What is Field Service Management and Why Should You Care?

This week’s post were are pleased to share a mini info-graphic based on an article by Danny Wong from Salesforce.com. You can find the companion article here.


What is Field Service Management and Why Should You Care Infographic

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Field Service Staffing — The Variable Workforce and FMS

Field Service -- FMS

The unemployment rate, outsourcing, part time employees, changes in the workforce; these are all topics that have been in the news for several years. Is it just that there are less jobs or fewer full time positions? Is the economy really in bad shape? Or is there a staffing trend that we need to examine.  Full time employment means a guarantee of wages, benefits, and paying the employee even when there is a lull in the business.  For companies in the Field Service Industry there may be peaks and valleys in workflow and need for field service personnel. And while so many functions can be performed on a remote basis, sometimes someone just has to be there.

Enter the Variable Workforce, offering highly skilled, well trained, specialized Field Service Engineers who are available on an as needed or project basis. These individuals are normally highly motivated as they essentially run their own small business and best of all; they work this way by choice.

Now we have people to hire.  How do we manage that? Freelance Management Systems (FMS) offer online cloud based systems allowing companies looking for qualified workers, including Field Service Engineers, to find them quickly and easily.  FMS provides companies with the opportunity to achieve significant cost savings over time and the ability to accelerate strategic or organic expansion resulting in new clients, new service offerings, and/or new sales territories.

So what is the actual experience of companies using a Variable Workforce and FMS platforms? Have they been able to achieve these benefits or is it just hype?

A survey seemed to me to be the best way to get answers. So we designed an online survey for the Field Service Industry to ask professionals who handle field service staffing or make decisions about field service staffing requirements, for companies with field service functions for technology equipment they sell and/or service.

We wanted to examine the benefits of Variable Workforce models, particularly FMS. In doing so, we could assess concerns regarding using FMS, the motivators for using FMS and the benefits that have been seen by using it.

Over 200 Third Party Maintainers (TPM)/ Independent Service Organizations (ISO), Original Equipment Manufacturers (OEM), Value Added Resellers, Systems Integrators, and Self-Maintainers participated.  The companies range in size from over $500 million in annual revenue to less than $50 million varying in size from those who manage less than 100 field service events per month up to more than 1000. These field service events included emergencies, installations, inspections, and preventative maintenance or calibration. And the types of technology supported included Information Technology, Network Connectivity, Printers, Point of Sale, Telecommunications, and more. The companies also varied on how a Field Service Business is run – as a cost center, profit center, strategic line of business, or revenue contribution center.

Over three-fourths (77%) were currently using some type of Variable Workforce Model.  The survey respondents were two-thirds TPM/ISOs or OEMs.

Most participants (81%) use the Variable Workforce for project based work.

We found that the top three reasons that companies made the move to a Variable Workforce were:

  • The ability to be agile and scale the workforce based on customer demands.
  • Over half agreed that “We didn’t have enough work in selected geographies to justify hiring a fulltime Field Service Engineer.”
  • Almost all said that controlling labor costs was a significant motivator.

One of the most important results was that the Variable Workforce users support more types of technology on average than non-users.  That is, those companies who use Variable Workforce are able to support 4 types of technology versus only 1.8 types of technology for non-users.

Nearly two-thirds of those utilizing the Variable Workforce use a Freelance Management System (FMS) to manage the staffing.  Of these FMS users, almost all have been using it for at least one year and 60% for three years or more — another sign that something must be working.

FMS users tend to support more types of technology as well. On average, companies who use FMS support 4.3 types of technology versus only 2.8 types for non-users.

Ultimately the most compelling reason to make the switch was that the FMS platform is agile, giving companies the ability to scale up quickly to meet seasonal, cyclical and short term demands. In fact, 71% of users found this to be the case.  FMS adopters have been able to gain more business and have been able to increase their field service work. They have experienced such success that 76% of them reported an increased demand for FMS just in this past year, most by at least 15%.

The survey results certainly indicate that usage of Freelance Management Systems for the Variable Workforce in Field Service will continue to increase over the next year as well.

Stay tuned for future posts where I will discuss what our survey revealed about the Key Performance Indicators and how use of Variable Workforce and specifically FMS impacts the Field Service Industry.

Improving First-Time Fix Rates

A Field Service Manager’s Guide

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In my last blog, I discussed the importance and impact of high First-Time Fix rates for the field service industry. (If you have not already read it, catch up here.)  Knowing that a high First-Time Fix rate leads to greater customer satisfaction, higher renewal rates, and lower costs for your company encourages management teams to want to improve this Key Performance Indicator (KPI). And making those changes does not have to be difficult or costly. On the contrary, making this KPI a priority will increase profitability and can make your organization flow more smoothly.

Here are 5 keys to increasing your First-Time Fix Rate:

  • Triage
  • Training
  • Dynamic Scheduling
  • Parts Planning
  • Knowledge Tools

Call Triage:  This is where it all starts.  Your customer calls in with a problem. The team on the front line needs to have the right technology and systems in place so that when a call comes in they can screen the call, understand the issue, and understand what skills and which parts may be needed to resolve the issue. Some calls may be able to be resolved over the phone if you have given the Call Triage Center the technology and systems to evaluate the call properly then no dispatch is necessary, saving time and money for you and your customer. If this is not the case, knowing as much as possible up front will help in the decision making process for the next step – dispatching the correct Field Service Engineer (FSE) with the right skills and equipment to have the highest chance of fixing the problem the first time. Is there a FSE in the physical area? Does that technician have the skills and parts to repair the problem? If not how can the FSE get the needed parts? And how do you achieve this in the time frame you have promised to your customer?  Your call center needs to know who is available and what skill set and equipment they have to make the best decisions for both your customer and your field service organization.  By conducting upfront call triage, you can provide the FSEs with the information they need to know in order to resolve the issue right the first time. Having the right systems and technology will help facilitate this process.

Training:  While it may seem like an obvious thing, you must have highly trained and well qualified FSEs available for dispatch.  Make the investment in both hiring and training your existing team of FSEs.  The more skills they each possess, the greater chance that the one closest to your customer at the time needed will be able to make the First-Time Fix happen.   How do you make this happen? First, have consistent and periodic training. Second, training should take place both in the classroom and in the field. Third have continued skill assessment and evaluation, that is evaluate your technicians and see how well they perform, then go back and do more training in the areas needed. In summary train, let them do, evaluate, and train more.

Dynamic scheduling: This means using advanced technology to identify and assign the best technician who has the skills, is available, can get there in time frame promised to customer and has or can get the required parts. Again, it may seem obvious, but if the FSE does not have the right part to fix the problem then a second trip to the customer is a given.

Parts: Parts management must be a part of any profitable Field Service Strategy.  What are the most commonly needed parts for the most common issues your FSEs encounter? What are the parts that have the highest failure rate? How do you make decisions about what each FSE carries with them for every call? And what is the availability for the parts that are not included in those most common service requests?  All of these decisions impact your organization’s First-Time Fix rate.

The fifth aspect of creating a high First-Time Fix rate is enabling your technicians to be more efficient to troubleshoot while in the field. There are several ways to achieve this:

  1. Give FSEs access to mobility solutions to access knowledge bases while in the field.
  2. Provide access to a Telephone Technical Support center they can call while in the field.
  3. Implement collaboration tools that allows FSEs to use their mobile devices to query and collaborate with other technicians who may have faced the problem and know how to solve it.
  4. Rely on augmented reality technology so that your technician can learn in real time while in the field what they need to do to solve the problem.

Investing in people, technology and processes make a high First-Time Fix rate achievable. By utilizing time and resources to have a well-run Triage Center; Train and re-train technicians; use Dynamic Scheduling to make the process efficient; implement effective parts management; and giving your FSEs the tools to be successful while at your customer, your First-Time Fix Rate will enhance the profitability of your Field Service Organization.

Tell us what has worked for you?

Or if you are looking for answers call for a free consultation.

First-Time Fix Rate: The DNA of Field Service

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First-Time Fix is one of the most frequently measured key performance indicators (KPI) used by Field Service Organizations (FSOs).   It is a very powerful metric to track.  This KPI measures the percentage of times field service engineers (FSEs) are dispatched to a customer site and have the skills and parts with them to resolve the issue on the first visit.  It is a powerful metric because it provides an indication of the FSO’s financial and operational health.  In this sense, it is like the DNA of field service.

Why is this so?  First, FTF is a measure of service quality and customer satisfaction.  Resolving an issue the first time demonstrates to the customer that they are dealing with a quality organization.  As a result, FSOs that deliver quality service will typically have higher customer satisfaction ratings than those that do not.   Second, FTF impacts revenue because customers are less likely to renew service contracts or purchase additional services if they are unhappy with the quality of service they are already receiving.

Third, FTF provides a measurement of field service productivity.  FSOs that experience high FTF are by definition more productive.  This is because they are able to resolve more service calls per day.   If FSEs are more productive, the FSO essentially can do more with less. In other words, the FSO does not have to hire as many new FSEs to handle additional work if service demand increases.   Assuming the additional work brings with it additional revenue, revenue per FSE also increases.   As this metric improves, so do gross margins and operating income.

Finally, companies with a high FTF experience lower operating costs than those with a low FTF. This is because if a call is not completed on the first visit, a second dispatch is required. Sometimes the call is not completed on the first visit due to lack of a spare part, in which case the FSE must travel to pick up the part or return when the part is delivered to the customer by courier.  In a recent survey conducted by our firm, we found that Best-in-Class companies experience an FTF rate of 98.3% compared to the industry average of 77.8%.   With service calls ranging in cost from $150 to $1,000 per event, the expenses for making repeat visits can be astronomical.  Assume, for example, an average cost per call of $150 and total service visits of 100, 000 per year.  If 22.2% of these calls are due to repeat visits then the FSO is incurring an additional $3.3M in expenses from its FTF of 77.8%.

There are of course a number of strategies and tactics an FSO can pursue to improve FTF.  First, FSOs can improve FSE skill sets through better training.   Second, they can perform better screening and diagnosis at the time of initial request so that when an FSE is dispatched he/she understands both the nature of the problem and the resources (i.e., skills, parts, etc.) needed to resolve the issue. Third, they can utilize intelligent scheduling to ensure the availability of both skilled FSEs and correct parts.   Fourth, they can provide FSEs with access to better knowledge and information in the field through knowledge tools or access to technical support personnel.

We’d love to learn about strategies your company has pursued to improve FTF.  Please share them with us in the comment section of this post.  If you need help building a business case to improve FTF contact us today for a free consultation.

The New Field Service Workforce

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There has been a dramatic shift over the past 5 to 10 years in the way work is performed in the U.S. and Europe as more and more workers join the gig economy.  By definition, a gig economy is an environment where temporary positions are common and organizations contract with independent workers for short-term engagements.  In other words, people are increasingly taking on freelance work.

According to the US Bureau of Labor Statistics, 53 million Americans are currently working as freelancers.  By 2020, 50% of the American workforce will be engaged in freelance activity. Furthermore, a study published by the Freelancers Union and Elance O-Desk indicates that freelance work contributes $750 billion annually to the US economy.

The gig economy has played a significant role within the Field Service Industry.  It is driven by the trend of many companies to implement variable workforce (VWF) models. This is a business model in which a field service organization (FSO) relies on a contingent workforce to manage peaks and valleys in labor demand.  Earlier this year, Blumberg Advisory conducted an extensive research study to examine the impact of VWF models on the Field Service Industry. The study, sponsored by Field Nation, revealed  that 8 out of 10 FSOs have implemented VWF models to manage over one-half (53%) of their workforces.

One of the ways that FSOs implement the VWF model is through a Freelancer Management System (FMS).  This is an integrated software platform that includes functionality for Vendor Management System (VMS), Human Capital Management System (HCMS), Service Ticketing System, on-line recruitment tools, and reporting & analytics. Approximately two-thirds of survey respondents use this type of solution to manage their contingent labor pool of field technicians.

The single biggest benefit of using an FMS, as reported by 70% of survey respondents, is scalability.  In other words, the ability to scale the workforce up or down based on service demands.   A majority of respondents also perceive access to a vibrant marketplace of freelance technicians (61%), the flexibility that an FMS has in managing W2 and 1099 employees (56%), and lower cost of overhead (54%) that results from using an FMS, among the top benefits.  Just under half of the respondents (46%) viewed lower direct labor cost as a benefit of using an FMS platform.

In addition to these benefits, FMS platforms have a measurable impact on field service financial and operating performance.  Indeed, companies that use FMS platforms report having observed a 6% or more improvement in field service key performance indicators (KPIs) such as field service productivity (i.e., # of visits per day), labor utilization rates, SLA compliance, recurring revenue, and gross margins.

Obviously, the gig economy has had a positive impact on FSOs who rely on the VWF model and FMS platforms.  However, many opponents of the gig economy believe that freelancing models take advantage of workers and therefore are bad for individuals.  The facts point to the contrary. In 2015, Field Nation, a leading FMS platform provider to the field service industry, conducted a survey among freelance workers to understand their attitudes and perceptions of freelance work.  An overwhelming majority indicated that the freelance lifestyle is both a personnel choice (88%) and their primary source of income (73%).  Almost all the respondents were satisfied with the work they do (97%) and the career choice they had made (95%).

These findings suggest that the nature of work within the Field Service Industry has changed for good. The days of individual commitment to a single employer and vice versa are long gone.  Freelancing is not a passing fad within Field Service .  Furthermore, Freelancer Management System (FMS) platforms make it possible for FSOs to achieve positive, measurable results from implementing a Variable Workforce Model. Clearly, the gig economy is here to stay.

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What Do Pokémon Go and Service Lifecycle Management Have in Common?

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Augmented Reality (AR) became a physical reality earlier this month when Nintendo launched its Pokémon Go application. This is the first example of a consumer based, augmented reality application that can be downloaded free on any Android or iOS device.  According to Vox Examiner, “Pokémon Go is a game that uses your phone’s GPS and clock to detect where and when you are in the game and make Pokémon “appear” around you (on your phone screen) so you can go and catch them. As you move around, different and more types of Pokémon will appear depending on where you are and what time it is. The idea is to encourage you to travel around the real world to catch Pokémon in the game.”

Many analysts believed that consumer applications for AR would not hit the market until 2017.   Nintendo was ahead of schedule.  Pokémon is taking the world by storm and fueling the market for  AR applications, a market that Digi-Capital reports will reach $90 billion by 2020.  Goldman Sachs estimates that 60% of the AR market will be driven by consumer applications, with the remaining 40% of the market attributable to enterprise usage.

In case you have not been paying attending to technology trends, AR provides a live direct or indirect view of a physical, real-world environment and then augments (or supplements) this view with computer-generated sensory input such as sound, video, graphics or GPS data.  The technology functions by enhancing one’s current perception of reality.  AR improves  users’ experience by enabling them to interact and learn from whatever they are observing.

Prior to the launch of Pokémon Go, AR applications where limited to the enterprise market.  I saw an example of a real-world-use case for AR at PTC’s LiveWorx ’16 last month in Boston.  At this conference and exhibition, PTC provided a proof of concept of how AR can be utilized within the context of Service Lifecycle Management.  In conjunction with their customer FlowServe, a leading manufacturer of pump and valves for process industries, PTC demonstrated an integrated solution which provides users with a better experience when it comes to operating, maintaining, and managing centrifugal pumps.  Sensors on the pump identify when an anomaly is detected.  Using AR, a virtual representation of the machine is placed on top of the device to expose the root cause of the problem.  AR is then utilized to identify the exact steps that need to be taken to resolve the problem.

By implementing AR solutions, companies can expect to realize significant improvements in key performance indicators related to Service Lifecycle Management.  For example, AR can help equipment operators anticipate and/or avoid machine failures and thus increase equipment uptime.  AR can also facilitate repair processes, thereby reducing both repair time and downtime while improving first time fix.  In addition, AR can improve the learning curve of novice field technicians, enabling them to become more proficient in diagnosing and resolving problems.  Furthermore, the contextual knowledge that is made available through AR enables equipment owners to make smarter decisions about operating the equipment, which  in turn can help extend the equipment’s life.

These results are only possible if field service technicians embrace AR and actively utilize it.  How likely are technicians to embrace this technology? This of course is the big question on people’s mind.  One scenario is that AR adoption will be very high, so high that technicians will become dependent on it.  The implication is that technicians will lose their domain expertise and be unable to resolve problems without it.  This could pose a challenge if for some reason the AR interface is not working properly and the machine still has a problem that requires resolution.  This outcome can be avoided through ongoing education, training, and skill-assessment drills.

A more likely scenario is that adoption rates will occur gradually.  Although technicians may embrace the use of AR in consumer applications, they may have some resistance to using it in a technical environment.  This is because AR requires technicians to modify their workflow and perceptions of themselves as problem solvers.  Technicians have been conditioned to rely on their own experience, intuition, and “tribal knowledge” to solve problems.  AR changes that basic premise.  Technicians will have to remember to activate AR applications when they are in the field and rely on the information that is presented to them to complete the task at hand. They’ll also need to become proficient at analyzing and acting upon the information they observe.  These activities are not second nature and may take some getting used to for veteran technicians because it represents a different way of working and a challenge to their conventional way of thinking.  Companies that want to leverage the value of AR can overcome these challenges by managing technicians’ performance against key performance indicators (KPIs).  They can observe who on their team is using AR and evaluate the impact on performance. They can in turn incentivize and reward good performance as well as identify who needs more training and coaching on the use of AR.

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3D Printing and The Digitization Of Field Service

3D Printing

This blog post has been reprinted with the permission of Field Technologies Online.

3D printing has received a great deal of attention by the media in recent months as this technology is rapidly being adopted in a broad array of market segments. Also known as additive layer manufacturing (ALM), 3D printing creates items using computer-aided design (CAD) and then builds them by adding thin layers of powder, melted plastic, aluminum, or other materials on top of each other. 3D printing requires fewer traditional raw materials and produces up to 90 percent less waste then traditional manufacturing. As a result, 3D printing is less costly. Furthermore, 3D printing enables companies to compress the supply chain and cycle time associated with bringing products to market.

The Role Of 3D Printing In Field Service
Indeed, 3D printing is a hot market. According to Canalys Research, the global market for 3D printers is estimated to reach $20.2 billion by 2019. This represents a sixfold increase from 2014 when the market was only $3.3 billion. Fueling this growth is the fact that 3D printers are becoming more affordable and mainstream. Given this trend, it is no wonder that the field service industry is quickly developing use cases for this technology. One example is Siemens, which uses 3D printing to make replacement parts for gas turbines. Rather than waiting weeks for an ordered spare part to arrive, Siemens can print the part and ship same day. As a result, Siemens has lowered repair time by 90 percent, which means less downtime per customer when it comes to gas turbines.

Another use case that has been proposed involves equipping service vans with 3D printers, permitting field engineers to print replacement parts on demand. This may not be practical or feasible. Many companies are moving toward variable workforce models and cutting back on company-owned vehicles. Even though 3D printing is faster than traditional manufacturing, it still requires a lot of time to print certain types of parts. This means that service calls would be extended, leading to longer customer downtime and lower productivity for the field service organization (FSO). 3D printing is also not a one-size-fits-all solution and can’t print complex parts. 3D printers vary according to the types of additive manufacturing methods employed, the types of materials utilized, and the size of the product manufactured. Unless all replacement parts have the same specifications, an FSO would need to install multiple printers in each van, which would add to the balance sheet and overhead expense structure of FSOs.

Despite these shortcomings, the concept of pushing the 3D printing closer to the customer and shortening the supply chain is very compelling. To capitalize on this idea, UPS has launched a full-scale, on-demand 3D printing manufacturing network. This network will leverage UPS’ existing global logistics network by embedding the On-Demand Production Platform and 3D Printing Factory from Fast Radius in 60 of UPS’ U.S.-based The UPS Store locations. UPS will also partner with SAP to build an end-to-end offering that marries SAP’s supply chain software with UPS’ on-demand manufacturing and global logistics network. This will simplify the production process from parts digitization and certification, order-to-manufacturing, and delivery. Now UPS’ customers can manufacture parts in the quantity they need, when they need them, and where they need them.

One of the most fascinating aspects of this solution is that instead of trying to force innovation (i.e., 3D printing) into our traditional way of thinking about spare parts management (i.e., in-house parts networks), UPS has turned service parts logistics into an on-demand economy business a la Uber. Under this model, the value for the FSO is not in the physical assets it manages (e.g., parts, 3D printers), but in the digital assets (e.g., designs, drawings, etc.) it owns. Eventually, developments in nanotechnology will enable 3D printing of all types of parts, even complex ones like microprocessors and capacitors. This creates the potential for FSOs to transform themselves into asset-light businesses. As a result they can deliver a better return on investment, lower profit volatility, greater flexibility, and higher scalability, things that weren’t possible a few years ago. UPS is of course an early entrant to the on-demand market for 3D printing. Look for more companies to offer similar solutions in the near future.

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Big Data & Analytics – A Transformational Journey

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Last month I had the good fortune to attend the Reverse Logistics Sustainability Council (RLSC) and Warranty Chain Management (WCM) conferences.   Big Data & Analytics was a topic that gained much prominence at both of these conferences.  Indeed, this is a subject that is gaining much attention in business and academic circles these days.  Interestingly, there is a general consensus among academics and industry thought leaders that Big Data Analytics is one of the most misunderstood and misused terms in the business world.  For some business professionals, the term analytics applies specifically to performance metrics, for others it has to do with unstructured data sets and data lakes, while still others think it relates to predicting the future.

Big Data refers to the volume, velocity, and variety of data that a company has at their disposal. Analytics applies to the discovery, interpretation, and communication of meaningful patterns in data.  The truth is that there are actually four (4) different types of Big Data Analytics that firms can rely on to make business decisions.

  • Descriptive Analytics: This type of Analytics answers the question “What is happening?”  In a field service organization (FSO) this may be as simple as KPIs like SLA compliance or First Time Fix rate.  The exact measurement tells an FSO how well it is doing when it comes to fixing problems right the first time and meeting customer obligations for response time.
  • Diagnostic Analytics: Understanding what is happening is important, but it is even more important to understand why something is happening.  This is how managers and executives can identify and resolve problems before they get out of hand. Diagnostic Analytics provides this level of insight, for example by pin-pointing why First Time Fix Rate is low.  Maybe it’s because the company is making poor decisions about which Field Engineers (FEs) are dispatched to the customers’ sites.  Or, perhaps selected Field Engineers do not have access to the right parts when they arrive on site and must return for a second visit.
  • Predictive Analytics: Ok, so now we know why something is happening. Wouldn’t it also be good to know what is likely to happen next?  Predictive Analytics provides this level of insight. In other words, it provides a forecast about what may happen if a company continues to experience a low first time fix rate.  For example, it could show the specific impact on customer satisfaction or the measurable effect on service costs and/or gross margins.   In this case, Predictive Analytics helps a company understand with a high level of statistical confidence how long it may continue to maintain the status quo before financial problems may arise.
  • Prescriptive Analytics: The final component of analytics is Prescriptive A This level of information helps a company understand at a granular level of certainty exactly what it should do to resolve a current situation and avoid future problems.  For example, Prescriptive Analytics may reveal that a company must ensure the field engineer has the right parts on hand prior to being dispatched to arriving at the customer site.  The Analytics can show which parts must be available and where they should be located.

In summary, Analytics takes the guesswork out of decision-making.  Instead of relying on intuition or prior experience, service executives can make sound business decisions based on objective analysis of data.  As a result, the probability of making the right decision increases.   Relying on Analytics to drive business decisions involves a transformational journey.  As innovative as it seems, a company cannot just start using Predictive or Prescriptive Analytics. It must first become proficient with Descriptive Analytics before it can leverage the power of more advanced analytic models.    This journey is not just about the data.  Many managers mistakenly believe that they must have enough of the right data to make Analytics work.  The truth is that we all have a wealth of data at our disposal.  Our challenge is finding the tools and technology to process the data, making Analytics a winning business proposition.  This begs the question: does your service organization have an optimal system in place to harness the power of Analytics?  If you are not certain, it may be time to conduct an audit and assessment of your infrastructure.  To learn more, schedule a free consultation today.

Strategies for Reducing Warranty Costs

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Warranty obligations represent both an expense and a liability to Original Equipment Manufacturers (OEMs). As a result, anything that an OEM can do to minimize warranty expenses and liabilities will have a significant impact on the balance sheet and bottom line. In the high-tech industry, warranty coverage often includes repairing defective products as opposed to crediting or replacing them. Warranties of this nature involve three (3) cost components: 1) Warranty Terms & Conditions, 2) Service Delivery, and 3) Product Reliability and Maintainability.

Service Delivery represents the largest of these three components and comprises approximately two-thirds of warranty costs. Approximately 55% of service delivery costs are attributed to repair activities. The remaining 45% of costs are evenly distributed between parts, logistics, and overhead (e.g., customer service, IT, etc.).

Among the three (3) different categories of warranty costs, service¬–delivery costs are the most difficult to manage and improve. By comparison, costs associated with warranty terms and conditions and product reliability and maintainability are easier to manage. OEMs can reduce warranty expense and liabilities by adjusting terms and conditions to make them more favorable from a cost-burden perspective. OEMs can also design and engineer better products thus reducing product reliability and maintainability costs. In addition, the time frame and investment required to plan and implement these types of improvements are smaller when compared to service delivery. On the other hand, these improvements may have a limited life span. In other words, an OEM needs to revisit terms and conditions as well as product reliability and maintainability issues with every new product release.

In contrast, a significant amount of time and investment is required to improve costs associated with service delivery. For example, it may take months or years of planning and hundreds of thousands of dollars of investment to realize service-delivery cost savings. However, the improvements are sustainable over a longer period of time because they don’t just affect costs associated with one-time product launches. Instead, they benefit subsequent product launches over a multi-year period.

The reason it takes more time to implement and greater investment to achieve cost savings in the area of service delivery is because it typically requires improvements in processes, infrastructure, and people (i.e., training). Examples of the types of strategies for reducing service delivery costs include but are not limited to:
Automating warranty claims-management processes to reduce warranty processing costs
Improving call management procedures to validate entitlement, troubleshoot and diagnose calls remotely, and avoid costly field service visits
Implementing dynamic scheduling software to improve field-engineer productivity and reduce travel costs
Adopting a Variable Workforce (VWF) model to lower field-service and associated overhead labor costs
Utilizing knowledge-management tools to improve resolution times, reduce No Fault Found rates, increase first time fix rate, and improve labor efficiency
Implementing advanced planning and forecasting tools to optimize spare parts stock levels and reduce inventory costs
Making it easier for field engineers to identify, locate and order spare parts thereby improving service efficiency and avoiding repeat calls due to lack of parts

In summary, the challenges associated with reducing service-delivery costs should not prevent a company from making the necessary systemic and procedural improvements since the gains in cost savings, service productivity, operating efficiency, and customer experience can be significant.

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”.