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  • New SLM Resource from Industry Week

    No longer a tired after-sales routine, service is now the strategy that builds and establishes reputations, sells the product, and creates new business potential for vendors and customers. However, many manufacturers still haven't tapped into the profit potential of post-sales service. Learn how many companies are organizing their service processes under the umbrella of Service Lifecycle Management, in much the same way as they’ve done in areas like Supply Chain Management and Product Lifecycle Management.

  • On Demand Webinar

    Learn why an integrated approach to parts pricing and planning helps boost service profits.

SLM Hub Exclusive: Disgruntled elf blows whistle on Santa’s SLM program!

Jingle McSorley was the former Lead Elf of the Land of Misfit Toys.  Last Tuesday after a heated exchange with Santa, he threw down his miniature apron and stormed off the North Pole ice.  The SLM Hub conducted the first-ever exclusive live interview with a Christmas Elf, revealing shocking details of the massive and controversial inner workings of Santa, Inc.

SLM Hub:  “Jingle, thank you for joining us today, and apologies for this hot Atlanta air.  You were the esteemed Lead Elf at the Land of Misfit Toys for 325 years.  Why are you leaving now, and why so suddenly?”

Jingle:  “Bah!  The Land of Misfit Toys is a ghost town.  That was a cushy job watching those islands.  I got to know each toy over the years, and each island evolved its own culture, unaware of the others.  Now Santa knows what toys are where, and the toys are never there for more than a few days before they’re repaired or recycled into newer toys.  Even Rudolph doesn’t visit anymore.  He went and got a nose job last year, now that Santa’s sleigh has fog lights.”

SLM Hub:  “Jingle, it sounds pretty rough.  Did you consider transferring to the main warehouse?  I hear they have excellent benefits there”.

Jingle:  “Yeah, the pay is higher at the warehouse now, but there’s no bonus stock left for us anymore on December 26.  That used to be our holiday, when we’d get the inventory surplus that the good kids didn’t want.  Santa’s so darn accurate at predicting wish lists now.  He has databases of prior wish lists and even wires the Mall Santas to listen in on the kids’ current requests.  It’s maddening.  The stats elves are to blame. My elf kids are still playing with TeleTubbie dolls and “Who Wants to be a Millionaire” board game surpluses from 10 years ago.  Do you have any idea how annoying TeleTubbies are, let alone after 10 years?  Santa, have mercy…overstock on some Legos and PlayStations, please!”

SLM Hub:  “Well, surely Christmas Eve must be a blast for the elves.  Is it still the biggest party north of the Arctic Circle?”

Jingle:  “Christmas Eve ain’t what it used to be either.  It was smooth sailing before the population started exploding in 1945.  We’d have a few drinks, load up a few sleigh loads and that was it – Santa was off for the night and we’d party like it’s 1899.  Now we have a zillion good kids, and no extra staff.   Santa doesn’t even deliver presents himself anymore, except to the very best kids, like Yankees fans.  He outsources the rest on GPS-fitted sleighs and watches them like a hawk from his command center.  If any of them veers off course, stops too long for spiked eggnog, or idles the Flux Capacitor on a rooftop, an alarm sounds, and he’s all over them.”

SLM Hub:  “Even though you’re a gruff old curmudgeon, Santa would surely ask you to return, and you could name your price.  Think of all the experience you have in servicing toys.”

Jingle:  “If I played that card 10 years ago I’d be a rich little man!  It’s tough to keep good talent in the North Pole, you know.  The smart youth wants to go way down south to Fairbanks or Edmonton where there’s warmth and excitement – no Justin Bieber or Bryan Adams concerts in the North Pole.  We had a huge talent gap a few years ago, but Santa got the best and brightest elves off of the toy making lines and had them write their service wisdom in a knowledge base.  Santa now pays us based on our knowledge contribution rather than toy-saving heroics.  The elf cowboy days are over.”

SLM Hub:  “Sounds like quite an operation.  I bet the good children are happy.”

Jingle:  “Yes, surveys are way up.  We haven’t missed a good kid’s house before dawn in 7 years.”

SLM Hub:  “What do Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner, and Blitzen think about all of these changes at Santa, Inc.”

Jingle:  “I don’t know.  I haven’t seen them in five years.  They’re all retired in the Caymans, living off of huge stock dividend checks.”

SLM Hub:  “What do you want for Christmas?”

Jingle (excited):  “A Red-Ryder carbine-action, 200-shot Range Model air rifle!”

 SLM Hub:  “You’ll shoot your eye out.”

 Jingle:  “This interview is OVER.

About Jingle McSorley:

Jingle McSorley is the former Lead Elf of the Land of Misfit Toys.  He was born in 1697 at the North Pole, the son of a wooden toy elf, and began his career in the metal toy shop. But, when toy returns began 1786, he transferred to the repair depot, better known as the Land of the Misfit Toys and stayed there until his untimely exit in 2011.  An avid ice fisherman, Jingle is now retired in Barrow, Alaska, where he is working on his memoirs and consults global toy executives.

Special thanks to frequent SLM Hub guest contributor Dave Duncan for this “exclusive” interview. Happy Holidays!

Waiting for Service Delivery Improved my Chainsaw Skills

By Dave Duncan

Working in aftermarket service I am immersed in countless projects with leading companies that are designed to help improve their customer’s service experience. At the end of the day, we are all someone’s customer and recently I had my own ordeal with a long wait for customer service. As one of the more than 500,000 Connecticut Light and Power customers that lost power after the early season snowstorm on October 29th, I have a renewed appreciation for how a customer feels when waiting for fast and efficient service delivery. Unfortunately, despite the top-notch efforts by the tree and electrical technicians, the utility management lacked the necessary coordination and visibility of contracted resources to operate efficiently. Connecticut Light and Power completed the greatest power restoration in state history, but the feat is widely viewed as too late.  We waited for 11 days for our power to be restored, but at least I was able to hone my chainsaw skills…

Let’s continue the discussion I began on service models in my post on Field Service SLM back in September. As I mentioned then, most post-sales service supply chains operate with one or more of these service models: Field-based, Dealer-based, Depot-based and Performance-based. For this blog post, I’m going to focus on Dealer-Based Service Lifecycle Management (SLM).

Dealer-based SLM is the subset of SLM that covers the processes associated with delivering customer service through dealer networks.  It emphasizes customer asset availability and both OEM/dealer service delivery margins.  It includes remote service, knowledge management, parts planning, parts pricing, and business insight process areas.

Dealers have broad customer reach for both service and support, but also present additional aftermarket service challenges.  Dealer growth and margin incentives do not always align with the manufacturers, particularly for warranty work.  Additionally, dealers generally can sell and service competitor products, creating competitive dimensions that don’t exist with in-house field or depot based service models.  Service part sales are particularly competitive.

Dealer-Based SLM represents a compelling opportunity for service business process improvement.  Few dealer-based organizations today have established the needed coordination and visibility across their service network to align dealer and manufacturer incentives/activities.  Disjointed technology and process across the contributing nodes causes punishing inefficiencies.  Industry analysts have begun to validate these struggles and mitigations:

  • Expensive dealer support phone channels.  “As much as 70% of inbound support calls are finding information that customers have but could not find”…”20% of calls simply for parts identification”.  (Aberdeen)
  • Unnecessary warranty parts expenses.  “25% of orders request multiple parts because the technicians are unsure of the right one.”  (Aberdeen)
  • Unnecessary warranty labor reimbursement.  “Non-linear troubleshooting tools can help techs solve problems faster, reducing #steps by 50%.” (McKinsey)
  • Lost revenue opportunity.  “Third Party service providers, suppliers, and repair shops are believed to own about 75 percent of the service and parts market.”  (Accenture)
  • Conflicting pricing and stocking practices.  “Profit-Driven Parts Management made possible through parts planning and parts pricing optimization can drive 20% higher profit contribution from service.”  (Blumberg Advisory Group)
  • Scaling new product introduction for effective service.  “The percentage of clients who identify their products as high complex has grown from 42% in 2003 to 64% today.”  (TSIA)
  • Coordinating incentives/visibility among dealers, contact centers, repair depots, warranty, and other service nodes.  “(Service Lifecycle Management) tends to be a fractured process, since it incorporates roles and responsibilities from various groups that often have different goals and measures. Typically, these groups have acted semi-autonomously, with no management incentive, to synchronize their activities in the overall context of the business strategy. This limits the potential (read: profitability) of the overall service business. Metrics have been defined and reported independently, which often leads to conflicting outcomes. Leading service companies, however, bring these various roles together under one group or executive and use common technology platforms.” (Gartner)

Dealer-Based SLM provides the necessary coordination and visibility to improve both customer asset availability and service margins. When an OEM has a Dealer-Based SLM program, the improved efficiency of service sessions is significant and many times what was a 12 step process to complete service is reduced to 6 steps, with improvements that can include 89% uptime improvement, 57% service cost improvement, and $500 over-stock avoidance.  It can keep your customers’ lights on at a low cost!

Dave Duncan is Vice President, Product Portfolio Management, for Servigistics. He holds a BSE in Civil Engineering and Operations Research from Princeton University

Got a fractured field service operation? You’re not alone.

By Dave Duncan

Chances are your post-sales service supply chain operates with one or more of these service models:

  • Field-based: customer assets are serviced remotely or by the asset operator, or a technician travels to the installed location to service the asset
  • Shop-based: customer assets are serviced remotely or travel to maintenance bays and/or repair depots
  • Dealer-based: dealers or distributors service assets and often operate in competitive asset and parts markets
  • Performance-based: service contracts are based on asset availability and/or other performance metrics.

For this discussion, let’s focus on field-based service lifecycle management (SLM). Contrary to what you might think, it’s not just about improving field force productivity. If you have a field-based service organization, your focus should not only be on scheduling and dispatching technicians but on the integrated SLM processes associated with planning, executing, and analyzing field service operations. You need to combine parts planning, field service, service knowledge, service content, and remote service systems and procedures to fully optimize the field service delivery process flow for high availability, growth, and margins.

With field-based operations, customer assets are serviced remotely or at the customer site and the focus is always on asset uptime and service delivery margins. By utilizing an integrated approach to SLM, you can gain full visibility of customer loyalty threats, cost to service, and service profit risk. Aberdeen’s recent benchmark for field service measured that 24% of dispatches require repeat visits.  42% of these repeat dispatches were due to unavailable parts, and 25% from improper diagnosis.  Moreover, 25% of parts orders contain multiple parts since the technician cannot determine which one is needed.

Without field-based SLM, your service network is likely fractured and suffering from conflicting incentives and ineffective visibility for improvement. Do any of these scenarios sound familiar?:

  • Contact center agents scored on average handle time are trigger-happy to dispatch when an extra 5 minutes of diagnosis could save a several hour dispatch or at least better prepare a dispatch.
  • Field service technicians scored on number of visits per fix are incented to replace multiple parts or higher assemblies to compensate for imprecise fault isolation.
  • Repair technicians cannot trace repair orders to dispatches, severing feedback loops back to Field Service to control no-fault-found rates.
  • Parts planners have no visibility of necessary versus unnecessary part changes, so inventories are high to enable first-time fix rates.

With SLM, you achieve the visibility to score contact centers on a balance of average handle time, dispatch avoidance, and technician first-time fix rates.  This creates business-aligned incentives to invest sufficiently in call-time to allow for phone-based fixes or at least to better prepare the dispatch with relevant diagnostics.  Field technicians in turn may be scored on a balance of number of visits per fix as well as no-fault-found rates for returned parts.  These balanced measures in turn lead to less repair depot churn and overstocking by planners.

Other benefits of field-based SLM include:

  • Empowerment of lower-cost touch points like remote service, self-service, and contact centers to avoid dispatches or triage for reliable first visit fixes.
  • Extending the value of the parts chain by enabling technicians to diagnose the right part the first time, and to immediately locate the best available part for the current service.
  • Proactive and condition-based maintenance:  being able to detect imminent issues and low machine usage levels to offer proactive training and other services to ensure customers’ utilization, throughput, and value targets are met.
  • Business Insight:  collecting, analyzing, and acting on end-to-end field service and planning data to continuously improve service operations and products.

So, where do you go from here? The first step is to look for signs that your field service organization might be fractured, per the scenarios I listed above. Then, estimate how much these instances of competing incentives or limited process visibility might be costing you on an annual basis. Then it’s about prioritization. Start where you think your total cost to serve is suffering the most.

Whether you start out by integrating parts planning with field service or field service with knowledge management and remote service, the investment in field-based SLM will drive significant cost efficiencies for your service organization,  trigger immediate positive impact to overall corporate profitability, and position your firm to compete for additional value-added services required by your customers.

Dave Duncan is Vice President, Product Portfolio Management, for Servigistics. He holds a BSE in Civil Engineering and Operations Research from Princeton University

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