How to Manage the Impending Backlog
We’ve been talking about disruption for quite a while, but many could not fathom its consequences or that it would even hit us. Nations, organizations, and individuals have discovered that their business continuity plans could not mitigate the impact.
Now that we’re past the initial shock, what is business-as-usual going to look like? How do we pick-up and how do we process the backlog created by three months of lock-down?
In Part I of our Post-Crisis Handbook, Daniel Brabec provided four areas that are top of mind when navigating the service world in the new normal. In this article, I will focus on how leaders can manage the impending backlog.
Right now, all focus is on COVID-19 and its impacts. But if you look deeper, you will see that many COVID-related themes have pre-existed in varying degrees; it’s only now that we look at them through a magnifying glass.
- Remote service procedures have been around for more than 30 years. Rethinking business continuity plans will likely expedite their adoption.
- Digital tools allow you to remodel your business processes and simulate the amount and mode of touchpoints. Social distancing guidelines add an additional ingredient to that business process (re)engineering.
- Balancing the availability of technician capacity and contracted workload is an ongoing exercise for each service-focused executive. Disruptions and imbalance exist at all times. Only COVID-19 is a major shock, illustrating that business-as-usual balancing mechanisms can’t cope.
Balancing Supply & Demand
For about three months many businesses have seen huge fluctuations in both the volume of work and the availability of resources.
The existing workforce has been confined to work from home, has been furloughed, or has taken sick/care leave. In addition, those that are available have had to spend more time on each job for extra precautionary activities. In all, you have less capacity to execute work.
From a workload perspective, we see that many jobs have been pushed out. We see some equipment being ‘sweated’ to maximum usage (e.g. medical diagnostic equipment) and others going into hibernation (e.g. aircraft engines). This will have a huge impact on the life cycle of the asset warranting a more asset-centric approach.
The Impact of the Backlog
Just try to imagine all the impacts a work-related backlog might have on the business:
- Compliance: For three months Preventive Maintenance (PM) and Inspection jobs have been pushed out. All time-based schedules and counters will see non-conformity. To what degree can you apply flexibility to compliance dates and how do you manage those shifts?
- Service Level Agreement attainment: There are many relevant questions that need to be answered in the measurement of SLA performance. How does one measure uptime for medical diagnostic equipment that has been running 24/7? How do you measure uptime of equipment for furloughed organizations? How do penalty clauses apply; or is the pandemic considered an act-of-god? And finally, how do you filter/clean metrics that are impacted by COVID-19?
- Contract renewal: This possible renewal scenario might play out between organizations and customers. Procurement at the customer may say “We’ve not had the benefit of contracted services for three months, so we will only renew in three months” or “We’ll only renew after completion of the pushed-out PM jobs.” Try to imagine and forecast the impact on your contract revenue streams.
- Dispatching priorities: How does contract renewal drive the priorities for rescheduling the PM backlog? If you have more jobs than capacity, what jobs get priority, and what will be the impact on the above three bullets?
- Workforce capacity planning: Now we have more jobs than capacity, how long will it take us to process the backlog? Will we strike the backlog, or will we contract additional/temporary capacity? What jobs will we assign to 3rd party technicians and what jobs will our own people do?
To reiterate, the above impacts are not only related to COVID-19, they are universal and timeless. You might recognize yourself in the synthesis of pre-COVID-19 quotes made by various companies: “At present, we can only deliver on 85% of the contracted work due to unavailability of skilled resources. In the execution of work, we take calculated business risks balancing compliance, cost and revenue streams.”
Ultimately, the challenge for any organization is the balancing of supply of resources and the demand for (contracted) work. And as we know by now, we have to be able to handle disruption in various degrees of intensity. This brings us to the requirement of being able to run scenarios.
- What is the revenue & compliance risk of executing 85% of the jobs versus adding resources to get to 95% execution?
- What happens to my contract renewals, SLA attainment and penalty clauses when I prioritize pushed-out jobs of gold-contracts over bronze-contracts?
- Can I use knowledge on capacity availability in my service-sales process when making commitments on execution dates?
In its most generic form, running scenarios will help you making informed decisions on both capacity/resource management and prioritizing (contracted) workload.
The New Normal is Business-as-Usual
So, what is so new about this new normal? Is it new? Or is it business-as-usual under a magnifying glass? I believe it is the latter. I believe backlog management in the past has focused a lot on the transactional aspects. Now the disruption is visible to all, I believe the time is right to make backlog management a strategic decision-making function.