Tuesday - January 6, 2009

Running Your Reverse Logistics Operations at the 'Velocity of Business' - Part 1

by Zack Bergreen, Astea International

Reverse Logistics Magazine, May/June 2008

Service Lifecycle Management (SLM), is an integral part of reverse logistics and while there are many areas of functionality that today's SLM solutions can support, only the "best-in-class" offerings provide users with all of the tools they need to increase their “velocity of business.” Part 1 of this two-part article outlines the key components of a “best-in-class” SLM solution, and provides detailed descriptions of the features and benefits of the first three major components. Part 2, which will appear in the July/August 2008 issue of Reverse Logistics Magazine, will focus on the remaining three components, and summarize how all six work together toward the common goal of meeting—and exceeding—the total reverse logistics needs and requirements of your customers.

The gradient of success in today’s global services economy is based to a large extent on our respective abilities to make certain that all of the tools and resources we have at our disposal are focused squarely on increasing the “velocity of business.” Regardless of which segments we serve, or however large or small our geographic coverage areas are, the market expects us to support our customers’ total product and services requirements better and faster than ever before. The irony is that any service organization can benefit from adopting an increased “velocity of business,” not just the large companies or the market leaders. All that’s required is access to the same tools and resources that the leaders use to support their customers—and the wherewithal to manage our own customer accounts in line with their respective needs, requirements and expectations.

According to industry analyst, William K. Pollock, president of Strategies For GrowthSM, “The most successful services organizations are typically those that have already recognized the importance of implementing comprehensive enterprise solutions such as Service Lifecycle Management (SLM) or Customer Relationship Management (CRM) to support their workforce, while also allowing them to build commensurate levels of asset management”. In the services sector, we no longer live in a “shrink-wrapped” world—in fact, we never did! However, in order to attain the desired levels of operational performance, most businesses today have found that they are becoming increasingly dependent on the rich and robust, "out-of-the-box" functionality that only comes from the use of state-of-the-art software designed both to increase the “velocity of business,” as well as to contribute directly to the bottom line.

Research has shown that the key drivers that define the various types of enterprise solutions that service organizations are seeking to carry them through the next technology cycle are the ability to:

Streamline and automate their business processes;
Compress the contract-to-cash cycle;
Identify incremental sales opportunities and improve revenue recovery;
Collapse non-value-added workflows;
Enhance resource utilization and reduce downtime;
Coordinate efforts of the sales, marketing and services organizations;
Improve compliance with Service Level Agreements (SLAs), contracts, and warranties; and
Synchronize every customer touch point for increased customer satisfaction.

However, while most service managers will agree that this list represents the principal outcomes they would like to see, the degree of success they may have in actually achieving them may differ widely from one company, or even one manager, to another. What they all should really be looking for is an end-to-end solution that addresses all facets of Service Lifecycle Management; that is, a solution that delivers the functionality they need to address the specific challenges and unique business opportunities that exist in their own relevant market segments.

But, how do they get there? Actually, that’s the easy part!

How Do You Increase the “Velocity of Business?”

What most service managers are looking for is an effective way to increase existing levels of customer satisfaction and retention while, at the same time, lowering their overall operating costs through call avoidance, higher revenue recovery, and increased asset utilization. In the past, these capabilities did not really exist, at least not in a particularly accessible manner. In fact, many managers were forced to decide between either increasing customer satisfaction or decreasing costs, as these two outcomes were rarely achievable together. In fact, the general rule of thumb was that in order to increase customer satisfaction, it almost always involved increasing costs as well.

However, there is new software functionality that allows companies to truly take control over all aspects of their reverse logistics operations, including the ability to increase their “velocity of business.” This functionality allows companies to improve all key components of their service business, including:

Field Service
Depot Repair
Logistics
Sales
Marketing
Professional Services

1. Field Service

For Field Service operations, today’s software functionality truly links the field to the front office. Through the use of this type of software:

Field technicians are enabled to arrive at their service calls completely armed with both customer- and product-specific information, as well as the parts inventory and documentation they need to resolve most customers’ issues on the first call.
A self-refreshing task queue indicates prioritized open jobs, with click-through access to greater detail, and seamless integration to knowledge stores for workload management.
Real-time visibility to warranties, contracts, and service histories ensures capture of billable time and materials as well as the identification of potential sales leads.
Status and priorities of open calls are constantly monitored to enable exception management based on specific user-defined triggers.

Basically, what this functionality brings to the table is better service performance, reduced cost-to-serve (i.e., pre-empting unnecessary calls), increased asset utilization and, as a result, happier customers.

The beauty of the software functionality is that it supports all field service categories including equipment installations, break/fix, planned maintenance, meter reading and so on. These applications can also be integrated with equipment diagnostic systems for fully automated solutions that initiate and prioritize service requests and dispatch assignments directly to the field technicians’ PDAs without the need for any human intervention.

The addition of global time zone support also empowers geographically dispersed organizations to allocate, track and transfer issues while maintaining comprehensive call history and satisfying service level commitments. Embedded mobile tools can also be used to enable field forces to work electronically with respect to receiving, documenting, and reporting assignments; and eliminating manual procedures, service delays and paper reporting—in other words, no more handwritten transcription errors, since everything is done electronically.

The principal features users should consider in reviewing and evaluating alternative types of Field Service software should include:

A universal view of customers, including service histories and state-of-the-art tools for problem solving.
Automatic assignment, location, and requisition of parts according to requirements for call fulfillment.
Interactive graphics, calendars, drag-and-drop scheduling, and hierarchical configuration views diagrams.
Intra-system escalation that alerts staff and customers based on user-specific tolerances (e.g., order status, contracted SLAs, duration in queue, etc.)
Response times and dispatch prioritization reflecting open calls, contracts, and technician capabilities.

The principal benefits that can be realized through the use of Field Service software should include:

Elimination of inefficiencies in workflow, redundant databases, multiple service calls, and duplicate data entry.
Improvement in the visibility to and, therefore, management of, spare parts and inventory levels.
Unification of activities in a comprehensive management system, synchronized with real-time events.
Customization to unique business environments so that best and current practices can be harmonized.
Ability to match assets to needs to minimize service disruption, balance workloads, and maximize first-call resolution.

2. Depot Repair

Depot Repair support is also an important functionality for any organization that offers customers off-site repair, but also wants to keep them apprised with up-to-the-minute repair status. For many customers, depot repair already takes too long compared with on-site support. However, by providing them with up-to-the-minute repair status, some of the “sting” is taken out of the customer’s wait.

A robust depot repair component will also aid the company's cash flow, by helping to reduce inventory carrying costs. Through this module the company’s operations gain real-time visibility of the overall repair cycle, and management can base its decisions on better qualified repair center information, including more accurate cost accounting. The information gained from monitoring repeat repairs can also provide valuable input for improving product quality.

By automating the tracking of goods through the entire repair process, and providing real-time data on location, status, warranty and ownership, depot repair functionality can help organizations improve both productivity and cost containment. The availability of up-to-date information enables better decision-making and prioritization, and limits the risk of overstocking or shorting parts. Further, it reduces costs for unnecessary expediting when standard flows are acceptable.

Return Material Authorizations (RMAs) can be issued from either the repair facility itself or via a service order generated by the contact center or field service agent. This is a crucial element toward providing universal visibility from inception of the repair order all the way through to final disposition. It also facilitates the generation of seamless contract updates to reflect exchanged materials, repair histories, and warranty implications.

The principal features users should consider in reviewing and evaluating alternative Depot Repair software should include:

Support of in-house, vendor and subcontractor repairs and exchanges.
RMAs issued for universal merchandise visibility through final disposition.
Status monitored through repair station flow for real-time visibility within support applications.
Real-time warranty tracking, tracing merchandise returned to service and/or exchanged.
Graphic repair data analysis and history logs.

The principal benefits that can be realized through the use of Depot Repair software should include:

Creates and processes repair orders, whether internal or third-party, in a seamless process for better database capture and workload balancing.
Tracks equipment through the repair chain, enabling enhanced spare parts inventory management and customer service (e.g. estimated time to completion).
Captures billable time and materials automatically to speed service-to-cash cycles.
Full-loop repair history tracking facilitates enhanced compliance with contracts and industry standards.
Supports problem/repair statistical analysis to help identify engineering and sourcing issues.
Integration with the rest of the software suite allows repair orders and report status queries to be initiated from customer contact centers, field service, field sales and warehouses, as well as the repair depot.

3. Logistics

A strong Logistics functionality allows companies to enhance asset management, wherever the product resides (e.g., remote warehouses, service vans, spares pools, or parts exchanges, etc.). It enables a reduction in inventory costs while ensuring that stock levels and movements keep pace with service and sales activities. It also enables parts management for effective field service delivery and SLA compliance. Cost management improves cash flow by streamlining and shortening the cycles from inventory, to usage, to billing and the resulting lower logistics costs open up opportunities to realize higher margins on products and services.

For many companies, the logistics module needs to be flexible enough to support multiple warehousing strategies, ranging from centralized to regional repair depot, as well as service agents’ mobile inventories including kits and tools. It should have the ability to track movements through item transaction logs, including in-transit stock. Color-coded priority queues can also be used to expedite key orders through warehouse operations.

The most robust logistics offerings available today are designed to track key areas including component/equipment relationships, serialized and non-serialized items, substitutes and super-sessions, costs, defective parts, vendor and customer returns, and parts held for repair. They are also able to monitor inventories for reorder quantities, stock levels, and reorder points utilizing sourcing rules by warehouse, including vendor ratings by grades, lead times and prices. At a minimum, the system should also be able to support cycle counts and physical inventory adjustments.

The principal features users should consider in reviewing and evaluating Logistics software should include:

A color-coded demand queue that provides a visual prioritized “to do” list.
Support of process flow through pick, pack, ship, and receive, including transaction logs.
Asset management with inventory searches by item, serial number or advanced filter.
Multi-site and multi-national spare parts inventory control.
A parts replenishment engine that automates requisitions to streamline the purchase of depleted stock.

The principal benefits that can be realized through the use of Logistics software should include:

Visualization of demand and assets, encompassing warehouses, vans, customer sites, repair chains, spares pools, parts exchanges and in-transit.
Improved stock level control, reduced carrying costs and expedited premiums due to out-of-stocks.
Correlated sales, service, and repair order processing with physical fulfillment.
Increased probability of first-time fix and enhanced service delivery.
Support for all warehousing strategies, including mobile inventory.

Be sure to read the conclusion of this article in the July/August 2008 issue of Reverse Logistics where Zack describes the remaining three components of a “best-inclass” SLM solution; namely, Sales, Marketing and Professional Services.

Zack Bergreen is Chairman and CEO, at Astea International, global leader in service management software that addresses the unique needs of companies who manage capital equipment, mission critical assets, and human capital.