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”.

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.

Invisible Customer Service:

The Customer Must Be Reminded of How Good You Are!

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This guest blog post is from Shep Hyken. Shep is a customer experience expert and the Chief Amazement Officer of Shepard Presentations. He is a New York Times and Wall Street Journal bestselling author and has been inducted into the National Speakers Association Hall of Fame for lifetime achievement in the speaking profession. Shep works with companies and organizations who want to build loyal relationships with their customers and employees. For more articles on customer service and business go to http://www.hyken.com.

When we talk about customer service, what usually comes to mind is the experience you have when you shop in a store or eat in a restaurant, or the relationship your company has with a vendor. It’s easy to know if you are receiving good customer service – you judge it by the interaction with the salesperson or server, by the timeliness and accuracy of deliveries, or the ease of dealing with a customer support center. It’s apparent when these companies are delivering on their promises. However, there are some companies in which the service may be less visible, maybe even invisible.

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My laptop computer recently locked up. When I purchased it, I got the three-year extended warranty, and luckily, I was still within the warranty period. I called for help with my problem, and I was pleasantly surprised by the high level of customer service that I received. The wait on the phone was minimal. The customer service agent was knowledgeable. They sent replacement parts via overnight delivery. I will not hesitate in the future to purchase the expensive extended warranty for my computer. However, this got me thinking. What if I never had to call for service? I wouldn’t have experienced the excellent customer service and concern that the company offers. They would be invisible. When it came time to purchase another computer, I might have considered going with a different brand.

Another good example of invisible customer service is a health insurance company. Let’s say that you have an individual insurance plan. As long as you are in good health, the main interaction that you will have with the health insurance company is paying the scheduled premiums. You probably couldn’t say whether the company offers good customer service or not. However, if you become sick and need to take advantage of the insurance that you have been faithfully paying for, that’s when you will find out what kind of service they offer. Is it easy to file a claim? Is the claim paid quickly? The experience will tell if you made a good decision when you chose the company, but until you make a claim, you’ll never know.

Companies, however, can escape the realm of invisible customer service. I recently had the pleasure of working with AvMed, a Florida-based health insurance company. They have great concern for their members and it shows in their customer-focused practices. They don’t wait until someone files a claim to show that they care about that member’s health. They pick up the phone and call the customers. They convey information not only about how to take advantage of the services they offer, but also ways the customer can stay healthy and save money. They don’t let their customer service be invisible. Their members don’t have to wonder if they made the right choice.

There is a lesson here for any kind of business. Even if you deliver amazing customer service every day, there may be times that you need to remind your customers. Think about after the sale or between visits, appointments, etc. You want your customers to know that they made the right choice by doing business with you and to think of you the next time they are in the market for the same product or service. Figure out what you need to do to keep your customer service from becoming invisible.

 

Did you like this post? To learn more about great customer service order a copy of Shep’s new book today! Amaze Every Customer Every Time: 52 Tools for Delivering the Most Amazing Customer Service on the Planet

Variable Workforce:

The New Field Service Paradigm

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The use of third party workers has become a common practice for Field Service Organizations. A driving force behind this trend is the economics of associated with managing a large pool of labor. Maintaining a field service workforce on a full-time basis represents a short-term, fixed cost for service providers. At issue, field service demand is variable in nature and becoming increasingly more volatile. This is occurring for a number of reasons including but not limited to the shift from reactive to proactive service, improvements in the ability of companies to resolve services issues remotely, cyclical events in the global economy, and technology changes (e.g., refreshes, consolidations, and upgrades).

One of the ways to deal with the peaks and valleys in field service demand is through a Variable Workforce (VWF) model. This type of model enables a field service provider to convert short-term fixed cost into a variable expense by utilizing third party workers. There are a number of options available to companies who want to implement VFW model. These include

1. Implement Master Service Agreement (MSA): with one or more companies: Under this scenario an OEM, ISOs or VAR, collectively referred to as the client, contracts with one or more field service organizations (FSOs) to provide on-site service as needed through a Master Service Agreement (MSA).

2. Manage subcontractors on their own: Another option is for a company to build its own variable workforce model. This requires that a company hire and on-board, independent contractors either directly or through a staffing company.

3. Turn toward a “Sharing Economy” model: Companies who are willing and able to manage teams of individual workers can turn to a sharing economy model. In this scenario, a company would use an Internet platform, also known as a Freelancer Management System (FMS), to recruit, on-board, train, dispatch, manage, and pay individual contractors.
The sharing economy model offers substantial cost savings to a company who is willing to pursue this course of action. Improvements in service quality and productivity are also possible as freelance contractors are typically more engaged and motivated since their income is directly proportional to the quality of work performed and number of assignments they accept.

The Freelance Management System Defined

According to the Staffing Industry Association (SIA), an FMS is a category of Workforce Management technology that enables self-management of a contingent workforce. To be considered an FMS, the technology most include the capability to 1) match freelance workers with assignments, 2)issue work orders, and 3)process payments to freelancers.

FMS solutions are available as either Enterprise systems or SaaS based solutions. At their core, they provide functionality to initiate, manage, complete, track, and evaluate work performed by freelancers. Additionally, they may include the ability to find and recruit freelancers through a marketplace functionality as well as additional services such as insurance coverage for freelance workers and the ability to manage work though mobile communications technology.

I recently authored a whitepaper, sponsored by Field Nation, titled “The Variable Workforce Model – An Optimal Solution for dealing with Field Service Uncertainties”. It discusses how FMS is creating improved outcomes for companies involved in field service. More specifically, it measures the benefits that can be achieved through an FMS platform and defines the key characteristics of an optimal solution. To learn more, download your FREE copy today.

Why reactive service is a thing of the past?

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In this week’s blog I am sharing an article written by Sarah Nicastro. She is editor-in-chief of Field Technologies Magazine and  Field Technologies Online.  Her publication covers topics related to mobile computing, field service software, and fleet & asset management. This article, in which I was quoted, originally appeared in the August 2015 issue of Field Technologies Online.

I’m sure you’re no stranger to the IoT buzz that has taken the industry by storm the past year or so. And you’re going to keep hearing that buzz – IoT isn’t going anywhere. In fact, according to Gartner, the number of deployments of connected devices is forecasted to increase by 30% in 2015, with the total number of connected devices to reach 25 billion in 2020.

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Why the rapid growth? IoT solutions enable a shift from reactive to proactive service. Reactive service – customer calls with an issue, service provider responds – is quickly become a thing of the past. Customers are beginning to understand that they don’t need to settle for such a model. M2M and IoT-enabled proactive service, often referred to as predictive or preventative service, is becoming the new normal.

In a recent column written by Michael Blumberg titled Strategic Forces Shaping The Deployment of IoT & M2M, he points to two of the drivers of this shift: social forces and economic forces. On the social side, Blumberg says, “For service providers, it is no longer just about finding ways to reduce the time and cost associated with troubleshooting and maintenance. In order to optimize productivity and efficiency, and to facilitate innovation in a service business, you need data. While service executives have understood this for some time, end-customers now understand and appreciate that they also need access to this same data in order to optimize the operations and processes that comprise their enterprise.” So you’ve known the value of data and how it drives action and decision-making for quite some time, but your customers are now recognizing the value of data too. And this is contributing to an increase in use of IoT solutions that provide data that both your operation and your customers find great value in.
Costs Of M2M, IoT Come Down

As for the second force discussed, economic forces, the premise is simple – the cost of implementing M2M and IoT solutions has decreased rapidly in recent years. This makes the technology more attainable for a wider group of users, and as adoption continues to rise we’ll see a cycle of increased familiarity, greater adoption, and lower costs.

If you aren’t already looking at how M2M and IoT can play a part in your operation, now is the time to do so. Not only can the technology enable your organization to operate far more efficiently, but it will allow you to embrace the shift from a reactive service model to a far superior, proactive service approach.

A framework for a creating a Performance Driven Company

Two weeks ago I had the good fortune of attending a Service Industry Association Roundtable. These roundtables are held every couple of months and they are typically hosted by a member firm. This particular roundtable was held in Grand Rapids, MI and hosted by Service Express, Inc. (SEI). One of the highlights of the event was a presentation delivered by Ron Alvesteffer, SEI’s CEO.

SEI provides Data Center Hardware Maintenance and has been growing by leaps and bounds over the past ten (10) years. The company has recently been acquired by the Pamlico Capital, a Private Equity firm focused on the Lower Middle Market. Ron’s presentation offered insight into the tremendous growth the company has experienced and will continue to experience under his leadership.

It is not just their financial performance that makes them a great company. It’s the culture and values of the company that make it a great place to work. Indeed, SEI is a proud winner of the “101 Best and Brightest Companies to Work For” in West Michigan, Chicago, and Metropolitan Detroit each year since 2005. The company was also named on of the  “101 Best and Brightest companies to Work For in the Nation” in 2011 and 2012. Inc. magazine  named them to their “Inc. 5,000 List of America’s Fastest-Growing Privately Held Companies”, an honor they have held since 2007

A great deal of the company’s success is due to Ron and his management team’s ability to build a performance driven organization. This strategy has enabled the company to grow through a combination of geographic expansion and new product/service development. The management team diligently follows a process centered business model that Ron developed. The model involves managing each business function, department, and line of business like a franchise. More specifically, the model is comprised of these four (4) building blocks:

  1. Vision: Ron refers to this as his “why”. Indeed, having a strong “why” is the basis for all successful endeavors. In essence, you need to have a compelling reason why you want to achieve any goal if you are ever going to achieve it. The reason why SEI exists is to “work with employees to help them achieve their personnel, professional, and financial goals”.
  2. Core Objectives: SEI has four core objectives these are 1) employee engagement, 2) excellent customer service, 3) margin retention and growth, and 4) revenue growth. These core objectives answer the question “how”, how does SEI achieve its vision.
  3. SR5 Performance Measurement: This is a performance measurement system that SEI utilizes to track results. Although, “SR5” sounds a little complicated, it’s really quite simple. It stands for Scorecards, ROIs, and 5/15s. In case you are wondering, scorecards are used to track goal achievement at a company, department and regional level. ROI stands for responsibilities, objectives and indicators. The 5/15 is a personal development plan created by each employee. (It originally got its name from the fact that it takes five minutes to read and 15 to prepare.) The SR5 system helps SEI personnel see trends and avoid emotional reactions to movements in company performance. As a result, management and employees view their performance objectively rather than emotionally.
  4. Business Focus: As mentioned above, SEI’s business focus is on Data Center Hardware Maintenance for mission critical servers. Ron’s perspective is the business focus answers the question “what”, what is it that we do here at SEI? Ron also believes that while this question is important, it is less important than the other three building blocks mentioned above. This makes a lot of sense, don’t you think? It often doesn’t matter what a company does as long as they have clear vision, core objectives, and an effective measurement system in place.

These building blocks serve as a great framework for how to build a thriving, performance driven company with high levels of employee engagement and morale. In addition to the awards and accolades that SEI has received for being a great place to work, the company has experienced an average revenue growth rate of 20% over for the last 10 years.   Ron refers to this framework as the “SEI Way”. You can download a copy of the free e-book that explains the concepts in more detail by visiting Ron’s blog site. http://ronalvesteffer.com/culture-the-sei-way/