Reducing the Cost of Service

  • April 23, 2015
  • Feature

By David Parrish,  SAP

It has been said that customer service is a dying art. In today’s world of self-service, programmed responses, it’s natural to question the value of service departments, especially when it can be one of the most expensive line items in a company’s operational budget.  As the business landscape becomes more competitive, service leaders must cut costs without affecting quality. Fortunately, what seemed like an impossible mission just a few years ago, is becoming a reality thanks to recent technology innovations.  

A Hands-On Situation

Most service organizations or departments rely on highly manual systems and processes for their operations. From scheduling field technicians to filing warranty claims, the entire service value chain usually is not integrated or standardized. As a result, these hands-on processes lead to a number of problems including breached service-level agreements, lengthy issue resolutions, and difficulty tracking warranty activity and recovering costs from suppliers. Higher costs for subpar services is often the result.

Target Areas for Optimization

Every time a process or procedure can be performed faster or with more accuracy it has an immediate, positive impact on a company’s bottom line. Technology solutions specifically developed for automating and streamlining service management activities can reduce costs greatly and maintain high customer satisfaction.  Three key areas being dramatically improved by newly introduced technologies are service contract management; field service management; and complaints, returns and depot repair management.

Service Contract Management Service contracts represent long-term agreements with customers for entitled services, guaranteed service levels, and financial terms. Accurate and timely service contract management enables companies to establish and maintain relationships with customers, while generating higher recurring service revenue. Using cloud-based, CRM software operating on high-speed platforms, companies are able to streamline the management of service contracts and warranties. Examples of processes made easier, faster or more accurate are:

  • Checking and verifying entitlements so that customers receive the correct services under warranty or individual contracts.
  • Enforcing service level agreements to schedule and plan preventive services within the agreed upon timeframe and price.
  • Renewing or extending contracts in a simplified and guided way.
  • Implementing industry standards and best practices to improve the productivity of service technicians.

Field Service Management

Field service management centers on optimizing field engineers’ schedules to maintain compliance with SLAs and fully utilize skills and availability. Boosting efficiency in field service operations can significantly reduce a normally high expense area.  Operations currently seeing improvements through technology include:

  • Optimizing workforce scheduling to meet SLAs based on skills, service commients, location, and customer preferences.
  • Arming field engineers with mobile apps to provide relevant information at the time and place it is needed, thereby increasing productivity and data quality.
  • Providing 3D graphics of complex parts on mobile devices to help complete jobs fast, with best quality, on the first visit
  • Managing the provision of one-off services and the delivery of service parts.

Incorporating financial management processes to support both fixed-price and resource-based charges; enable accurate, timely billing of services; and tracking of service revenue and costs.

Speeding up communication between the back office and the field, which increases the first-time fix rate and decreases inventory carrying cost and wasted travel.

Complaints, Returns and Depot Repair Management

Returns management includes monitoring return material authorizations and integrating logistical and financial processes like goods receipt, warehouse inspection, or refund determination. Automating the depot repair process helps control customer claims and validates entitlements against suppliers. To this end, advanced technology systems are shortening the return cycle and reducing costs by:

  • Finding and resolving product defects early on in order to address customer complaints quickly and reduce the number of returns.
  • Simplifying the process of handling customer complaints.
  • Reducing unnecessary returns and claims by aligning front- and back-office processes with the rest of the business operations to enable accurate returns diagnosis and defects reporting to product development and manufacturing teams.
  • Enhancing visibility into the repair pipeline to improve workforce productivity with in-house repair planning and execution.
  • Controlling costs with integrated entitlement and financial management so refunds are giving only to entitled customers and reimbursed are secured from suppliers whenever appropriate.

Integrating service operations with other functional areas, such as billing and accounting, provides greater transparency into the business. With this insight, decision makers can take data-based, relevant actions to improve financial performance such as selling new service contracts or developing innovative new service offerings. It also provides a deeper understanding of where time and effort is being spent to eliminate revenue leakage or unprofitable work. Overall, automating operations with technology improves an organization’s ability to deliver the proactive, real-time service necessary to meet high customer expectations and sustain long-term profitability.

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