Operations Management-

Kaston-Trenton Debrief slides

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 1. Positioning of each service

Design & Business boiler

Domestic boiler
Installation servicing
Relatively high cost servicing
6 9700
1354
Low Volume High

High Variety Low

Variation in demand
High Low
Unexpected nature of servicing

High Visibility Low

Performed at customer premises
Cheaper to produce 2
1. Key points re the 4V

 Design and Installation is very much “left side” – Low volume, high variety with
implied higher cost.

 The largest volume should be domestic boilers ( There are more residences
than businesses typically.) A volume can be forecast by using the numbers of
residential places over a replacement timeline with a market share target.

 High variation will come from an amount of unexpected nature of some

servicing.

 Visibility will be high in all cases as the service has to be carried out at the
customer’s premises.

1.
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2. What aspects of performance are important for the KTS to win
more servicing business? Complete a polar diagram.

We give you the ones shown in the template on the next page, as they are all mentioned
in the case, but please feel free to enhance with your own. It will be recognised.

Note how these are already adapted to the case, as opposed to just using the “core five”.

When you have built your model, justify your choices on the subsequent slide.

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Business boiler Domestic boiler
servicing servicing
Advice on
Usage
Price sensitivity

Notification of updates
Speed of Response

Servicing downtime Timing dependability

Robustness of repair Timing Flexibility

Design & Installation

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 Justification of Polar Analysis
• Robustness of repair is deemed very important
• ‘Mutually convenient timing’ is important but hard to arrange so we
have to offer flexibility and stick to it.
Domestic
• General cost control due to price sensitivity.
boiler
• Call out timing is unpredictable.
servicing
• So, better ‘despatching’ (scheduling, sequencing) skills are key.
• Better forecasting?
• More genera process / operational management and control.
• High amount of customisation therefore each problem will have
differences.
Business • More importance of call outs. Timing response is key.
boiler • Servicing process efficiency is key. A post service technical report is
servicing needed.
• Providing information on updates is key.
• Strong customer facing skills.
• Wider technical skill needed.
Design and • Each one is customised, so more costly, but potentially more profitable.
Installation • Contractual skills.
• Important it is designed to ‘lock the customer in’.

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3. How would you evaluate the potential of offering a “total service”
like the K-T customer had been offered?

For this question we recommend you take your proposal for Q2 and add another line
onto it to represent the “total service”.

Then justify this as before.

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 Business boiler Domestic boiler
servicing servicing
Advice on
Usage
Price sensitivity

Notification of updates
Speed of Response

Servicing downtime Timing dependability

Robustness of repair Timing Flexibility

Business total service (I have not put the D&I profile on here
contract (TSC) As it gets a bit messy) 8
 Justification of Polar Analysis

• A broader service with changes in the balance of risk between customer

and KTS.
• Move from “selling the servicing of boilers” to selling “the continuity of
Total heating”.
Service • Increased risk overall. Does the marginal extra risk, outweigh the
marginal benefits of increased profit potential.
• Impacts technology strategy.
• New opportunities for knowledge transfer.
• Servitisation involves significant cultural issues
• Involves moving financial resources away from other activities.
• Taking over activities previously performed by customers. (Perceptions
Potential
and expectations).
challenges /
• Importance of feeding knowledge back into future product design.
risks of
this?

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4. What should K-T be doing to prepare for possible longer term
changes in their industry.

• The nature of the future of both domestic and business heating is likely to be affected
by increased measures to limit carbon levels in order to meet the UK’s target to reduce
emissions (as with most other European countries).

• What is uncertain is the speed and extent of any legislative changes.

• Also uncertain are macro political influences and the trend of climate change going
forward.

• At a general level, think about what you could be doing in advance of any changes to
increase the operational performance of the products and services on offer.

• As you do this, consider both the need for internal operational efficiency and for
increased customer satisfaction.

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