New Service Development : Energy Efficiency Consultancy Service

Abstract: For a longer period of time, manufacturing was the core business activity and hence service has gained lesser attention. However, a time came when manufacturers faced a huge challenge to stay profitable which apparently gave service to get more attention. The reason to this can be classified in to three categories: economic reasons, customer satisfaction and competitive advantage (Oliva et al., 2003). Understanding this, Volvo Group has set high target for revenues from soft products including service. In order to achieve this it is necessary to expand existing service offerings and explore more new service offerings. As part of this goal, Volvo Technology has been working on several projects. One of the projects which are closely related to this thesis is the Hauler Development Service (HDS) which started in 2008 for the trucking (Hauling) industry. HDS has two versions; HDS Green Field and HDS Efficiency and Effectiveness. HDS Green field focuses on starting up new road transport operations and establish business processes including system support on emerging markets. HDS Efficiency and Effectiveness focuses on performing assessments and improvement programs on already established firms on mature markets. These business offerings started to get their orders from customers and thus proving their functionality. However, unlike the trucking industry, the construction equipment business area within Volvo Group is lacking such business offerings today. Volvo Construction Equipment is the second largest business area within the Volvo group generating about 16 % of the total sales. Volvo CE is mostly offering hard products and wants to expand its service offerings and assume a better position as a professional service solution provider. The development of HDS for the trucking industry and the need for Volvo CE to expand its service offerings laid the background for this thesis. One of the market segments Volvo CE provides equipments is to the quarry and aggregate business segment. Customers with in this business area were successfully contacted and collaborated in this study. This master thesis investigated what the customers in the quarry and aggregate business area needs and problems are and developed a service concept which Volvo CE can offer while at the same time solving customer problems. This service concept was found out to be Energy Efficiency Improvement Service intended to help lower production costs of the customer by eliminating or lowering energy wastes and improve environmental impacts by lowering carbon emissions. Moreover, customer energy performance measures were studied and analysed if they are robust enough to be used as measures to the improvements inevitable by the new service offer, the Energy Efficiency Improvement Service. Results show that the energy performance measures currently in use are not robust enough, and suggest further development of energy performance measure system. In order to realize the service offer in a practical manner, the five lean principles (define value, identify value stream, floe, pull and continuous improvement) were tested if they can be used as tools to identify and measure energy wastes at the customers operation site and proved to be useful.