We need to know what the goal of the company is before we can decide on the service strategy to support that goal.
An extreme example of a company goal is: Just sell the product and take the money; don’t worry about repeat customers or warranty. This company has a very simple service strategy. There no service.
The typical company wants to stay in business beyond their first product and wants its customers to become brand loyal. The acquisition time and cost of customers is likely long and high, and customers lost because of bad service event experiences are customers unlikely to come back to the brand. They are, however, likely to spread the bad experience stories via social media.
Your service strategy will need to fulfill a number of, or all of the examples below:
- Meet / exceed customer expectations
- Turn a service event into a positive experience
- Use the service event to engage the customer
- Take advantage of up-sell options
Do not let a service event be a wasted opportunity.
Your service network strategy and setup determines the investment you need to make in spare parts inventory, locations, safety stock, etc and the effectiveness of your service strategy. The results go way beyond just dollars of investment: they affect the customer satisfaction and retention and your overall brand.
Some of the important factors in determining your service network setup are:
- Outsourcing / In-house mix: What is your core competency?
- Warranty / Service contracts options such as, next business day, 4 hour, 8 hour.
- Are you selling products or the outcomes of those products; the air conditioning unit itself or the cooling performance in a facility?
- Spare parts frequency mix: High cost / Low volume, Low cost / High volume
- Succession Chains
- And many more
None of these factors should be adjusted or used in a vacuum.
Service optimization is the art and science of creating processes that make the Service Strategy a reality and the Service Network Strategy efficient, repeatable and measurable.
The optimization art happens when the processes and their supporting systems are adjusted for changing circumstances, additional service contract models and market conditions to name a few.
The optimization science is already figured out by scientists like Dr. Jack Muckstad of Cornell University. Algorithms and the necessary data needs are well documented in various forms by these scientists. Multiple software companies have embedded them in their solutions. If you are interested in the science, read: Optimizing Service Parts Inventory in a Multiechelon, Multi-Item Supply Chain with Time-Based Customer Service-Level Agreements.
I have had the opportunity to meet with Dr. Muckstad multiple times during my product management days and have always learned something new.
This does not necessarily mean that those big systems need to be implemented but lessons learned from them are helpfull in making your processes hum.
Lee Smith – DVP / General Manager – Service Lifecycle Management (SLM) at PTC – 2016
“I have worked with Dick for the past 8 years as his manager and an internal organization customer. I have tremendous respect and gratitude for the time I worked with Dick. He is a thought leader and domain expert that I could always count on to deliver on time with high quality. We experienced a true partnership that endured many challenging sales and client journeys. He is always one to think out of the box with high integrity and willing to do what is best for the client and company. His supply chain expertise is second to none. He understands the deep complexities that come with after market service and is able to design and implement solutions that solve real world challenges.
On many occasions he worked directly with prospects and clients to gain a deep understanding of their requirements and then led teams of product managers and developers to build enterprise class solutions to solve the problem. He is capable of leading large multi and cross-functional teams as well as operating as a domain expert in a matrix organization. Dick is high energy and hands on with capacity and experience to operate at a strategic and tactical level. He is comfortable operating at C levels in the organization as well as getting into the details with individual contributors.
I highly recommend Dick and personally look forward to the next opportunity we have to work together.“