price was the final price. And Saturn retailers could confidently adhere to the policy because they knew the customer wasn’t going to find the same new car for $100 less a few blocks or miles away.
The exclusive market areas combined with the efficient parts supply chain also allowed Saturn dealers to pay the same price for repair parts. Other GM dealers had to compete with one another to keep their supply bins full, and they often had to buy parts from their rivals. At Saturn, the bins were almost always stocked thanks to a computerized system that automatically sent orders to a distribution center.

What this indicates is that beyond creating a multi-echelon system (where stocking decisions are shared using true multi-echelon software) a number of other factors such as how dealers are placed into competition with one another is also important. However, the system relied upon inventory pooling between dealers and the automotive company regional warehouse. This lead to a service part turn-over of on average more than 7 times year (which is quite high for service parts).

The design of the system is explained below from the article in the Sloan Management Review Saturn’s Supply Chain Innovation: High Value in After Sales Service:

Retailers review Saturn target level recommendations at the end of each day, then Saturn automatically replenishes to the agreed on target level. Replenishment orders are received at the central distribution center and are shipped out according to the delivery schedule, leading to a three a shorter response time if the ordered part is in stock at the DC. Otherwise the part is either put on back order or sourced from the production inventory stock. Note that a pull system such as Saturn’s is based on target levels. Using one for one replenishment means that Saturn does not position inventory in advance based upon forecast consumption. The shipped part also is replaced automatically within 3 days (assuming avilability at the DC). Saturn essentially tells retailers what to stock. If a part does not sell after nine months, Saturn takes it bac kdn repays the retailer. Each retailer (dealer) inventory system is linked directly to Saturn management system.

What is happening here is what few automotive companies use, a centralized service parts planning system. However as described by this article from Sloan Management.

Although central inventory resources can be shared, companies often make planning decisions for retail locations independently, looking at forecasts of local demand and lead times from the central depot or suppliers.

Unfortunately, this parts system, which was recommended by Morris Cohen and Hau Lee, is at risk as Saturn is looking for a buyer, and their possible arrangement with Penske has fallen through. Saturn owners will now be serviced by GM dealerships, which is definitely not what Saturn owners bargained for when they purchased a Saturn. They will now have to work with a considerably lower capability service network.

It unfortunate because the Saturn system, if it persisted, could be extensively studied and perhaps copied. Currently, this is not very much written on the Saturn system, and if Saturn dies or dissipates, there will be less opportunity to gain insight into what they did that made them so different.

References

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2366

http://sloanreview.mit.edu/the-magazine/articles/2000/summer/4147/saturns-supplychain-innovation-high-value-in-aftersales-service/


Posted in Service Level Planning, Service Parts Networks | Leave a Comment »

Using Box.net for Service Information

July 31, 2009 by sapplanningadmin

Information Management

We maintain a separate blog dedicated to information management. On this blog we have written about a service that is set to change file management as currently practiced.

http://infoknowledge.wordpress.com/2009/06/15/data-management-easier-on-the-web/

There are many implications to file management for Box.net, however the one we want to discuss here is the capability with respect to service parts information.

Box.net

Box.net allows you to easily keep documents, and then to link these documents to web pages and to send these links through email. Service parts have many files such as specifications or user manuals. The question is how to best manage these documents. Our previous idea was to simply integrate the documents into the actual web page. See an example at our Service Parts Portal website.

http://www.servicepartsportal.com/?page_id=255

However, now we are not so sure that this is the best approach. A better approach may be to host the files at Box.net and then simply profile links to the page that lead to Box.net. Box.net has an excellent interface for managing large numbers of files, in fact we think it currently the best on the web. Systems like SAP and others are trying to maintain the content in a central repository, the fact is ERP systems are not very good at this.

Posted in Service Parts Database | Leave a Comment »

Service Parts Management by Haliburton in Iraq Beyond Belief

July 25, 2009 by sapplanningadmin

IOS

A License to Steal

The behavior of Haliburton regarding service management and planning, as documented in the move Iraq for Sale, in Iraq is shocking.

This movie shows Haliburton and KBR deliberately not repairing items in order to charge the government for purchasing new items. This is because of how the contract with the government is structured. It is cost plus, and therefore, Haliburton and KBR have every incentive to increase the cost, as their profits increase in a linear fashion. Secondly, neither Haliburton nor KBR appear to have any business ethics, and therefore, they are doing what they can to increase the costs as much as possible. There are many examples, but one that really resonates is the fact that Haliburton will have semi-tractor trucks that break down on the side of the road in Iraq because they either do not change the oil, or check the tires, or even order or stock spare tires. When this happens, Haliburton sets fire to the truck, destroying them (so the insurgents can’t use it.) They then charge the government for a new truck, plus their cost plus margin. That Halibutron is simply destroying large capital equipment items is amazing, but it is supported by multiple sources. Another form of fraud is related to how equipment is leased, but that gets into a divergent area of malfeasance.

Service Parts and Maintenance: Making the Effort Service

Organizations and service parts management are in a poor state in the US. The official explanation for this is the philosophy of neglect. The standard The line of reasoning goes something like this:

“Companies want to improve in service parts planning because its good for their customers, the only issue is an issue of education.”

For some time, we personally believed this. However, the Haliburton example demonstrates this is not always the case. Other examples of service incapability are stretching the credibility of the lack of education argument. If Haliburton can charge the government $90,000 + its cost plus contract for a new truck, they would rather do that then charge the government for a new tire. When will this change? No time soon. The Pentagon is now highly dependent upon Haliburton and KBR for all types of essential functions. Secondly, they continue to contribute mighty to the political process and have hired a number of influential ex-Pentagon officials, that mean Haliburton will continue to get contracts into the foreseeable future. This is an example of two companies that operate in this manner. However, there are more. The assumption that every company cares about service parts needs to questioned in light of their institutional incentives. if a company can make more forcing a customer to buy a new product, they may prefer this over servicing an old item. More than likely some company representatives will read this post and question whether its anti-business and whether a blog like this should just focus on “the positives” of service parts and maintenance. That opinion is simply doctrinal and does not have much validity outside of the confines of a corporate PR meeting. If service management is to be understood then its underlying assumptions must be questioned. It also helps determine what companies and areas to focus upon. For instance, if I were a consulting or service software company I would not bother offering consulting or software services to Haliburton in Iraq. Lets just say, they prefer to buy new….or in fact for the taxpayer to buy new. The whole movie may be seen here. Its a few years old now, but not much has changed, so it is still quite valid.

References

http://www.publicintegrity.org/projects/entry/297/bio.aspx

Posted in Bad Service Maintenance Companies | Tagged | Leave a Comment »

Accenture Writes a Horrible Paper on Service Management

July 9, 2009 by sapplanningadmin


Who is writing Accenture’s white papers?

Articles can be motivated by inspiration, or frustration. Neither motivation is more or less valid than the other. This post is definitely motivated by the later. We thought we might learn something by reading a white paper on service management that was produced by Accenture back in 2003. Guess again. Nine pages of content free PDF later, and what felt like the equivalent of a literary Diet Pepsi, we learned the following:

  1. Accenture is focused on service management
  2. Saturn is focused on service parts
  3. There are software companies that focus on service parts
  4. Accenture has a nice graphics department

Any Information in That White Paper Partner?

 

Is there an interest in actually communicating any information in white papers or are they purely promotional items to Accenture? This phenomena is not restricted to Accenture, there is simply too much promotional literature that is disguised as white papers. The promotional white paper format goes something like this:

  1. Come up with white paper title
  2. Create a beautiful cover page
  3. List two partners on the second page
  4. Come up with a few examples of companies that are doing something similar to what the white paper is discussing
  5. Talk about how technology is important (when isn’t it?)
  6. Put a few graphics in the white paper, the simple the better (three circles is apparently white paper nirvana)
  7. List the obligatory 30% improvement in whatever (30% seems to be the magic number — all improvements return 30%)
  8. List contact details

Material for Retarded Executives?

Really, how simple minded are executives that would contact a consulting or software firm that publishes such brochure ware? For instance, what we learned from Accenture’s white paper is that Accenture either knows extremely little about service parts, or did not leverage any of its external expertise on the topic. If I were an executive I would not be overly interested in having Accenture come and visit my service organization, since a quality white paper on the topic is apparently beyond them.

Sell Sell Sell

Everyone wants to sell business, but the implied agreement is that white papers are actually going to contain information. Accurate information is even better.  For those consulting companies looking to learn how to write a white paper, check out the Ciber website and see how its done. (BTW, we have no affiliation with Ciber, we just like their documentation.) Here is Accenture’s promotional brochure…err, we mean white paper. http://www.accenture.com/NR/rdonlyres/6BBEC529-3EE0-491F-B6BF-A19F2750E6EB/0/profit_after_sales.pdf

Posted in Basic Supply Chain Concepts | Tagged | Leave a Comment »

Showing Parts Connections Online

July 5, 2009 by sapplanningadmin

Dell’s Website and Intel Linkage

Something we found interesting while writing an article on assembly to order in SAP SCM and Dell.

http://sapplanning.wordpress.com/2009/07/04/assemble-to-order-and-dell-and-apple/

We were on the Dell website, when we noticed they have a link to the right that states:

“Compare processors to find what’s the best for you.”

Here is the site, notice the orange circle to the right under livechat.

Dell Intel 1

Where the Link Goes

What we found interesting about this was that the link takes you to Intel’s site, where an explanation is laid out for the consumer between the different microprocessors Intel offers in Dell models.

Intel

Who Benefits?

What is even more interesting about this is how Dell benefits. First, they provide valuable information to their consumers. Second, they no longer have to maintain information on their own site about a product that they do not make. We could see links like this for all the components. What this does is demonstrate and make transparent the contribution of suppliers to the end manufactured product.

Extending the Concept to Service Management

This concept can be extended to service parts management. For instance, if a hard drive needs to be repaired, or a microprocessor needs to be switched out, it is the supplier, not the assembly firm (in this case Dell) that has the intellectual property and knowledge of the components. Too often the main brand that performs final assembly has attempted to both present the concept that they “manufactured” the entire item, and that they were the specialists in servicing subcompontents that they did not manufacturer. The web provides the ability to show the interconnections with suppliers that made the sub-components and to integrate product and service information in a way that has not been done before. Manuals in the future would be both on-line and integrated. Thus the overall guide to say…the Dell Inspiron 14 could be partially on Dell’s website, but then integrated with Intel’s and Western Digital’s and Corsair’s (etc..) websites. This is all accomplished through linking. Furthermore, each supplier only need write the manual and guide for its components once, and this can be linked to by Apple, Dell, and any other manufacturer that uses that component in their products. This both reduces the costs of maintaining this information, and improves its quality.

Posted in Service Parts Database | Tagged , | Leave a Comment »

Service Labels for Estimated Service Time Required

June 27, 2009 by sapplanningadmin

Nutrition Label

Government mandated nutrition labels were critical to improving the transparency of information as to what is in food. We are proposing a similar level of transparency for serviceable items.

A Common Sense Proposal

After learning that items are becoming less serviceable, and that most companies are hiding their reliability information…

See these posts for background information

http://spplan.wordpress.com/2009/06/22/public-mtbf-statistics-for-hard-drives/

http://spplan.wordpress.com/2009/06/16/items-becoming-less-serviceable/

Clearly what is happening is many companies are not placing sufficient emphasis on serviceability. Furthermore, without some increase in transparency, this misallocation of resources and continuation of manufacturing items with little concern for service-ability will continue.

Because of this we are proposing a labeling system for serviceable products. This label would state the following:

  1. The amount of time to initially setup an item
  2. The amount of time required to service an item through the item’s lifespan
  3. The total estimated time = item 1 + item 2 above

This could be printed as a large number with an identify-able label. (we are partial to orange because it readily grabs a shopper’s attention) This could be placed on all product packaging for items that require assembly or service. Examples would include:

  • Computers and sub-components
  • Automotive Parts
  • Appliances
  • Housing items such as lights fans, furniture
  • Toys
  • Industrial products

How the Estimates Would be Generated

The estimation of the time required would come from a goverment testing body, this would be very similar to Underwriters Labortories (electric items come with a UL sticked in the US, and can not be sold without testing for safety). Testing would be performed by using laypeople — not experts in maintenance, to assemble and repair items. Sufficient quantity of people would be necessary to ensure that the times developed had statistical relevancy. The testers would only be provided with the manuals and instructional materials that came with the product, thus the test could also test the manufacturer’s instructional material.

What Would the Label Look Like

The label  would be very simple. It should be large and easily recognizable and only needs to provide a three numbers. Here is a mockup.

Service Labels

The Industry Response

Business would fight this initiative as being too expensive and invasive. However, there is nothing new here. Business has fought every single initiative that has improved consumer health and safety. Areas they have fought in the past include:

  • Safety belts
  • Air bags
  • Food labeling
  • Cigarette warnings
  • Drug testing

At the time these concepts were deemed by industry as completely unnecessary, however, now they are simply part of how we live. Who can now imagine a world without drug testing or seat belts?

Where Will The Money Come From?

There is plenty of money is the US to do this. There are trillions of dollrs to give to corrupt banks, so there is plenty of money for a small program like this.  We have spent around a hundred billion to develop a military fighter jet that is so delicate and specialized, it can not even be used by the military in combat (the F-22), and is considered completely unnecessary by independent military experts. So there is thus plenty of money to setup a lab to perform labaratory testing for service and maintenance. In terms of the source of funds, the money would come directly from the federal government and not from fees applied to business. (This is currently the problem at the FDA, where companies contribute more than 1/2 a million per drug tested, and it is one of the reason so many dangerous and ineffective drugs are approved by the FDA.) – This video by PBS provides an indepth investigation into this topic.

http://www.shoppbs.org/product/index.jsp?productId=1428845

A YouTube intro is available here:

http://www.youtube.com/watch?v=H2Ky3g79-lU

The expense of doing this would not be all that onerous. Products could be tested relatively quickly, and would only have to be tested when a new product comes out or a change is made to an existing product by the manufacturer. If not every item could be tested, the most widely sold items could be tested, resulting in the highest common good per dollar spent.

How Would This Change Things?

The result would be a significant change in how companies build their products which would make them more durable, and easier to service. Right now companies are banking on the fact that consumers will never know the long term service time and costs of items. Therefore, new product development produces items that have great packaging, compete well on price, but have very little invested in them in terms of ease of assembly, maintenance and service. By placing the Service Label right on product packaging, and on product website, companies will no longer be able to ignore this issue, and consumers will be able to make informed decisions. It will punish companies that release poorly designed and difficult to service items onto the marketplace.

Service to Business

While this would be opposed by many OEMs and their suppliers, not every business would oppose this. Service organizations of business would be in favor of this government testing center as it would allow them to know the lifelong service effort of different items that they buy and maintain. Thus the government testing center would offer a serice not only to consumers, but to businesses also.

Making It Happen

We are considering starting a site dedicated to promoting the concept of the service lable.  If anyone is interested in participating, and help getting the word out, contact us at spplan@gmail.com, or feel free to comment on this post below.

Posted in Service Regulation | Leave a Comment »

Public MTBF Statistics for Hard Drives

June 22, 2009 by sapplanningadmin

Hard Drive

Can We Get  An MTBF Please?

In one of our posts we described how unusual it was for companies to maintain causal information (such as aircraft landings, or installed base) that could be used to perform causal forecasting.  After the hard drive in our iMac went out, and we were performing a search for the most reliable model to replace it with, we learned that MTBF (mean time between failure) figures are not available for even the most commonly purchased item by companies and by individuals.

Two pieces of data are necessary to perform causal forecasting, which is very important for service parts planning:

  1. MTBF of the causal value
  2. Installed base or other causal value

With just the MTBF consumers and organizations can make informed purchase decisions. However, with both these values companies can use service parts planning software to drive our forecast and stocking. (to read more about this, see these posts)

http://spplan.wordpress.com/2008/01/13/service-parts-and-mtbf-forecasting-2/

At this point, it is well known that the official MTBF statistics published by vendors are unreliable and pure fantasy. Because there is no objective third party that does drive comparisons across vendors and publishes the results, there is no reliable source for failure information (if anyone knowns of one please comment on this post). Although we know that companies, especially companies that purchase and deploy large numbers of disks may keep their own private statistics. When asked questions about this topic, vendor spokesperson move into a degree of doublespeak that would make Henry Kissinger green with envy.

Where Are The Failure Stats?

According to a white paper by Wiebetech – a drive enclosure maker

Manufacturers are loath to give out real world statistical information.

All of the drive vendors do what they can to obscure any differences between their drives in terms of quality or MTBF. This allows them to compete on the basis of retail box design and marketing, as well as personal business to business relationships, which appears to be their preference. A quote from a recent article on this topic in PC World reinforces how much OEMs like to dance around the issue of reliability and failure.

Several drive vendors declined to be interviewed. “The conditions that surround true drive failures are complicated and require a detailed failure analysis to determine what the failure mechanisms were,” said a spokesperson for Seagate Technology in Scotts Valley, Calif., in an e-mail. “It is important to not only understand the kind of drive being used, but the system or environment in which it was placed and its workload.”

http://www.pcworld.com/article/129558-2/study_hard_drive_failure_rates_much_higher_than_makers_estimate.html

The Costs of Publishing the Truth

Its easy to publish positive information about vendors, but a huge headache to publish negative information. We know. We tested backup software several years ago and published our results online. Our general finding was that PC backup software was very unreliable and difficult to use. Also that Norton Ghost, but in particular Acronis True Image never actually recovered an computer image properly after 10 attempts. After publishing this, we were contacted by a representative from Acronis who told us we did not know the software and that our findings were wrong. They then offered to send us the newest software,….which we took a lot of time to test…and which also failed.  Publishing negative information like this, if you take advertising is even more difficult. This is one of the reason so few companies do it. CNET will publish on the different merits of products, but won’t touch the issue of reliability, nor will 98% of other publications. Consumer Reports is one of the few that does. While their publication is trailblazer in the area of reliability studies, have to have a legal team ready because they are often sued. However they do not publish at the level of detail of MTBF or other failure statistics. Something more is needed.

References

Article on how vendors refuse to provide real MTBF values.

http://www.eweek.com/c/a/Data-Storage/Hard-Disk-MTBF-Wheres-the-Reliable-Reliability-Data/

Turns that it is not just the disk that is important, but the configurtion as well. If a person is using a external multidrive enclosure, it appears that mirroring is the best and most reliable. This is of course because of he 100% redundancy. Redundancy does come at a cost, but with the highest quality drives now costing roughly $75  – depending upon the make, redunancy is affordable. This also brings up the topic of whether all computers should have two drives internally, so that mirroring can be accomplished. Since the iMac and most laptops do not offer mirroring, they can be seen as less reliable designs than mirrored disk computers. Mac offers the ability to boot off of external disks, which does offer the capability of mirroring. This is only one reason why online data tends to be so much better maintained than off-line data stored personal computers and exernal disks. Almost all servers use a high degree of redunancy, which includes mirroring of disks. To read more about this see this post on Box.net

http://infoknowledge.wordpress.com/2009/06/15/data-management-easier-on-the-web/

See the article here:

http://www.wiebetech.com/whitepapers/Storage_Enclosure_Reliability.pdf

Posted in Service Parts Planning Basics | Tagged , | 1 Comment »

Repair Pal for Repair Costing

June 22, 2009 by sapplanningadmin

Transparency Improved by Repair Pal

On many occasions in this blog we have have decried the lack of transparency in service parts and service repair operations. Recently we found an interesting web site which addresses this for the automotive repair market. It is called Repair Pal. It provides both repair costing – estimation, as well as repair locations that can provide the intended service.

We performed a search for our Honda Accord for a repair we had performed several years ago. This is what the report looks like.



As you can see, it differentiates between dealers and independent shops, with the dealers being more expensive. It also breaks down the labor vs. part cost.

After receiving a “quote” one can look towards the right side of the screen where possible locations are listed to have the work done.

Repair Pal 2

All we can say is, what a great service. We think this is Repair Pal is the first place to check before getting any repair done. Try it out for yourself at the link below.

http://www.repairpal.com

Further Capabilities

Repair pal allows you to search specifically for the service you need. It also provides a range. We recently needed to find timing belt replacement for our Honda. You can perform a search…


..or you can select.


from a menu of common repairs.
Here is the range view.


Advice

RepairPal also provides advice as to when to perform repairs. Our car is 12 years old, yet it does not have enough miles to justify a timing belt replacement. However, RepairPal recommends the belt be replaced every 6 years, which is a great insight and shows that we are completely due for a replacement.


Posted in Innovative Services | Tagged | Leave a Comment »

Why OEMs Should Stop Controlling Service

June 21, 2009 by sapplanningadmin



The desire to control is not an attractive feature in individuals or companies. Too many OEMs follow a control model for their service parts and maintenance information which is anti-market, and it should be understood and opposed.

A Trend Observed

It has come to our attention after reviewing several of our previous articles that the less control OEMs (original equipment manufacturers = companies like Ford, Apple, Cisco, etc..) and service organizations have, the better it is for consumers.

Automotive Service Restrictions to Competition

In our article, Why Automotive Parts Networks Area a Mess, we cover how automotive dealers are retarding the development of service parts businesses through their monopoly over many “dealer only parts.” These parts are not even made by the manufacturers, but instead by the manufacturer’s supplier base (on average 70% of a car is not made by the name on the car). The only reason this situation exists is because OEMs compel parts manufacturers to sign exclusive contracts with the OEM that restricts the selling of parts to the OEM or to the dealer network. This is bad for consumers in a couple of different ways.

  • Dealers lack the competence or interest to create service part websites, and thus most dealer parts cannot be purchased online in any way.
  • Consumers have to pay a significant premium for their parts because of the control exerted by dealers and their antiquated supply chain and inventory systems.

Unprincipled Tying Agreements

There is something ethically wrong with these type of agreements. If a company is not making an item, its hard to see how they have the right to determine how that item is sold and distributed. Not only is the item not made by the OEM, but the technical knowledge and intellectual property is not theirs either, that also resides with the parts supplier. There are laws in the US against what is referred to as “tying agreements.” It is typically applied to an OEM pressuring a retailer to sell one of the OEM’s new or less popular items in exchange for gaining access to the right to sell another more established item. We don’t see why the tying arrangement law could not be applied by the Federal Trade Commission to break up exclusive OEM distribution arrangements with their parts suppliers.

Wouldn’t This Be Anti-Market?

This is a very common concern brought up people when exposed to this idea. There is a severe misunderstanding generally about what makes an dynamic and innovative economy…and it have very little to do with moving interest rates around or bailing out Wells Fargo. It has much more to do with structuring the rules of the economy so they provide the right incentives to business to operate openly and transparently. If we really want the dynamic and innovative economy, that according to the business publications we say we want, then we need to collectively show some backbone and begin standing against uncompetitive and regressive legal contracts that enrich non-value added actors at the expense of consumers and market efficiency. There are already all types of laws on the books that break up trusts and uncompetitive, anti-consumer activities. It’s time to start using them again.

Video Repair Guides and Information Exchange

In our article, Using Online Videos for Service and Repair, we discuss how, in the case of repair guides and repair information, OEMs have historically restricted information to users, and how it is the user community that is actually doing the OEM’s work for them by making repair videos available on YouTube.

OEMs have done remarkably little innovating, and placed little effort towards creating quality instructional material for the servicing of their items. Their manuals are belabored, sleep inducing to read and unnecessarily expensive to produce compared to the benefit obtained by consumers. OEMs may find this topic incidental or a non-issue but it is wasting a lot of consumer time. If a regulatory body appeared and placed a label which listed the average number of hours required to assemble or repair items right on product packaging, OEMs would start taking this issue of repair information a lot more seriously. Again, many would call this an unnecessary restriction of the market. However, they would be basing this on a flawed understanding of what makes an efficient market. A market cannot develop without information. Here is an example.

Market Information Example

Lets say a consumer is looking at two items in a store. They have identical features and both from reputable manufacturers, but one is $15 less. It would make economic sense for the consumer to buy the lower cost item correct? Not necessarily. What if the lower priced item, because of a bad manual or bad design takes an hour longer to assemble, and 2 more hours to maintain over the life of  the item. Furthermore let us say the consumer values his time at $20 per hour. In this example, the buyer would be in actuallity paying $45 more by buying the less expensive item ($15 – (3 x $ 20 / hour) = $45. However, if the consumer is not made aware of this information, they will not be able to make a rational choice. Thus the current information model – which is no information about long term service costs promotes manufacturers to complete on price, to not invest in designing effective instructional material and to make less serviceable items. This results in a less efficient market.

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The Place of Regulation in Maintaining Markets

This misunderstood feature is primarily because it has been heavily lobbied against by business through extensive public relations campaigns and influencing educational curriculum and economics research with money.  An efficient market requires regulation, just as a fair football game requires officiating. If anyone doubts this, simply try a little test. For one week in the NFL, have all the games played with no officiating, and see what happens to the quality of the game. Thus, regulations that increase transparency and information enhance the market, not the other way around.

*This is the nice thing about blogging, if we worked at a university, we would probably get a lot of pressure from corporate donors for writing this, and our head of department would be angry at us for reducing the department’s fund raising opportunities. (businesses only fund business freindly research) However, since we do not report to an institution, we can present what is well known, but which is career limiting in academics to discuss or publish.

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Dumping Manuals

The ineffectiveness of manuals is well researched. The vast majority of users never read them. They also lack effectiveness because, unlike a video, they cannot show the manipulation of items in a 3 dimensional space. Several YouTube videos for each product could probably replace most of the instruction manuals for products that are sold. More complex products would require more videos, which is fine. They are cheap to produce and take less skill to produce than written manuals. To write a good manual, one has to be a good writer in addition to reproducing technical knowledge. However, to make a good instructional video one only needs to know very basic video filming, and simply perform the activity on camera. Videos can show an entire assembly and dis-assembly of an item, providing maximum reproducibility.

Unapproved Uses

Service organization and OEMs are losing control over the information of their products. While they controlled this information in the past, this information was never theirs to begin with. In a free society, anyone can publish whatever they like about whatever product or service they use. History shows that users will come up with many shortcuts and extra uses that OEMs never thought of. In a way, this is similar to the benefits of open source software.

While threats like “voiding warranties” have been used to limit the user’s customization of products, a person has a right to do whatever they like to products that they buy. Users are posting videos for doing unapproved things (such as replacing iMac hard drives) to their items. What has changed is that users now have the distribution mechanism – YouTube specifically, but the web more generally, to provide their own content. Much of this content is of very good quality, and this demonstrates that content like this is not that difficult to produce, and of great benefit to users.

Conclusion

The trend here is clear, the less control OEMs have over the servicing of their items, the better that market will be for consumers and the more dynamic the overall market will be generally. OEMs seem to have little interest in investing in innovation, IT or service generally, so it makes sense to open them up and allow user communities to do the work they don’t want to do, so they can just work on new product design and marketing.

Forward looking OEMs will embrace this and even support the growth of online user communities on their websites. These developments can be incorporated into their own service organizations.

Reference

Waste Makers

After researching this area, we found it goes back further than we thought. This exerpt is from the book The Waster Makers published way back in 1960.

Manufacturers often failed to provide in provide information that would facilitate repairs. Recently The Boston Globe protested that appliance manufacturers were getting so “cozy” with service manuals that customers seeking them got the impression they were “censored as if they contained obscene material.” The Electric Appliance Service News likewise expressed indignation on behalf of servicemen, or at least independent servicemen. It said, “Our mail is loaded with gripes daily from servicemen throughout the country lamenting their inability to obtain service manuals from certain manufacturers.” Often this coziness has sprung from the desire of the manufacturer to keep the repair business to itself and out f the hands of independents. The News charged that “some manufacturers do not make service manuals available to all independent repairmen and therefore it is almost impossible to make repairs easily and properly—and at a time-saving expense.

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