News: Articles
Another Look at Optimization
By
Michael R. Blumberg
In a survey of 120 high-tech service organizations
conducted approximately one year ago, we found that nearly all
of the respondents surveyed indicated that service optimization
is important to their organization. In fact, approximately three
quarters believe that service optimization is extremely important.
However, a majority of the constituency surveyed for this study
focuses on only a limited number of optimization goals, such
as maximizing service profitability, customer satisfaction,
or service revenue.
These goals represent very general business objectives
and focus primarily on external measures of performance. They
also tend to be easy to measure through financial reports and
customer satisfaction surveys. A smaller percentage of respondents
surveyed indicated that they have more specific optimization
goals for internal operating performance measures, such as field
engineer utilization, inventory investment levels, logistics
fill rates, or response time. In contrast, these internal performance
parameters are more difficult to measure unless integrated systems
are in place down to and including the field level. Our experience
suggests that firms may not track these measures because they
simply lack the systems, mechanisms, and/or knowledge to do
so effectively and consistently.
We believe a service organization can only reach
its optimization objectives through a commitment to both internal
and external performance measures and the infrastructure and
systems to support and control them. Achieving high levels of
service productivity and efficiency is often part of most service
optimization strategies. To that end, “best-in-class”
performance, defined by exceeding a higher level of efficiency
and productivity than “best general competitor,”
represents the ultimate outcome of a service optimization program.
This can be measured either by the firm itself or by independent
comparison and evaluation.
It is interesting to note that only one-third
of the respondents surveyed rate their service organization
as “best in class.” This result corresponds very
closely to the number of respondents that have optimization
goals for both internal and external performance measures. The
majority of respondents have found that process improvements
along with education and training of staff on these improvements
are the most effective mechanisms for achieving “best-in-class”
status. Many respondents do not perceive the deployment of basic
service management systems or advanced technology to be effective
in achieving “best-in-class” performance. However,
a significant number of respondents did validate that systems
and technology, implemented in conjunction with process improvements
and training, is indeed very effective in achieving their overall
optimization goals.
These findings validate the view within the industry
that technology has the greatest impact on organizational effectiveness
if it is implemented in conjunction with strong management focus
on the overall service business model (including revenue), process
improvements, and training of people.
While a majority of respondents have implemented
basic service management systems, almost half of the firms surveyed
have not yet implemented advanced technology for optimization,
such as diagnostics, optimized scheduling, and spare parts optimization
software. Those firms who have implemented advanced optimization
technology have found it to be very effective in maintaining
high levels of service quality and effectiveness, reporting
improvements in performance by as much as 20% or more. This
is very consistent with prior observations by our firm. It also
supports vendor claims with respect to the impact of their technology
on performance. By and large, the survey results suggest that
those companies who have implemented optimization technology
demonstrate better performance in key areas than those who have
not.
In general, we believe that a commitment to tracking
a broad array of performance metrics, benchmarking performance
against other firms in the industry, and continuously striving
for improvement in performance are the keys to obtaining best-in-class
status. Tying performance metrics into service level agreements
enables a service organization to realize and empower the value
of this status in the market and provides the incentive for
making continued gains in productivity and efficiency.
In summary, we believe the results of our optimization
research effort validate that optimization of field service
processes is achievable and the payoff is quite significant.
Despite the benefits of optimization, managers and executives
responsible for field service can face many obstacles and challenges
in achieving their optimization goals. These challenges can
stem from a lack of buy-in, at all levels of the organization,
and/or a lack of knowledge within the organization about how
to achieve these goals.
Furthermore, a service executive can become very
overwhelmed if he or she does not possess the knowledge to make
change or have the desire, experience, or capabilities of being
a change agent, in terms of both internal and external (i.e.,
market improvements and staffing). We strongly encourage service
executives to seek the help of experienced staff or outside
experts if this is the case.
© Copyright 2004 D.F. Blumberg Associates,
Inc.
___________________________________________________________
Michael R. Blumberg, MBA, CMC, an authority on marketing
research/strategy formulation in the high-technology service
market, is president of D.F. Blumberg & Associates, Inc,
a Fort Washington, PA based management consulting firm that
provides client services in strategic planning, market research,
productivity improvement, and management systems design and
implementation. You may reach him at michaelb@dfba.com
or (215) 643-9060.
|
