Achieving “services” business process excellence: Metrics-driven best practices and innovation

© 2014 Copyright Genpact. All Rights Reserved.

[email protected]

Achieving “services” business process excellence:Metrics-driven best practices and innovation

mailto:[email protected]


A Global Business Process Services Leader: Process Transformation and Outsourcing, Analytics, Technology

We help leaders of some of the largest enterprises transform and run their processes and operations, including the very complex and industry-specific

What we do

Unbiased, agile combination of process science, related technology and analytics limits upfront costs and enhances future adaptability

Right critical mass:

• we are large (64,000+ global staff) but our solutions appropriately flexible

• our top management is directly involved in our client partnerships

How we do it

Our impact

We help enterprises to be more competitive by becoming more intelligent: adaptive, innovative, globally effective and connected…

…by enabling tighter management of costs, risks, regulations, and supporting growth

The results: US$22B* of impact for 800+ global clients


Aftermarket Services: The “what,” “why,” and “how”

3

Service provided after the product purchase that is “devoted to supporting customers in the usage and disposal of goods”

“THE WHAT”CustomerSupport

CustomerSupport

Product/Technical Support

Product/Technical Support

Repairs and Maintenance

Repairs and Maintenance

Product-relatedServices

Product-relatedServices

“THE WHY”

Significant component of the economy Contributes 25% of revenues across U.S. manufacturers, and 40 to 50% of profits

May generate twice as much profit as sales of original products

Offers customers a continuous connection to the brand Can drive customer satisfaction and loyalty

Can facilitate continuous improvement of product design and quality

Can differentiate a company from its competitors

“THE HOW”

Perceived as a business network process, particularly when the service is carried out by different organizational partners

Third parties may provide services that are Complementary (e.g., field assistance, customer care), or

Competing (e.g., unauthorized sales and/or repair centers)

Organizational partners should be chosen to provide consistent service performance and the opportunity to control service output

Service provision has become very complex due to advancing technologies and diversified customer touch points and service delivery channels


Aftermarket Services: The value chain

4

• Contract

monitoring • Contract

renewals

• Contact

center• Product

support

/helpdesk

• Service parts

planning and

pricing• Parts fulfillment

support

• Field

service

support• Remote

monitoring

• Warranty

claims

processing• Warranty

supplier

recovery

• Operations

dashboard

and service /

cost analytics

• Installed base

management,

including IB

analytics

• Product

returns

support

Pro

cess

In

terv

enti

on

sV

alu

e D

rive

n

Service Growth Enablement

Service Execution SupportTransaction Processing

& Reporting

Setup & Planning

Service Request

Management

Warranty Management

Service Fulfilment

Parts Management

Service Invoicing & Reporting

Contract Management

Product Returns &

Refurbishing

• IB service

coverage %

• Cost per sale /

renewal• Contract

profitability

• Response

time• First call

resolution

• Remote

resolution %• FE utilization

• On-time

delivery• Back orders

• Cost of

reverse

logistics • Repair TAT

• Claim to

recovery TAT

• Analysis

accuracy


Did you know?

5

Centralizing the service support desk releases 20-25% of a field engineer’s capacity

Consolidation of field engineer dispatch and parts order teams drives 15% savings

Dynamic forecasting and accurate triaging of parts result in a further savings of up to 10%

Implementing contract pricing analytics helps identify key levers, resulting in 10% increase in revenue

Installed base analytics increases service coverage, resulting in 15% incremental revenue

LEVERS IMPACTING SERVICE COST

LEVERS IMPACTING SERVICE REVENUE


Summary of key learnings based on client engagements

6

Service Request Management

Setup & PlanningService

Request ManagementContract

Management

Service Fulfillment

Parts Order & Logistics

Service request creation on the correct installed product leads to faster issue resolution

Warranty Management


Accurate contract coverage and entitlements details ensure adherence to contract terms and higher CSAT

N/A

Correct parts pricing information in the ERP results in accurate billing and dispute resolution

One-stop shop for the field admin support activities with correct and updated information impacts field utilization and service quality

Clearly detailed warranty coverage details help to avoid over- or under-billing due to lack of visibility

Accurate warranty coverage start and end dates produce faster claims processing and avoid billing disputes

Upgrading/removing “end of life” products and parts from the contract coverage reduces service costs and leads to faster request closure

Correct account details lower logistics cost and helps to avoid revenue leakage

Accurate details of parts (under warranty and contract) reduce missed billing opportunities and claims processing time

Correct reporting of all incidents leads to improvement in the quality of installed base data

Allocation of field engineer with correct skills ensures faster response and resolution time

Correct parts ordering eliminates the extra cost of transporting parts back and dispatching new ones

Upfront information to the customer avoids cases where a purchased order is required for that service as out-of-warranty coverage

Service request creation on correct customer IDs minimizes incorrect billing

© 2014 Copyright Genpact. All Rights Reserved.© 2014 Copyright Genpact. All Rights Reserved. 7

Parts ManagementWarranty

ManagementService Fulfilment

Service Fulfillment

Parts lead time and using preferred vendors, when adhered to, reduces inventory cost and parts fulfillment cycle time

Warranty Management


N/A N/A

Correct shipment method used as per customer contract reduces shipment costs

Clearly defined workflows for the parts return process leads to faster parts return and supplier recovery

Clear information from the field engineer pertaining to customer abuse can result in unnecessary parts / product audit and reduce invalid warranty claims

Timely service closure documentation leads to faster service revenue realization

N/A

Analytics on claims processed can provide product improvement ideas and new sales opportunities

Insights and best practices for process interfaces drive $$ impact

Insights and best practices for process interfaces drive $$ impact

Summary of key learnings based on client engagements


Typically, 20%–25% of the service portfolio is below target margins and service revenue yield on the installed base is just 3-5%*

8

Service Cost can be reduced by ~20% by optimizing field operations, optimizing warranty payouts, and driving supplier recovery

People

Impact: $125 MM*

Parts

Impact: $75 MM*

Eff

icie

ncy

Eff

ecti

ven

ess

• Accurate triage of parts across regions and return processes can save 1-2%

• Dynamic forecasting and pooling of parts at warehouses can save 2-3 % of parts costs through lean inventory

• 10-15% of total warranty costs can be avoided by auditing 50% claims through an audit reasoning matrix

• Supplier warranty recoveries can increase by an additional 10-15% through effectively managing reverse logistics of parts under warranty

• Consolidating field engineer support and parts triaging teams saves ~15%

• Remote monitoring deployment reduces emergency dispatches by 30%, saving ~5%

Warranty

Impact: $50 MM*

Service Revenue can be improved 25% by enhancing contract coverage and increasing installed base yield

Capacity to Deliver

Impact: $150 MM*

Increase Contract Coverage

Impact: $150 MM*

• Installed base analytics increases service coverage, boosting incremental revenue by 15%

• Customer and product segmentation to identify potential customers

• Part and component level segmentation to expand service customer base

• Implementing contract pricing analytics helps identify key levers, resulting in ~10% incremental revenue

• Data-driven scientific inputs for pricing

• Accurate cost inputs

• Centralizing the service support desk frees up ~10% of field engineer capacity

Extract Contract

Value

Impact: $110 MM*

*For large manufacturing organizations


Challenges to achieving $$ impact

9

Lack of visibility into the installed base data

Low accuracy of the existing installed base (IB)

Growing market need to drive higher contract coverage

Lack of clarity in the “service products” (contracts)

…driving service revenue …optimizing service cost

Lack of visibility into Cost to Serve

Broken link between customer contact and service issue resolution

Lack of standardized processes

Significant parts availability/inventory issues and field service responsiveness issues

Unclear job allocation and handoffs

Lack of visibility into KPI/metrics to measure process efficiency and effectiveness

Key Industry Challenges In…Key Industry Challenges In…


Multiple missing links are an opportunity for value creation

Highly disaggregated

and broken processes,

leading to unclear handoffs

Service businesses financially

challenged by

Current economic environment and undercapitalized

scenario

Hyper-intense competition

among manufacturers and retailers

Standard process/IT tools

unavailable

Brands’ service organizations unable to commit and execute

service levels

Brands unable to drive Service Excellence and Customer Confidence

Result

Service Growth Enablement Service Execution SupportTransaction Processing and

Reporting

Setup & Planning

Service Request

Management

Warranty ClaimManagement

Parts Management

Service Fulfilment

Service Reporting &

Analytics

Contract Management

Returns & Recovery

XX X XX

10


A metrics-driven execution approach is needed

11

Efficiency Metrics

Effectiveness Metrics

Effectiveness Levers Affecting BOs

• Field response TAT• Parts OTIF

Service Execution:

Issue resolution

% Reduction of service requests on hold for parts

Improved productivity % Point-in-time savings

Improved resolution % Sustained savings growth

Integrated call field parts Process & Execution

• IB coverage• Contract profitability

Integrated IB and Contracts Process & Execution

Service Growth Enablement:: Contract and IB

expansion

• IB accuracy• Contract

Renewal/expansion Rate

Service requests requiring parts to complete transaction range from 28% to 73%; manufacturing industry median: 43%*

Effectiveness drives much bigger impact than efficiency Interplay of “smarter” processes, people, and technology is the key enabler

Service Factory: Integrated process and

execution

*Source: Blumberg Report


Building blocks of an executed innovation approach

12

Technology as a Key EnablerTechnology as a Key Enabler

Creating a Service Delivery Model Creating a Service Delivery Model

1

Centralize service support to impact service revenue and cost

Decouple similar processes and consolidate them

Establish a seamless linkage between customer contact and service issue resolution

2

Institutionalizing KPIs and Creating Next Generation Processes

Institutionalizing KPIs and Creating Next Generation Processes

3

Connect business-level KPIs to operational KPIs

Provide visibility into L2 and L3 process measurement metrics

Explore inter-linkages between business outcomes and process metrics


Intervention 1: Create a service delivery modelCentralized support platform: People and process

13


Decouple, consolidate, and centralize

14

Field ServiceField Service Parts ManagementParts Management

FE schedulingDispatch creation

Fieldrepair

Manage and track field parts

Parts ordering Tools sourcing

Manage field returns

FE debriefField admin & support tasks

Field service metrics reporting

Invoicing auditUpdate FE availability calendar

Parts logistics

Order receiptEstimate and promise delivery date

Orderentry

Follow-up for back orders

Shipment tracking

Parts returnsParts expediting

Global order triage

Parts planningScrap management

Field parts management

Centralized support platform

Apply Lean/Six Sigma principles

Establish link with local physical execution

Field admin time vs. wrench timeField admin time vs. wrench time Parts velocity vs. fulfillment support costsParts velocity vs. fulfillment support costs


Intervention 2: Technology as a key enabler

15

Tight integration of technology with

process and people

will drive “Realized Benefits”

Technology is outshining human collaboration and communication but

provides only “Potential Benefits”

PROCESS

TECHNOLOGY

PEOPLE


Intervention 3: Institute KPIs centrally and create next generation processes

16

ILLUSTRATIVE

Request to Repair (R2R) Business Outcomes: Cost of Service Service Revenue Customer Loyalty

Service Fulfillment

Warranty Management

Parts Order& Logistics

Setup & Planning


Service Request

Management

Contract Management

Level 2Sub-process

Key Performance

Measures

Level 3Activities

Key Performance

Measures

Level 1SEPSM

Handle field admin and

support tasks

Fix problems remotely

Re-order/correct/ place new parts

orders

Tools scheduling and

fulfilment

Service Provision & Field Support

Coordinate and expedite with

service vendors

Complete field service report

after FE debrief

• FE utilization• Support cost per repair• Fulfillment TAT

• Remote

Resolution %• Resolution TAT• First time fixed

right

percentage

• TAT• Answer Rate• Accuracy • First Time

Response

• Order Accuracy• TAT• Back order %age

• TAT• Availability %• Tools calibration

percentage

• TAT • Compliance %

• Debriefing

Accuracy• Missed billing $

SAMPLE

© 2014 Copyright Genpact. All Rights Reserved. 17

Establish linkages between performance measures and process outcomes NOT EXHAUSTIVE

Max

Minimum

Median

Key Business Outcomes

Field engineer utilization

%

30 79

59

Key Performance Drivers

% Asset remotely connected*

21 100

83

First time fix rate % 27 86

66

On-time parts delivery % 81 96

89

First time part fill rate%

Work orders completed late

%

% Back orders

TAT compliance %

7677

31 9

17

Deploy and monitor remotely

Field service support

Key Performance MeasuresSub-processes Activities

Remote resolution %

5 90

47Fix problems

remotely

Available capacity

Use analytical models for field force forecasting and

scheduling

Wrench timeDispatch the best-fit customer

engineer based on skills, proximity, availability,

preference

Ensure service history records, IB details, required parts/tools

info and other documentation is provided to CE

Manage entire dispatch process until closure and action on all field support activities within

specified TAT

Expedite with logistics / 3PL partner for on-time parts

deliveries onsite

Follow-up on open dispatch / back-orders, handle exceptions,

liaise with vendors, etc. for timely repair/deployment

82

IB accuracy %

Source: Aberdeen Service Management Benchmarks


Bring all critical components under one umbrellaAchieve visibility and control through the right combination of people, process and technology, all at a common ‘workplace’

People

• Trained to handle AMS operations

• Consistency in delivery

• Structured interactions with customers

Process

• Metrics-driven process measurement• Well documented and consistent

operations• Ensured business benefits, guaranteed

performance• Predictable and reliable

Technology

• Proven platform for managing distributed AMS operations

• Superior visibility and control

• ‘One Company’ approach

18


The Service factory modelA confluence of process, people, and technology

19

Centralized back end: Interplay of skilled people, smarter processes, and integrated technology

Local execution of service supported by a

Common central support platform

Measurement system to identify and link key performance indicators (KPIs) to business objectives

Focus on realized benefits


What do companies say about measuring KPIs?

20

“The more you start reporting KPIs the more people understand that we need a lot of introspection regarding the right KPIs for the business

The KPI needs to be one that the board is using regularly to manage the business

Publishing the KPI gives it more exposure and makes people think harder about how they can improve performance against that KPI”

An FTSE 100 Company

“Trying to distill common KPIs across diversified units was difficult but ultimately enlightening……”

An FTSE 250 Company

Professor Sir Andrew LikiermanLondon Business School


You can't manage what you don't measure

21

Based on our experience of working with multiple clients from different industry domains, we strongly believe that:

Many important and “relevant” process KPIs are NOT measured by organizationsMany important and “relevant” process KPIs are NOT measured by organizations

The majority of KPIs that do get measured are NOT used for any analysisThe majority of KPIs that do get measured are NOT used for any analysis

Organizations usually focus on “outcome level” benchmarks and DO NOT FOCUS on “process level metrics”

Organizations usually focus on “outcome level” benchmarks and DO NOT FOCUS on “process level metrics”

After sales services provides: Important sources of competitive

advantage Opportunities to build market share and

profitability

Companies are using multiple measures to assess after-sales service performance

Companies are differing in their usage of service performance measure in both number and variety

More research in service metrics and benchmarking is needed given the relatively little published academic research on this subject

© 2014 Copyright Genpact. All Rights Reserved. 22

There is a need for “process level” benchmarking…

…which can be achieved through interaction and understanding at a “process level” driven by leadership

“Services” is run and managed

CSL is the best platform to achieve this… (with a worthy mix of industry leadership and

academicians)

“Services” is measured, driven, and strategized,and therefore “led”

This will transform the way


About Genpact

Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and operations, including those that are complex and industry-specific. Our mission is to help clients become more competitive by making their enterprises more intelligent through becoming more adaptive, innovative, globally effective and connected to their own clients.

Genpact stands for Generating Impact – visible in tighter cost management as well as better management of risk, regulations and growth for hundreds of long-term clients including more than 100 of the Fortune Global 500. Our approach is distinctive – we offer an unbiased, agile combination of smarter processes, crystallized in our Smart Enterprise Processes (SEPSM) proprietary framework, along with analytics and technology, which limits upfront investments and enhances future adaptability.

We have global critical mass – 62,000+ employees in 24 countries with key management and corporate offices in New York City – while remaining flexible and collaborative, and a management team that drives client partnerships personally.

Our history is unique – behind our single-minded passion for process and operational excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE businesses for more than 15 years.

For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook, and LinkedIn.

http://www.genpact.com/

http://twitter.com/

http://www.facebook.com/pages/Genpact/105635026136729

http://www.linkedin.com/company/210064?trk=tyah