Strategy & Leadership

Aberdeen: 2 Key Tactics for Optimizing Parts Management (and Improving Your First-Time-Fix Rate)

Cash is king. The customer is always right. These two idioms often conflict as service organizations attempt to quickly resolve all customer issues and deliver a high level of service without breaking the bank. The link between these often opposing goals is efficient delivery service.

Companies today are looking for “new” channels to exceed customer expectations — and one of those key areas is service. Why? According to Aberdeen’s recent State of Service Management: Outlook for 2013 report, competition and reduced customer spend are the top two reasons why organizations are re-focusing on service.

The proper management of service parts and customer warranties is critical to providing first-rate service. Aberdeen’s Field Service 2013: Workforce Management Guide showed that more than 50 percent of all field service visits require a service part. The efficient delivery of service is dependent on a number of inter-related functions working together; i.e., the right parts are available when a technician arrives at a customer site, yet the parts depot isn’t overrun with excess inventory. Two key trends are emerging in parts management:

Better Warranty Management

Often overlooked when it comes to revenue generation and profitability is the warranty side of the service operations. Extended warranties can have a huge impact on both the cost and revenue side of the ledger. Aberdeen’s Warranty Management research showed that top-performing organizations looked to the warranty chain not only to improve communication and collaboration across the business but also to leverage failure and service data to develop more relevant warranty and service contract covenants.

There must be a clear communication loop within the service organization and amongst other business functions in order to actually improve both the products and services that can be offered (and therefore sold) to customers. Organizations that feed valuable warranty claims data back into the operations are capable of understanding the defect issues and the opportunities to improve parts, both of which lead to sustained sales and renewed service contracts.

Right Parts at the Right Time

Improve first-time fix rates through better parts management. The No. 1 reason why field service techs have to return to a customer site for a second time or more is that they did not have the right part in their truck, according to Aberdeen’s research. The cost of a second truck roll is not nominal, and almost as important is the negative impact on the customer experience. Service organizations that hope to thrive cannot afford to have unsatisfied customers, so it’s critical that the right tech has the right part when he or she arrives at a customer site.

In order to ensure that customer issues get resolved quickly and efficiently, top-performing organizations have prioritized better planning, training, triage, and the identification of opportunities to prevent service issues from arising. Moving away from a break/fix mindset enables companies to be better prepared for the varied nature of service issues and ensure that when a tech is on site (with the right part) a visit can be maximized (and future visit avoided).

The service story is increasingly important to customers and senior executives. If you would like to understand more of the findings that highlight top service performance, please download the full report on Service Parts Management here.

 

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