Why the Variable Workforce is Not a Passing Fad

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This post contains an excerpt from my whitepaper titled ‘The Variable Workforce Model – An Optimal Solution for Dealing with Field Service Uncertainties’

The freelance economy and variable workforce models have been gaining traction in a wide array of markets. Although the demand for this type of labor is growing, there are segments of the field-service industry that are concerned about whether or not individuals will continue to choose freelance work over full-time employment. We can answer this question by examining some factors affecting supply and demand. The first is the nature of work itself. The field-service industry, like many industries, has undergone a major shift in the way work is performed and by whom. This shift began in the late 1990s and early 2000s as the trend toward outsourcing forced many high tech companies (e.g., OEMs, resellers, integrators, etc.) to consider whether owning a field service force was strategic to their businesses. As a result, a number of companies began to outsource their field service activities.

The next major shift had to do with inversion of organizational hierarchies. In the past, span of control and layers of management were a proxy for expertise in the field-service industry. In other words, the larger the company, the more layers of management – and the more organizational controls in place, the better the service was perceived to be. Companies now realize that that large outsourcing providers are not only more costly do deal with but often do not possess the right level of technical expertise to complete the work accurately and in a timely manner. To overcome these deficiencies, companies that outsource or out-task field service now prefer to cut out the “middle man” and deal directly with individual expertise (e.g., freelancers) as needed.

A more recent shift that has made freelance work possible has to do with advances in communication and collaboration technology. These technologies make it easier for companies to do business with anyone, anywhere in the world without the need for large infrastructure or supervisory personnel. The Great Recession of the late 2000s also shifted the nature of work as many laid-off workers were able to generate income for themselves by taking on freelance assignments. This in has turn led to the emergence of the “Sharing Economy” also known as the “Gig Economy” where individuals are finding personal freedom and fulfillment from engaging in freelance work made possible through Freelancer Management System (FMS) platforms.

However, many economists wonder what will happen to the Gig Economy when economic growth improves and companies need to hire full-time employees. According to the U.S. Bureau of Labor Statistics over 34% of the U.S. labor force is performing freelance and independent contracting work. However, this number is likely to reach 40% by the end of this decade.

This trend is further supported by a market research study conducted by Field Nation, a leading FMS platform provider to the field-service industry. Their study reveals five (5) critical insights about individual preferences for freelance work. First, an overwhelming majority (88%) of respondents indicated that the freelance lifestyle is a personal choice for them. Second, almost three-quarters (73%) indicated that freelancing is their primary source of income. Third, over one-half (52%) view themselves as entrepreneurs and small business owners. Fourth, 93% of the respondents are committed to their clients’ success in addition to their own. Fifth, almost all (97%) are satisfied with what they do on a day-to-day basis, and 95% are either satisfied or very satisfied with their career choice as a freelance contractor. These stylistic facts suggest that the days of individual commitment to a single employer are long gone. The freelance economy is here to stay!

To learn more, download your FREE copy  today of my whitepaper titled  “The Variable Workforce Model – An Optimal Solution for dealing with Field Service Uncertainties”.

Understanding the DNA of Reverse Logistics

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A common expression among Reverse Logistics (RL) professionals is that nothing happens until a product is returned. To be more precise, nothing gets done without a Return Material Authorization (RMA). Anyone who has experienced a situation where a product just shows up on the receiving dock without an RMA knows what I am talking about. As such, the RMA process is one of the most critical elements in the management of the Reverse Logistics (RL) Supply Chain.

The RMA can be considered the DNA of the reverse logistics process because it provides all the critical information about where the product has been and the reason for its return. This information in turn provides guidance about what should happen next to the product once it has been returned. For example, should it be tested, repaired, or destroyed? It also provides information that enables the service provider to complete financial transactions related to the returns process such as warranty entitlement, adjudication, and reimbursement.

When designed correctly, the RMA function enables a manufacturer or service provider to obtain critical information required for processing the return (e.g., reason codes) and tracking labor and material costs associated with this return process. That’s why it is important for information captured in the RMA process to be linked to other corporate information systems such as their ERP, CRM, and WMS applications. Data gathered from the RMA can be analyzed to anticipate and forecast future returns. More importantly, it can be evaluated to determine the root cause of the returns. With this root cause information in hand, manufacturers can take steps to reduce returns by designing better products or improving the service delivery process (e.g., troubleshooting, remote support, etc.). In short, capturing and analyzing data about the return process will lead to reduced operating costs, enhanced service quality, and improved corporate profits.

The RMA is more than simply a transaction; it is a process that must be coordinated strategically. Indeed, products get returned for a variety of reasons at any time during the product lifecycle. By capturing the appropriate information about why the product is being returned, manufacturers and service providers can more efficiently manage back-end processes, for example by routing the returned product to the right point in the supply chain, whether it is a depot repair facility, asset recovery provider, or liquidation vendor. By anticipating returns, service providers can also take the appropriate action to ensure they have the necessary resources in place to process the returns and support the customer in a timely manner.

In summary, manufacturers and service providers are urged to place greater emphasis on the RMA when designing business processes and information system requirements related to the reverse logistics supply chain. This perspective can have a positive impact on identifying opportunities for improvement in productivity, profitability, and customer satisfaction. End-to-end integration of the RMA process and related transactions with other corporate information systems is a critical element to achieving this outcome.