Theory of Constraints Handbook - James Cox Iii [585]
In this work, we will try to show how TOC and its application can significantly contribute to successful CS, and thus to a better, more successful business.
Steady Erosion of Income in the CS Area
Three main processes, which have steadily advanced over the course of the last few decades, contribute heavily to the problems the CS area faces today:
In many key industries (printing, metalworking, textile production, and microelectronics, to name a few) the selling price of the equipment has decreased considerably. That, of course, made the equipment within the reach of many potential buyers who could not afford it earlier. The resulting growth of sales volume was huge. When coupled with the growing competition as a result of developing countries joining the ranks of the established production centers of the West and East, the economies of scale due to much larger markets, and the advent of electronics replacing mechanical or optical solutions, they enabled production of more and more sophisticated equipment at prices that continuously decreased.
At the same time, the growing complexity of the equipment put even greater and more varied demands on CS providers. Equipment, which was once the provenance of only the largest organizations with their own engineering and maintenance resources, now became available to much smaller firms. Once the equipment operates at these smaller firms, in which the division of labor between day-to-day operations and the technical support function does not really exist, it may create a problem. There is an expectation that somehow the equipment will always be functionally available, without the need of creating (and paying for) a specialized internal maintenance unit to make it happen. At such firms, the dependence on the goods’ producer to provide the technical support is crucial.
There is an additional effect having its impact; the life cycle of equipment undergoing a continuous reduction, resulting in ever-shorter periods of time between the appearance of a particular piece of equipment and the arrival of its successor. Even in the short period of time between equipment generations, there is a steady stream of improvements, upgrades, changes, and additions to it. For the equipment producers it meant, if they are not to continuously increase their engineering ranks, they would have a great and growing strain on the engineering resources. As a result, quite often the products arrive in the marketplace before the full development process is completed; the rigorous testing procedures in various scenarios and multitude of operational environments, a true must at products directed to mass markets, is often cut short. That, in turn, brings about significant “growing pains” to the users of the products. The part of the equipment producers’ organization, which will have to deal with the problems stemming from this is, of course, the CS unit. Many firms keep the older equipment after newer versions are available, forcing the CS staff to master the maintenance of a number of versions of its equipment, long after many have been replaced.
However, with all the dynamic growth it underwent, the modern industrial equipment market does not have the huge size of the true mass market (like that of cell phones, cars, digital cameras, or laptops). In contrast to the true mass production markets, the industrial equipment offer to the market is characterized by a wide variety of products and features, relatively low volume, and almost always high complexity. These characteristics do not allow for the economies of scale needed to bring its development process, as well as its production procedures, to deliver truly fail-proof products.
On top of these phenomena, which characterize a large part of the products market, there is a rather peculiar system for setting the price of the CS provided to the users of a particular product or service. Usually, after the conclusion of the warranty (guarantee) period, the service is provided at a fixed annual