Introduction
This paper will discuss the service lifecycle management of American Abyss Trucking; a temperature controlled transport and Logistics Company which targets small businesses around the world. Service lifecycle management (SLM) is a strategy that helps service organizations to recognize their full income potential by assessing the available opportunities proactively as a whole instead of singular events or a set of separate tasks. This way, the services are arranged into a set of workflows and business processes. A complete SLM includes critical aspects such as workforce administration, reverse logistics, knowledge administration, asset management, forecasting and components planning, as well as contract management.
According to Peruzzini, Germani, and Marilungo (2014), SLM can improve the efficiency of operations by availing useful information throughout the life cycle of a product or service. This will lead to better client satisfaction since the quality of services will be boosted. American Abyss Express (AAE) understands that its customers have faith that it will deliver the right product at the right time, and so the company is not blindsided by external obstacles such as shipping problems or delays in unloading at the ports. Although managing deliveries is the core mandate, costs need to be checked too. Therefore, a right balance should be struck between the two.
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Technologies to be used
American Abyss Trucking will use Radio Frequency Identification Technology (RFID) in its operations to maximize efficiency. According to Masek, Kolarovszki, and Camaj (2016), RFID gives a higher scanning speed than barcode technology, and it is easier to use in systems that are automated. There are standards related to the application of this technology in a transport and logistics company, such as the standard IS 18000-6 (WAG TSI) and directive 861/2006/ES (Masek, Kolarovszki, & Camaj, 2016).
The system is safe, reliable, and able to perform its functions, in addition to ensuring health and protection of the environment. Implementation of this technology will be beneficial to AAE by simplifying technological activities not only in transportation of temperature controlled products but also intermediate sidings and delivery of loads. RFID is wireless radio-frequency, non-contact, electromagnetic fields for data transfer to be used in tagging and identification (Rijal, 2016). The system is comprised of different components such as tags, antenna, interrogator, and the host computer with appropriate software as shown in the diagram below.
Figure 1: RFID System, Source: Rijal (2016)
Identified Clicks and Bricks Decision
AAE will not rely on the tradition brick-and-mortar model where it deals with clients in face-to-face interaction. This is because the model is outdated and it cannot be used competitively in the post-modern E-commerce world. Therefore, the company will work on an E-distribution model whereby it will directly deliver products to their customers when they need them. AAE will, thus, not only serve as a transportation company, but it will also be a point of contact between the suppliers and consumers of temperature-controlled products. According to Yu, Wang, Zhong, and Huang (2016), modern logistics companies, based on E-commerce; improve the efficiency of material flow.
Service Life Cycle
Being a service organization, AAE will handle a service lifecycle to help the company realize its gross revenue potential. The organization understands that it has to offer competitive services that are valued by customers for it to sustain improved performance. As such, the company will try to adjust to changes quickly in the marketplace as well as in the economic climate. Therefore, all services offered by AAE will be tailored to enable it to transform and grow. AAE Service management supports transformation by use of an effective service lifecycle that has five key stages. They are service strategy, service design, service transition, service operation and continual improvement as advised by Pink Elephant (2018). The first stage is on service strategy which is based on an understanding of who the clients are, the services offered, the capabilities, and available resources. The primary target is to meet the needs of customers. Therefore, the company will always try to ensure that the cost of its services is related to the value felt by the client.
The second stage is service design which is a methodology of ensuring that the changed services always meet customer expectations. As such, the company will integrate appropriate technology and architecture for cost-effective services. Consequently, IT tools must be continuously modified and changed to ensure that the services given are efficient and useful to the satisfaction of all customers. This is in line with the organization mission statement of being the top transportation company of temperature-controlled products.
The third phase is the service transition stage in which the design is constructed, tested and moved into action to enable the customers to obtain a value for their money. This stage addresses issues such as change management explicitly by configuring items and controlling assets so that they work well with the changed systems. This step is followed by service operation whereby the service is delivered on an ongoing basis and monitored daily to track success and obstacles. Finally, the continual service improvement (CSI) will be critical in the service lifecycle by offering techniques for measurement and improvement of performance.
For the sustainability of its services, AAE will utilize cloud computing which is a shared service approach that will bring real value to the industry. Through this, the company will be able to access solutions to procurement challenges, rates, collaboration, end-to-end visibility, as well as e-invoicing and payment. Logistics Management Lifecycle (LML) is rounded out by sales and operation planning as well as compliance offerings. In this regard, the company will aim for sustainability by checking its carbon footprint by including its impact on transportation decisions. Personnel at desk level will be used for analysis of complex carbon impact data so that decisions can be made on a daily basis. For management of constrained carrier capacity, there will be a capacity management system for leveraging rates and time of transit so that carriers are utilized well. Besides, AAE will seek to cooperate with value chain partners so that efficiency is created and shared.
AAE understands that service lifecycle management is a complex process involving numerous activities such as remote monitoring, field service, spare parts planning, and warranty management. This is especially critical for the company since it deals with sensitive products that can easily be damaged by temperature fluctuations. For the company to become service-centric and customer-centric, it will need to master new process skills, adopt new technologies, and come up with new principles.
Business Life Cycle
The Corporate Finance Institute defines business life cycle as the progression of an enterprise over time through five stages of launching, growth, shake-up, maturity, and decline(CFI, 2018). The first phase is the launch in which the service or product is introduced to the market. AAE projects that sales will be low at this stage, but will be increasing steadily. Therefore, in this stage, more focus will be put on marketing through aggressive advertisement to show the comparative advantages of the business services and value propositions. It is expected that the business will have losses at this stage due to initial startup costs and low revenue. The second phase is growth which is characterized by rapid sales and improved revenue. Here, the business will start getting profit after breaking-even. However, the profit level is still not as high as optimally possible. The advantage, however, is that the cash flow will be positive. This stage is followed by phase three which is a shake-up where sales increase but at a slower rate, mainly due to market saturation or effect of competitors. Therefore, profits will begin to decline.
The fourth phase is maturity which is evidenced by stagnant cash flows as a result of decreasing sales and thin profit margins. AAE will extend its life cycle at this particular stage through reinventing and investing in new markets as well as adopting new technologies. This will allow the company to reposition itself in the transportation and logistics sector, effectively refreshing its growth in the market. Finally, the decline will be exhibited in the form of decreased sales leading to a drop in revenue to a point where it will be not economically feasible to continue operations. As such, investment will be minimized, or the company is sold to another one.
Profit-Generation Opportunities
Based on the lifecycle analyzed above, there are many profit generation and cost saving opportunities for American Abyss Trucking Company. Profit generation opportunities are many for the temperature controlled products transport enterprise. For instance, there is a need to increase sales predictability by enacting a sales process which is scalable, measurable, and repeatable. According to Hector (2018), a sales process that is clear increases accountability, reduces loses, and ultimately improves revenue generation.
The second opportunity for profit maximization is to utilize the marketing strategy for consistent revenue growth. The company can invest in inbound lead generation to attract customers to its website. Three strategies associated with this are content marketing, social media, and search engine optimization. Content marketing is used to produce relevant content such as blogs, videos, and ebooks to attract customers. Search Engine Optimization (SE) structures the content in a website in search a way that it can be ranked top in organic searches. N its part, social media marketing is effective in promoting content, offering information, and gathering feedback.
Another strategy is the outbound lead generation which will target those customers who have not previously expressed interest in the services offered by AAE. This can be achieved through cold calling, direct sales, and through events for the business-to-business promotion of sales. Should at least one of these strategies be implemented, sales will be boosted, impacting positively on revenues.
Real opportunities for profit generation exist for AAE, should it decide to go an extra mile. According to Hector (2018) brand credibility is critical to growth in sales since it is one of the most significant psychological factors that attract customers. Once customers are confident that American Abyss Express can deliver temperature-controlled services, they will start trusting the company in transporting their sensitive products such as pharmaceuticals and food. In line with this, the company will establish a business differentiator to get a competitive advantage. Here, it is proposed that AAE adopts lower prices so that potential clients will be inclined to the company’s services. It is essential that the company has decided to focus only on one segment which is a better strategy in brand positioning.
Cost-Saving Opportunities
For cost-saving in the temperature-controlled transport, business includes warehouse space, supplier relationships, inventory, modes of transport, and processing of orders. One way of managing costs is to forecast and plan so that demands can be predicted, delays considered, and market conditions anticipated. This way, a custom plan can be designed that minimizes costs by avoiding disruptions and meeting customer demands. Secondly, there is a need to analyze total costs including taxes, insurance, and handling fees and focus on areas that can be controlled. Thirdly, AAE should introduce flexibility in its operations. Finally, measuring performance is a critical component of managing costs since it will highlight areas that can be improved on.
Phase-Out Plan
Program Quality (2018) notes that there is uncertainty about what is going to happen when a company withdraws its services or products from the market. Therefore, it is vital to come up with a phase-out plan that will ensure a sustainable solution is achieved and makes way for further innovation in the future. AAE will have to be restructured to take advantage of two fundamental realities. First, the first, the earnings should be well distributed and the assets sold so that any loans and liabilities are cleared. Secondly, a new business will have to be established to ensure that a vacuum is not created in the business niche currently occupied by AAE.
The first thing to be done is planning for the withdrawal of service since it could be a critical issue to the customers. The strategic background is an assumption that the services will be replaced by a new model that will continue to improve customer experience. The actual phase-out process is often protracted and can take an extended period. In terms of sales, AAE will make sure there is a message sent to the clients that the temperature controlled services are being phased out. This will be followed by withdrawal of marketing materials from product catalogs, media, and websites. Proper documentation should be done to make way for future innovation and profit streams.
Conclusion
This article has explained the service lifecycle management of American Abyss Trucking, which is a new company that seeks to venture into temperature-controlled transport and logistics business. The company will use RFID technology in its operations to maximize efficiency. Its lifecycle will include a launch, growth, shake-up, maturity, and decline. Profit-generation and cost-saving opportunities that are available for this enterprise have been considered herein. Finally, the paper has detailed a phase-out strategy which will ensure sustainability and give way for future innovation and profit maximization.
References
CFI. (2018). Business Life Cycle . Retrieved from Corporate Finance Institute : https://corporatefinanceinstitute.com/resources/knowledge/finance/business-life-cycle/
Hector, H. (2018). Logistics Sales: Strategies to Boost Revenue Growth . Retrieved from CYZERG Warehouse Technology : https://articles.cyzerg.com/logistics-sales-strategies-to-boost-revenue-growth
Masek, J., Kolarovszki, P., & Camaj, J. (2016). Application of RFID technology in railway transport services and logistics chains. Procedia Engineering, 134 , 231-236.
Peruzzini, M., Germani, M., & Marilungo, E. (2014). Product-Service Lifecycle Management in Manufacturing: An Industrial Case Study. IFIP International Conference on Product Lifecycle Management , 445-454.
Pink Elephant. (2018). Service Lifecycle . Retrieved from Pink Elephant : https://pinkelephant.co.uk/it-service-management-2/service-lifecycle/
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Rijal, S. (2016). RFID Technology in Logistical Activities . Retrieved from Arcada: https://www.theseus.fi/bitstream/handle/10024/130553/RFIDInLogistics.pdf?sequence=1
Yu, Y., Wang, X., Zhong, R., & Huang, G. (2016). E-commerce logistics in supply chain management: Practice perspective. Procedia: CIRP, 52 (1), 179-185.
