The 7 Habits of Low Cost Service delivery for product organisations?

by NIck Frank on February 24, 2012

These days no matter what business we are in, continuous on-going cost reduction while increasing value to the customer is the challenge most service leaders have to face every day of the week. As with most things in life there is no magic strategy. Although technology is an enabler, the most important element is to develop a culture that challenges ourselves every day to find new ways of doing things more efficiently or that offer more value. Here are potentially 7 habits you might want to review if you want to evolve in to a low cost, high value product services organisation.  I would be interested in your views;

1. Manage the Total Service Resource to reduce waste, gain efficiency & a critical mass of capability

Whether you have a direct service team or work through 3rd party providers seeing and managing the TOTAL services resource as an entity can lead to increased efficiency and improved satisfaction.

Within field based organisation this does not necessarily mean forming big teams that no longer are flexible to the needs of the customer. But by sharing information on capacity planning and available expertise can lead to improvements of up to 10%.

Call & Technical centres can find significant benefits through consolidating  small isolated local centres as one organisation. This allows for better use of technical expertise  and and provision of local language support.  It does not necessarily mean a central location(which does help) and for international coverage the savings can be up to 25%

And you use  a large number of 3rd party service providers, looking at consolidating and deepening your relationship with a few key suppliers can lead to saving up to 50% through dramatically reducing the time required to manage your providers and gaining efficiencies through greater throughput.

And ironically the spin off of consolidating expertise, can be better service to the customer as the organisations capability increases!!

 2.  Know how your products are performing and how they are being used

The quality of the product still has an enormous impact on the cost to serve. Your role as a service leader is to take responsibility and make sure that you professionally monitor product quality and feed it back into the product organisation is a structured  data driven manner. Use data to drive your colleagues towards the actual needs of your customers.

This is where remote product monitoring and remote diagnostics offer huge savings in speed of reaction, cost reduction and data for improvement.

 3. Process Excellence: first document, then improve, then automate

Key to low cost, high value processes is a focus on process excellence. And it’s not a secret that the 1st step is to document your processes. This gives you the baseline against which all those side discussions, ideas from your staff and even more formal initiatives can be discussed, tested and importantly actioned. Otherwise you will find all your efforts and the words of your team simply disappearing into thin air, never to see the light of day.

And having created a robust process, look to automate and eliminate waste.

4. Customize the front office, but standardise the back office

There is no point having great processes if your business model is fundamentally flawed.  So design your services processes to be modular in nature to allow easy configuration to the needs of the customer, but benefit from volume generated efficiencies created in the back office

 5. Continually manage and balance your KPI’s

By creating the right balance of KPI’s that cover the key aspects of your service operation and customer experience from different angles. It’s no accident that the mantra ‘if you can’t measure it, you can’t manage it’ has come into the the business vocabulary. But remember another well worn mantra ‘measures drive behaviour’ so take your time to get it right and continually assess the results.

6.    As well as carrots, make sure you have a stick

We all know that not all service costs are within the control of the service organisation, for example how many of us have held our head believing tat sales have set to high an expectations. Don’t become part of the blame game. Get involved with the Sales team and make sure they understand the value that you service team brings directly to their customers. Empower yourself and your people.

But on the flip side make sure you design into your way of working the stick. Charge back of warranty costs are a good example of how a manufacturing organisations must feel the pain of non delivery and take responsibility for their deliverables. In the same way ensuring the sales force in their gross margin calculation take account of those ‘little incidental services’ such as Product Start Up that somehow get  given away to clinch the deal.

7. Don’t forget ‘The People’

It’s people who deliver the service either directly at touch points or indirectly through managing the back-office. Their motivation and expertise needs to be managed. Learn from excellent performers to improve and motivate, and manage out of the business those that can not deliver. Low cost delivery does not necessarily mean low cost people, but it does mean we all have to be smarter.

These are a few of the many things you can do?


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