Field Service 4.0 Digital Transformation from Reactive to Proactive Services

By Ralph Rio

ARC Report Abstract

Executive Overview

Today, many equipment manufacturers are reclaiming the service relationship from the distribution channels with a modern field service management system and remote monitoring, thus allowing the move from reactive to proactive services.  Adding IoT to their products provides the infrastructure for predictive maintenance and proactive service.  Rather than react to emergency calls and disgruntled customers, they know when the equipment’s health is deteriorating and make the repair prior to failure.   Service providers are also starting to provide a similar digital transformation by enhancing their service agreements with add-on components for remote monitoring and predictive maintenance. 

IoT with predictive maintenance is beginning to transform field service from a painful reactive cost center into a proactive business with higher revenue and margins.  For owner/operators, unplanned downtime is particularly painful with lost revenues, missed customer shipments, quality issues, and safety or environmental incidents.  By nearly eliminating this unplanned downtime, OEMs increase customer satisfaction, net promoter score, and repeat orders.  This capability is driving a market discontinuity among industrial equipment suppliers and service providers i.e., those who adapt quickly grow in share, and those who don’t adapt, decline and sometimes go out of business.

With modern FSM and IoT connected products, field services can become a competitive advantage with increased revenues for both products and services.  These business benefits improve the executive metrics in the P&L statement and shareholder value.

Based on ARC research and analysis, we recommend the following actions:

  • FSM software providers should review their capabilities to support remote condition monitoring with robustness and ease-of-use
  • Equipment suppliers should start a holistic program from call center to field service technician for remote condition monitoring services with business processes that include their channel members
  • Service providers should evaluate the more common types of equipment they service and consider a program for remote condition monitoring

End customers should add remote condition monitoring to their selection criteria for new equipment and service providers – particularly for more complex and critical equipment

Unplanned Downtime Is Ugly

Unfortunately, unplanned equipment downtime occurs while operating the equipment to produce goods or services.  This is the point of greatest negative impact to the business. The ramifications include:

  • Lost revenues with lower profitability since the equipment is not available when needed to make product
  • Missed shipments and lower customer satisfaction
  • Safety and environmental incidents
  • Scrap materials, quality issues, and rework for the work-in-process (WIP) materials increase costs and result in production delays
  • Lost labor hours waiting for a repair


Costly Attempts to Mitigate the Risk of Downtime

Industrial organizations have layered a variety of activities and overhead costs to help mitigate the negative impact of unplanned downtime.  These costs have been accepted as “normal” business practices including:

  • Extra equipment for back-up
  • Redundant systems
  • More internal, on-site maintenance staff
  • Increased reliability and maintenance engineering
  • Increased WIP inventory so downstream operations can continue during a failure and repair
  • Increased finished goods inventory to help avoid lost revenues and missed shipments

Many of these costs have become thought of as necessary for a well-run business or even considered a “best practice.”  However, in the context of Lean manufacturing, they are non-value-added waste that should be eliminated.

from reactive to proactive rrsrfsm1.JPGMore Preventive Maintenance Is Not the Answer

For preventive maintenance, reliability engineers examine an asset’s failure history and schedule maintenance based on usage using either time duration or number of cycles.  The strategy for preventive maintenance is to schedule work orders just before the frequency of failure starts to increase.  The “bathtub curve” at the top of the graphic for equipment failure patterns is a prime example often taught to new reliability engineers.  But, multiple reliability studies (starting with “Reliability Centered Maintenance” by Nowlan and Heap in 1978) have shown that only 18 percent of assets have an age-related failure pattern.   Preventive maintenance is effective for only this small portion of assets.  The other 82 percent of assets have a random failure pattern with no rise in failure rate.  Another approach is needed for the other 82 percent.

Legacy Maintenance Management Is Unsustainable

Critical assets, both new and existing, often have a high degree of technical sophistication.  This makes it increasingly difficult to isolate and identify problems.  As equipment gains complexity, it becomes impractical for a general-purpose maintenance team at the end customer’s site to support and maintain (compared to the time when cars had carburetors and no computers, few people repair their cars - the author included).  One response is to provide the technician with deep product training.  Unfortunately, the training knowledge decays or leaves for another role before the next repair.


Table of Contents

  • Executive Overview
  • Unplanned Downtime Is Ugly
  • Digital Transformation for Assets
  • Digital Business Processes for Field Service
  • Field Service Management Business Models
  • Field Service Management Case Stories
  • Markem-Imaje Turns Field Service into a Competitive Advantage
  • Medtronic Cardiovascular Equipment Services
  • Recommendations


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