Many OEMs aggressively pursue signing multiyear service contracts at the time of equipment purchase by offering discounted service contracts for multiple year terms. One hospital was told that they would receive a 1 percent discount on the purchase price of their new CT scanner if they purchased a five year service contract at the same time. After further analysis it was determined that they were actually being charged 10-12 percent more for the cost of the CT than others nationally, by far negating the 1 percent savings that had been promised.
Long term service contracts are even harder to cancel and have steeper penalties. In fact, some companies have no out clauses in their long-term contracts. They don't allow for effective management control or cost reductions and greatly limit or eliminate options to reduce costs in the future.
Managing existing service contracts
Equipment under a service contract should be managed in the same way as equipment serviced by other means (in-house engineering, time and materials, under warranty, etc). You must actively manage your service contracts by monitoring the service you receive, the equipment's performance and preventive maintenance, or you may not receive what you paid for.
The following steps can help you manage service while under contract. First, implement a mandatory check-in and check-out procedure for vendors. Second, monitor the progress of the repairs closely. Third, make sure to ask questions. Find out what is being done, how long the repair will take and if there are delays find out what is causing them. If the vendor's service engineer requires additional service expertise from the service company, it should happen as soon as possible and at the vendor's expense.
Next, be aware of all updates, upgrades and modifications, and understand the impact it will have on your equipment. Get complete written service documentation on all activities. Remember, you have the fight to any information that pertains to your equipment's operation and/or maintenance. Many service reports will not give a detailed list of repairs that were completed, identify what went wrong or provide the number of hours spent on the repair, but if you request this information from the service provider, you will receive it. Finally, if you have work scheduled out side the terms of the contract, require authorization from the appropriate management and a new purchase order before you allow the vendor to proceed.
Make sure that the parts not included in the service contract are approved by you for quality and cost before they are installed. Also remember, it is almost always cheaper to repair instead of replacing components, so it is in your best interest to get a second opinion if a vendor recommends replacement of a part not covered by the service contract. For example, one facility was told that they would need to replace a damaged ultrasound transducer at a cost of more than $14,000. However, they discovered an ISO that provided a loaner and repaired the transducer for $850. MRI surface coils are another prime example, where yen dots offer savings of $3,000 to $20,000 over the OEM replacement prices by repairing the coil. Understanding repair-versus-replacement options will allow you to make the best decision for your facility. It's important to note that maintenance management programs from reputable firms like Thermo Asset Management Services do not--and should not--affect an existing warranty or service contract. In stead, the maintenance management program comes into play after the existing warranty or service contract expires, or the facility itself chooses to cancel its service contract. The key factor with managing service contracts is making sure the vendor knows you are monitoring and actively involved with managing the maintenance and service of your equipment.
SOURCE:http://findarticles.com/p/articles/mi_m0BPC/is_10_29/ai_n15685943/pg_2/?tag=content;col1
Long term service contracts are even harder to cancel and have steeper penalties. In fact, some companies have no out clauses in their long-term contracts. They don't allow for effective management control or cost reductions and greatly limit or eliminate options to reduce costs in the future.
Managing existing service contracts
Equipment under a service contract should be managed in the same way as equipment serviced by other means (in-house engineering, time and materials, under warranty, etc). You must actively manage your service contracts by monitoring the service you receive, the equipment's performance and preventive maintenance, or you may not receive what you paid for.
The following steps can help you manage service while under contract. First, implement a mandatory check-in and check-out procedure for vendors. Second, monitor the progress of the repairs closely. Third, make sure to ask questions. Find out what is being done, how long the repair will take and if there are delays find out what is causing them. If the vendor's service engineer requires additional service expertise from the service company, it should happen as soon as possible and at the vendor's expense.
Next, be aware of all updates, upgrades and modifications, and understand the impact it will have on your equipment. Get complete written service documentation on all activities. Remember, you have the fight to any information that pertains to your equipment's operation and/or maintenance. Many service reports will not give a detailed list of repairs that were completed, identify what went wrong or provide the number of hours spent on the repair, but if you request this information from the service provider, you will receive it. Finally, if you have work scheduled out side the terms of the contract, require authorization from the appropriate management and a new purchase order before you allow the vendor to proceed.
Make sure that the parts not included in the service contract are approved by you for quality and cost before they are installed. Also remember, it is almost always cheaper to repair instead of replacing components, so it is in your best interest to get a second opinion if a vendor recommends replacement of a part not covered by the service contract. For example, one facility was told that they would need to replace a damaged ultrasound transducer at a cost of more than $14,000. However, they discovered an ISO that provided a loaner and repaired the transducer for $850. MRI surface coils are another prime example, where yen dots offer savings of $3,000 to $20,000 over the OEM replacement prices by repairing the coil. Understanding repair-versus-replacement options will allow you to make the best decision for your facility. It's important to note that maintenance management programs from reputable firms like Thermo Asset Management Services do not--and should not--affect an existing warranty or service contract. In stead, the maintenance management program comes into play after the existing warranty or service contract expires, or the facility itself chooses to cancel its service contract. The key factor with managing service contracts is making sure the vendor knows you are monitoring and actively involved with managing the maintenance and service of your equipment.
SOURCE:http://findarticles.com/p/articles/mi_m0BPC/is_10_29/ai_n15685943/pg_2/?tag=content;col1
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