With the current economic business pressure, reducing costs in the service supply chain without compromising customer satisfaction is a challenge which must be faced head on.
Managing this balancing act requires business intelligence, which refers to the applications, tools, infrastructure and best practices which enable raw data to be transformed into significant information, and as such can be utilised to improve outdated processes.
Sadly, the current service supply chain model does not use business intelligence, but relies on a silo system, in which each area of the network, namely diagnostics and scheduling, parts, logistics, field service and repair, is run by a separate company.
Although the majority of companies working within the service supply chain use this silo model, there are major pitfalls to doing so which seem to be overlooked by the decision makers which strategically drive the agenda.
Glyn Dodd, managing director of service supply chain specialists Centrex Services, states such issues cannot be overlooked. "We know the service supply chain model has been working inefficiently, with separate entities running each sector of the network," he says. Unsurprisingly, the communication between these areas is often found lacking, as an issue which the diagnostics team are unable to resolve is simply passed on to the next stage, when in reality it may not have been necessary to do so."
The current model invariably results in the deployment of field service engineers, regardless of the scale of the problem, due to a lack of business intelligence. The cost-effectiveness of such a system must therefore be scrutinised.
Dodd continues: "There are three key elements to the service supply chain which transcend each of the five silos. By studying the people, processes and data which unite to create the service supply chain, while simultaneously identifying the inefficiencies within these silos, each element can be challenged. Ultimately, this will culminate in a far more efficient network."
Correctly skilled representatives create cost-effectiveness
The three key elements which are vital to the functionality of the service supply chain must be dissected to create the most effective model available. The first of these are the people who represent businesses in the service supply chain. This is the element which is easiest to directly challenge, as this can be controlled through efficient management of correctly skilled representatives. Dodd believes the current silo model within the service supply chain is in fact impeding such change.
"Communication is of paramount importance in all businesses, and this applies to those working in the service supply chain, where we live and die by the level of customer service we are able to offer.
"It is therefore unacceptable that the communication silos which the majority of businesses seem to rely upon result in a system where cross-silo communication is so poor. This is especially poignant when it is the customers who pay the price. It is hard to believe, when some businesses utilise an integrated service network which improves communication, that the silo structure continues."
A recent study by the Aberdeen Group shows service supply chain customers agree with Glyn’s sentiment, with 58% of respondents stating they want to see an improvement of diagnosis of triage at the initial call level. With further statistics showing there is a 24 per cent increase in first-time fix performance, from 62-86 per cent, when all calls are routed via triage, it is clear that such intelligent communication can increase service level agreements (SLA) and in turn, customer satisfaction levels.
Inefficient processes must be challenged
Customer satisfaction levels cannot be increased solely through challenging the service supply chain businesses representatives. Alongside this, processes must also be scrutinised to construct an efficient service in which business intelligence can be utilised.
With business needs evolving continuously, the processes which are currently commonplace within the network cannot be sustained in the long term.
Dodd says although this is a vital step in the evolution of the service supply chain, this message is not reaching the relevant decision makers.
"Those decision-makers who strategically alter the function within the service supply chain do not necessarily have the knowledge required to alter the inefficient processes which currently plague the system.
"With businesses worried about maintaining their profit margins in these difficult times, altering the processes they use can seem like an unnecessary burden, which is then wrongly linked to excess spending. If they used a leansource approach to integrate the service supply chain rather than tactically selecting separate companies, efficiency levels would increase, while spending decreases and complex issues are transformed into competitive advantage."
A study by research organisation McKinsey looking into the priorities in the global supply chain support this. 61% of respondents cited reducing operating costs as a priority over the past three years, which is a task manageable through creating more efficient processes within the service supply chain. Once achieved, the percentage of SLA’s which are successfully achieved will increase without any additional pressure being applied on the deployed field service engineers.
Big data is not the answer
The final element of deriving complete business intelligence is the data. The arrival of complex data analytics may seem to be the answer to such issues, but Glyn believes that the data alone is not enough to improve the current state of the service supply chain.
"There is a widely held belief that generating ever increasing amounts of data is the answer to all our service supply chain needs, but alone it is irrelevant if not turned into useful information. It’s the business intelligence transforming this into relevant information which is vital for the creation of an efficient, integrated service supply chain, abolishing the silos that plague the current model."
Companies such as Centrex Services source business intelligence from reason code data and apply a layer of diagnostics. The codes detail the circumstances that have caused the code to be raised and the associated completion code. Rather than just documenting each code and applying the same reasoning to each circumstance, the business identifies repetitive causes and designs a solution to resolve the issue, without it reoccurring.
This intelligence was applied when Centrex identified a recurring problem on the point of sale system at a fast food outlet. A plastic part of the POS hardware was continuing to break, causing the same reason code in the majority of the support calls. When the business analysed the fault, they found the operators were leaning on the part of this hardware during use. The plastic was simply not robust enough. By tooling a metal replacement part, the problem was resolved permanently.
"Delivering customer satisfaction is a critical part of any business and deriving intelligence plays a large part in the experience. Diagnostics of reason codes is therefore vital, yet many do not see the long term benefits which have an adverse affect on customer satisfaction within the service supply chain.
"If businesses diagnose the reason codes, business intelligence can be created, which in turn can be used to offer improved SLA’s, rather than accepting a failure rate."
Why should we plan to fail?
In addition to the people, processes and data, the service supply chain is heavily reliant on service level agreements. Dodd questions the current ethos in place throughout the service supply chain, claiming some companies are in fact preparing for failure.
"There are circumstances where SLA’s are not being met as a direct result of people and processes being deployed without applying context to the data which has been sourced. I also question why SLA agreements are being signed allowing up to a 15% failure rate when the deployment of business intelligence can realistically create a network in which success is inevitable."
The need for such change was identified in a business intelligence not utilising business intelligence, which resulted in an SLA being missed.
Dodd explains: "A client of ours works closely with a very well known American diner chain and have in place an agreement which states once a call has been made to report a technical fault, there must be a field-service engineer on-site to resolve the issue within four hours.
"The issue here was, these calls can come in at any time of the day and the mentality was that the SLA must be met at all costs. So, when a call reporting faulty point of sales systems was placed at 1.00pm, processes were set in motion to guarantee an engineer was on-site by 5.00pm.
"However, once they arrived, they were turned away, as the restaurant was unable to accommodate the work during their busiest period as this would result in a decline in productivity which in turn can lead to a loss of custom. Ultimately, the SLA was not met.
"This demonstrates just how vital it is that the service supply chain changes, as had business intelligence been utilised, there is no way an engineer would have been sent to a restaurant during such a busy time."
Business intelligence is the future
Efficient communication, processes and correct analytics provides the business intelligence needed to simplify the fragmented supply chain. Simplification leads to more efficient service delivery, guaranteed SLA’s, greater customer satisfaction and ultimately transforms the service supply chain for competitive advantage.
Now is the time for senior decision makers to challenge all elements of the chain; without constant innovation and new thinking the industry will continue to be perceived as a laggard – a disparate set of fragmented, commoditised services that fail to meet the required standard.