AUTHOR ARCHIVES: Michael Blumberg

Michael Blumberg, President of the Blumberg Advisory Group looks at how Augmented Reality can quickly become a standard part of the very fabric of field service delivery...

The importance of service to the manufacturing sector 

Industrial Machinery and Equipment (IM & E) manufacturers form an integral part of the manufacturing supply chain as their equipment plays a critical role in the automation of production processes such as shaping, extruding, moulding, crimping, cutting, folding, etc.

In addition, every manufacturing process has its own set of specialised machinery. For example, manufacturing equipment in the food processing industry is different from equipment found in the apparel manufacturing industry.

These machines must perform at very high levels of reliability to keep manufacturing processes operating at optimal levels of productivity.

The lost value to manufacturers of machine downtime is extremely high. It is not atypical for a manufacturer to lose hundreds of thousands of dollars a day in lost revenue due to machine downtime.

Challenges to keeping factories running

Providing fast and efficient service in the industrial machinery world is no a small feat for equipment service providers. Diagnosing and resolving equipment problems quickly is challenging when the machinery is highly complex, the installed base is relatively low and plants are scattered worldwide. Service organisations of IM&E manufacturers are usually staffed by a small cadre of field service engineers (FSEs) and technical experts. IM &E FSEs often possess deep subject matter expertise in some but not all product lines.

The FSE who assembles and installs the machine is often the same person who diagnoses the problem and initiates corrective action.

In addition, machines are manufactured to customer specifications. Thus, service is not standardised from machine and there is often a huge knowledge gap among FSEs and between customers. Language barriers can also make it difficult for customers in one country to communicate with FSEs in another and vice versa.

 

Furthermore, machines often have a long service tail and be in operation for 10 or 20 years. Thus, there may be no one at the customer’s site who has the knowledge to maintain the equipment properly. Tribal service knowledge, where knowledge that rests in the minds of individual FSEs is shared with others through verbal communication, is the norm within the IM &E service market.

The Service Conundrum

IIM&E manufacturers typically help customers resolve service issues by first attempting to diagnose and resolve problems over the telephone and prior to dispatching a FSE to repair the machine. However, there are certain times when the service expert cannot resolve the issue remotely. In other cases, the remote service expert may not understand what the customer is describing over the telephone or vice versa, or maybe the technician simply needs to see the problem for himself.

When situations like these occur, the FSE must travel to the customer’s site to troubleshoot, diagnose, and resolve the problem.Onsite travel is both time-consuming and expensive. It may involve a flight to another country and days at the customer site to resolve the issue. Capacity constraints may prevent that technician from traveling to the customer’s site. Also, if the FSE is at the customer’s site, no one else may be available to handle incoming requests from other customers.

At times the IM&E service provider may send an alternative FSE. There is a chance that the FSE who arrives onsite may not have seen this issue before and needs additional assistance to resolve the problem. In this case, the FSE assigned may need to telephone a more experienced technician for back-up support.

Other challenges include the fact that many IM&E manufacturers do not charge for service.

Furthermore, lengthy road trips add significantly to operating costs and place a great deal of stress on technicians.

From Road Warrior to Service Hero

Fortunately, IM&E Manufacturers now have a solution to their challenges; Augmented Reality.

By using smart glasses or a smart phone, machine operators at the customer site can capture a video image of the equipment and then transmit it to the equipment manufacturer’s service technician at another location.

If it is a relatively simple issue, for example one that can be resolved through a customer replaceable unit, the remote support specialists can send images, text, and annotated repair instructions back to the customer so that the customer can resolve the issue himself.

This saves time and money, as downtime and lost productivity is minimised for the customer. A live chat session can also be opened so that the customer and technician can communicate in real-time.

Considering FSE travel and per diem costs (e.g., meals, hotel, etc.) to another country can be quite expensive, savings from providing remote support through an AR platform can add up to thousands of dollars per service event.

This is a huge savings given the fact that a large percentage of service issues are the result of enduser (e.g., machine operator) error.

[quote float="right"]With AR, the remote service specialist can obtain rich contextual information about the machine problem, isolate or identify the fault, and then determine what skills and parts the FSE needs to have with him when he arrives onsite.

Fieldbit, Ltd., a leading provider of AR solutions, has been able to help its customers in the IM &E market improve remote resolution rates by as much a 50% AR solutions like those provided by Fieldbit also make it possible for IM & E suppliers to improve first-time fix rate. Repeat visits to solve the same problem are costly for the IM &E service provider not to mention stressful and embarrassing to their FSEs.

 

Normally, if the FSE lacks proper parts and/or skills to enable a fix, he must return or wait onsite until the correct resources are supplied.

However, with AR, the remote service specialist can obtain rich contextual information about the machine problem, isolate or identify the fault, and then determine what skills and parts the FSE needs to have with him when he arrives onsite.

The FSE can also use the live chat to communicate with the remote support specialist while onsite if additional troubleshooting and diagnostics are required. Utilising AR to improve FSE proficiency minimises the percentage of times onsite service calls are broken or extended due to the lack of spare parts or skills, thus improving “First Time Fix” rate.

Another practical application of AR solutions like Fieldbit is in the creation of a self-learning knowledge base. Remote support specialists can use the platform to develop and record step-by-step repair procedures for resolving equipment issues that are stored in a searchable database.

When a customer or FSE encounters a similar situation, he can search the database for the right solution.

The technical learning curve is shortened and on-the- job training time can be reduced by as much as 40% using this approach.

Recognising the high value in use for machine uptime and the tremendous impact Augmented Reality plays in cost avoidance, many end-users have begun to monetize their investment in these platforms.

For example, Fieldbit’s customers include downloadable, one-time-use licenses for Fieldbit Hero™ in the service level agreements they sell to their end customers (i.e., machine users).

These end customers can of course purchase additional licenses when they need them.

However, the benefit is clear: AR not only improves customer satisfaction and reduces service delivery costs, but drives additional profit to the service provider’s bottom line.

 

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Michael Blumberg, President of Blumberg Advisory Group gives us an insiders view of how to ensure our customers understand the true value of extended warranties and service contracts...

Warranty Attachment and Renewal rates are Key Performance Indicators (KPIs) that measure how successful a company is in marketing and selling extended warranties and extended service programs. Ideally, a company would want to achieve attachment rate of 50% or higher and renewal rates of 75% or better. This is considered best in class performance.

Only a small percentage of companies have been able to achieve these targets.

Key findings from Blumberg Advisory Group’s recent survey on extended warranty benchmarks and best practices indicate that only 30% of companies have achieved attachment rates of 50% or more. In fact, 16.7% have achieved attachment rates of 70% or better. While the majority (59.5%) of companies experience renewal rates of 75% or more, only 22.5% have achieved renewal rates greater than 90%.

There are several best practices that companies can pursue to achieve best in class performance on KPIs related to marketing and selling extended warranties and extended service program. Most significantly, service portfolio design plays a critical role in influencing attachment and renewal rates. The truth is that customers will purchase these programs if they feel that they will effectively meet their needs. That’s’ why it is important to specify what’s included in the program from the perspective of features, resources, and coverage.

 

It important to include both basic and value-added services as part of the program. The more extensive and focused the services, the more likely the customers will be to buy. Nearly all the companies surveyed (93.2%) provide basic corrective failure as part of their program. Only 50.4% include preventative maintenance. Less than 40% offer a broader array of value added services such as calibration, inspection, recalls, and disaster recovery as part of the portfolio.

Indicating the level of service commitment, the customer can expect to receive is also important when it comes to selling extended warranty and extended service programs. Only 58.1% of companies have defined onsite response times as part of their programs, 39.3% specify parts delivery times, 29.9% and 31.6% respectively commit to the repair time and remote resolution times, and 15.0% will provide a loaner unit if repair time target is not met.

The way in which these programs are promoted can also impacts KPIs. Most companies surveyed rely on direct mail (74.8%) and brochures (68.0%) to sell extended warranty and extended service programs. Most respondents (58.5%) indicate that direct sales have been very effective when it comes to impacting attachment rates while only 26.6% believe that brochures are as effective. Interestingly, survey respondents agree that other tactics are just as effective. For example, 50% of respondents indicate that endorsements and testimonials are very effective as is reputation management (49.1%), telemarketing (32.0%) and public relations (28.9%).

 

Frequency of communication is also a critical driver when it comes to influencing attachment and renewal rates. Almost half (49%) of respondents indicate that they sell extended warranty and extended service programs any time after the original product sale which means the capture revenue at any point in time during the product’s lifecycle.

Only 28.0% notify customers 90 days or more in advance of when their programs are up for renewal and 36.0% provide more than 3 notifications that there contracts are about to expire. More importantly, most (60%) respondents upsell their programs during the warranty entitlement process.

As result, they experience incremental improvements in attachment rates; 36.5% indicate they have experienced a 10% to 25% improvement and 20.1% have experienced a 26% to 50% improvement from pursuing this tactic. In summary, the survey findings suggest that best in class companies follow a structure and disciplined approach to marketing and selling extended warranties and service programs. They do not view sales of these programs as a one-time even to be made only at the product point of sale. Indeed, they sell beyond the original point of purchase and align attachment and renewals with the customer entitlement process.

 

Furthermore, they promote their programs through a wide array of marketing communications tactics and rely on frequent and timely communication to get their message across. Most importantly, they ensure their programs are designed to meet the needs of their customer and are very specific about what the customer can expect to receive in terms of service feature, resources, and coverage.

 

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Michael Blumebrg, President, Blumberg Advisory Group explains why the on-demand economy has become a very attractive value proposition for both FSOs and their customers...

I recently marked a significant milestone in my career. This year marks 32 years since I began work as a management consultant in the Field Service Industry.

I was a newly minted MBA when I started and wondered how I could possibly help clients solve their field service challenges. One of my mentors at the time told me that the key to my success was to just keep at it.

Eventually, I’d have enough experience to solve any challenge presented to me; even those that people were dealing with for the first time. Not just because I’ve seen these issues before but because I would be able to anticipate them.

Looking back, I find these words of wisdom to have been spot on. The Field Service Industry has changed so much since I began working in it.

Much of what we anticipated would happen has happened.

Oldsmobile, a now defunct car manufacturer, had a popular commercial jingle on television in the United States when I began my career…” this is not your father’s Oldsmobile… this is the new generation of Olds”. I feel the same way about Field Service. We have entered a new generation of field service.

 

The field service industry has changed so much such much since I started working in it. Interestingly, much of what the experts at that time predicted would happen with respect to field service has happened.

Back in the good old days, I used to sit around the lunch table with my colleagues and discuss how technology would change the service delivery model and how service would become a utility just like electricity, water, or gas.

It would always be available when you needed it, you would consume it frequently, and pay for what you use. In other words, we were describing the basic elements of the on-demand economy. We just didn’t know it at the time.

What exactly is the On-Demand Economy?

Tech Insider Magazine defines it as the economic activity created by technology companies that fulfil consumer demand via the immediate provisioning f goods and services. Uber, eBay, Lyft, and Airbnb are classic examples of the On-demand economy in practice.

Field Service is also rapidly becoming an On-Demand economy business. Over the last twenty years there have been several industry trends and developments that have made this possible.

Here are a few examples of how Field Service Organisations (FSOs) are leveraging technology to become On-Demand economy businesses:

• Dynamic Scheduling provides real-time information on technician availability which permits FSOs to immediately commit to their customers when a Field Engineer (FE) will arrive on site.
• GPS Technology provides real-time visibility of FE location which enables immediate updates as to when the FE will arrive on site
• Freelancer Management Systems provide FSOs with the ability to source, train, and dispatch freelance technicians. As result, FSOs can scale their workforce on-demand.
• Advanced Technology such as IoT, Augmented Reality, and Artificial Intelligence provides the technical platform for delivering on-demand diagnostics to FEs and end-customers reducing resolution time and improving first time fix.
• 3D Printing Technology enables FSOs to produce parts on-demand. Thus, they can reduce their investment in spare parts inventory, improve fill rate, and lower their logistics and transportation costs.
• Servitization Business Models where manufacturers charge for usage of their product on a subscription basis, such as Rolls Royce’s “power by the all”; the ultimate example of an on-demand economy business. Customers pay for what they consume, when they consume it.
• On-demand consulting platforms like Si2Partners provide a collaborative platform for Field Service Leaders to access subject matter experts to validate thinking, solve problems, challenge assumptions, and formulate new approaches as needed.
  [/unordered_list]

The On-Demand Economy is no longer a concept of the future as far as the Field Service Industry is concerned. It represents a very attractive value proposition for both FSOs and their customers.

There are numerous case studies and data points available that demonstrate how the advancements identified above have helped FSOs improve the efficiency, agility, and economics of service. It will only be a matter of time before Manufacturers and FSOs develop and market on-demand value propositions to business customers in the same way that Uber or Airbnb have done with consumers.

Given current trends, FSOs will need to give serious consideration as to whether they should develop on-demand, “uber-like” service offerings for their customers. It is likely that customers will expect these offerings just as they have come to expect other types of services that have become standard within our industry.

 

There will obviously be leaders, followers, and those left behind when it comes to On-Demand. The question is where will you company reside on this spectrum. Will your company be first to market or will you wait to see what happens? The choice isn’t easy.

Ultimately the answer comes down to whether your company and your customers are ready for On-Demand.

If my experience offers any wisdom, then it’s that entry into any new service or market requires a good bit of market research, analysis, planning, and execution.

On-demand consulting platforms like Si2 Partners can certainly be a critical resource to field service leaders as they formulate their own on-demand service strategies.

 

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High-Tech manufacturers and their channel partners have begun to recognise the strategic value of providing extended warranty and extended service programs in the aftermarket. Indeed, these programs can represent a significant source of profitable and recurring revenue. As result, more and more service executives are tasked with the responsibility of building and growing these programs writes Michael Blumberg, President, Blumberg Consulting Group 

At issue, some companies are very effective at marketing and selling these programs while others face challenges. What factors set these companies apart? Does it have to do with warranty price being too high, service offerings being inadequate, sales efforts not effective, or just lack of interest among customers? Which begs the next question… What can service executives and warranty professionals do to overcome these challenges?

To answer these questions, Blumberg Advisory Group in conjunction with Giuntini and Company have launched a market research study among warranty and service professionals who influence, recommend  or make decisions about extended warranty and/or extended service programs.

The objective of this survey is to identify best practices involved in marketing and selling extended warranty and/or extended service programs, and evaluate the impact of these practices on key performance indicators (KPIs).    The findings will validate which strategies and tactics have the greatest impact on maximizing service revenue which in turn will help managers and executives become more effective in marketing and selling extended warranty/service programs.

More specifically, the survey result will evaluate how various elements of the service marketing mix (e.g., pricing, portfolio, terms & conditions, etc.) and service delivery infrastructure help or hinder KPIs. It will also examine the impact of alternative types of sales approaches and pricing strategies impact attachment and renewal rates. The information will be compiled a new benchmark research study, never presented, as well as from twenty years of progressive industry analysis of best practices.

 

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If you are interested in participating then you can access the survey through this link 

 

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The survey should take approximately 15-20 minutes to complete. One out of every 50 participants will receive a $100 American Express Gift Certificate, and every participant will receive an executive summary of the survey results.

Please note that the survey will close January 18th 2017. We also expect to publish results of this survey in Field Service News in the March/April timeframe

 

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Michael Blumberg, President of Blumberg Advisory Group discusses the emerging hiring trends of the variable workforce and freelance management systems and looks at how these can be applied to help field service organisations balance staffing levels with workloads...

If you follow the business news, you have heard about hiring trends which are moving away from the traditional full time employee model. Having full time employees means a guarantee of wages, benefits, vacation time, sick time and paying additional federal wage taxes.

With the new labour laws coming into play regarding overtime, this can mean additional expenses as well. It also means paying the employee even when there is a lull in the business. For a service company there may be peaks and valleys in workflow and the need for field service personnel. And while so much can be done on a remote basis, there remain many times when someone just has to be onsite to fix the problem. Clients are no longer localised geographically so having technicians who can get there quickly becomes an additional challenge.

For all of these reasons, companies have increasingly turned to freelance workers, AKA a Variable Workforce. Freelancers have existed for decades in the form of writers, artists, administrative assistants and others who were not full time or part time employees, rather they worked and were paid as contactors. The idea of outsourcing work is not a new concept either. The difference is the increase in the number of and types of workers for hire on a part-time or project basis. In relationship to the Field Service Industry, there are now highly skilled, well trained, specialised Field Service Engineers who are available on an as needed or project basis. These individuals are normally highly motivated as they essentially run their own small business and generally have a strong work ethic.

 

For most people in the Variable Workforce, they work this way by choice, enjoying the flexibility that being your own boss can offer. This workforce can be found worldwide and can get to those emergency on-site calls fast. That speed satisfies the customer and saves the service company money.

Given changes in the way companies staff their businesses, a new system of managing this process is a natural extension. With the increased pool of a project based, part time workers has come the growth of Freelance Management Systems (FMS). These online cloud based systems allow those companies looking for qualified workers, including Field Service Engineers, to find them quickly and easily.

The FMS platform handles the billing and payment, scheduling, provides a searchable database with skill sets and geographical locations of the personnel all at the fingertips of the companies who seek workers and the workers themselves. The workforce can market themselves to hundreds of companies at once and manage their incoming payments all at the click of a button.

FMS provides companies with the opportunity to achieve significant cost savings over time and the ability to accelerate strategic or organic expansion resulting in new clients, new service offerings, and/or new sales territories.

So what is the actual experience of companies using a Variable Workforce and FMS platforms? Have they been able to achieve these benefits or is it just hype?

 

When faced with questions like this, what would a great management consultant do? A survey of course! So that is what we did. We created an online survey for the Field Service Industry to look at these staffing trends and how it is being manifested.

We wanted to reach a broad range of companies, reaching out to professionals who engage field service staff or make decisions about field service staffing requirements for companies with field service functions for technology equipment they sell and/or service.

We wanted to examine the benefits of Variable Workforce models, particularly FMS. In addition, we wanted to understand key objections or concerns about the Variable Workforce and FMS models. And in doing so, we could assess the key motivators for using FMS and evaluate the impact of FMS on critical Key Performance Indices.

Finally we could use this information to identify the best candidates for using FMS. This article addresses Variable Workforce and Field Management Systems in the Field Service Industry.

The survey which we conducted yielded 203 respondents. The types of companies included those participants represent include all areas of Field Service: Third Party Maintainers/Independent Service Organisations, Original Equipment Manufacturers, Value Added Resellers, Systems Integrators, and Self-Maintainers.

The companies range in size from over $500 million in annual revenue to less than $50 million. These companies also varied in size as there were those who manage less than 100 field service events per month up to more than 1000 field service events. These field service events included emergencies, installations, inspections, and preventative maintenance or calibration. And the types of technology supported included Information Technology, Network Connectivity, Printers, Point of Sale, Telecommunications, The Internet of Things, Security Equipment, ATM and Banking, and Retail Marketing Equipment. The companies also ran the range of how a Field Service Business is run – as a cost centre, as a profit centre, as a strategic line of business, or as a revenue contribution centre.

What we found was that of the respondents, over three-quarters (77%) were currently using some type of Variable Workforce Model. Also, the respondents were two-thirds Third Party Maintainers (TPM)/ Independent Service Organisations (ISOs) or Original Equipment Manufacturers (OEMs).

 

One of the most important data points we found was that on average, the Variable Workforce users support more types of technology than companies who do not use solely a Traditional Workforce.

That is, those companies who use Variable Workforce are able to support 4 types of technology versus only 1.8 types of technology for companies who do not utilise Variable Workforce.

This piece of information reinforces the idea that those companies using a Variable Workforce can expand their service offerings not only geographically, but also to include more types of service by utilising the highly skilled specially trained technicians they can reach utilising this model.

The top three reasons that companies made the move to a Variable Workforce were:

• The ability to be agile and scale their workforce based on customer demands.
• Over half agreed that “We didn’t have enough work in selected geographies to justify hiring a full time Field Service Engineer.”
• Almost all said that controlling labor costs was a significant motivator.

Once making the decision to utilise the Variable Workforce, companies needed to find tools to help build and manage the staffing. Nearly two-thirds of those companies use a Freelance Management System. Others used and in-house team or 3rd party provider or staffing company.

Of the Freelance Management System users, almost all have been using it for at least one year and 60% for three years or more. Approximately two thirds of these companies are Third Party Maintainers/ Independent Service Organisations or Value Added Resellers.

What type of labor do they contract labour? The number one answer is project based work - an overwhelming 81% of the respondents. Not only do companies who use a Variable Workforce support more technologies than non-users, but also FMS users tend to support more types of technology. On average the companies who use FMS support 4.3 types of technology versus only 2.8 types of technology for non-users. This is most likely due to the ability to have more types of specialised engineers available to the FMS users.

As is the case with most changes, companies considering using the Variable Workforce and FMS to support that staffing model had concerns about moving the impact it would have on their business.

 

These concerns included a fear of a negative impact on customers, how would this change impact the customer and their relationship?

What did they know about the reliability and technical capabilities of the workforce they were hiring and how could they really know who these people were? And would the savings they thought they would get in the long run really be enough to justify the cost of making this change?

The companies we surveyed told us that ultimately the most compelling reason to make the switch was that the FMS platform is agile, giving companies the ability to scale up quickly to meet seasonal, cyclical and short term demands. In fact, 71% of users found this to be the case.

The benefits of FMS and the Variable Workforce these companies have realised include the ability to cover a greater geographic region, increased service coverage, increased flexibility, and lower overhead.

FMS adopters have been able to gain more business and have been able to increase their field service work.

They have experienced such success that 76% of them reported an increased demand for FMS just in this past year. In fact, most of those have increased their use by at least 15%.

 

The increased usage stems from the positive results of New Service Lines, New Customers, and Increased Geographic Coverage. The results show that the very reasons they considered making the move to FMS is now leading them to utilise this model to an even greater extent.

Taking all of the survey results into account, we feel confident that the need for and usage of Freelance Management Systems for the Variable Workforce in Field Service will continue to increase over the next year as well.

Companies of all sizes adopted this model have found the results to be overwhelmingly positive. A decrease in overhead combined with an increase in the ability to serve customers equals increased success. As one survey participant summed it up, “Increased revenue and additional customers [are] driving volumes!”

 

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Effectively managing the peaks and valleys in field service demand is one of the greatest challenges facing managers and executives across a broad array of market segments says Michael Blumberg, President & CEO of Blumberg Advisory Group, Inc.  Here, we publish the first part of extracts from his White Paper, "The Variable Workforce Model",  on how the momentum for freelance service technicians is building and potential solutions for managing them.

The Field Service Dilemma

Typically, temporary or contingent labour was utilised to support periods of peak demand: when there was a spike in new product sales or when brought about by seasonal issues. For example, a surge in installations or refreshes resulting from new product purchases required that the service organisation employ additional field service engineers (FSEs) to complete the installations in a timely manner.

However, relying on a temporary workforce to handle emergency maintenance was historically viewed as anathema to service executives within companies that sell equipment. This was because the FSEs were typically viewed as an extension of the sales team and thus vital to keeping the equipment operating and the customer happy. The conventional wisdom was that if equipment failed to operate properly then the customer would become irate, blame the manufacturer or reseller, and stop buying their products.

FSEs were considered to uniquely possess the specialised knowledge and skills required to resolve emergency issues. These skills took years to acquire and were difficult to replicate. How could emergency service be trusted to temporary employees with limited knowledge or experience with the product?  As a result, peaks in demand for emergency service were typically handled by asking FSEs to work overtime hours.

Setting the groundwork for the variable workforce

In the mid-1980s a number of service networks were created among like-minded service providers (e.g.  resellers, OEMs, etc.) to provide FSE coverage in geographic areas where their partners lacked specific skills sets: the beginning of the managed service provider concept.  Another driving force behind the decision to use contingent labour was the fact that the economics of hiring full-time personnel were not favourable. With margins declining, it was difficult for service providers to justify hiring additional personnel. Turning toward a network of vendors, subcontractors, and service companies to fill peaks in demand became a viable solution for many service providers.

 

In the 1990s outsourcing of non-core activities became popular with a number of prominent original equipment manufacturers such as Cisco, NetApp, IBM, and HP who outsourced non-strategic field service functions to Third Party Maintenance companies.

The recessions of 2001 and 2008 led to layoffs and hiring freezes across a wide array of industries. Service providers could not risk having situations where field service engineers were not available to support customers’ requests. Rather than keep non-essential workers on the payroll, companies realised they could reduce operating expenses and lower overhead costs by hiring field service engineers on a per call basis; as consultants or freelancers.

The freelance model has now become main stream within the field service industry. It gives service providers the ability to manage field service delivery through a variable workforce model. Maintaining a field service workforce on a full-time basis represents a short-term, fixed cost for service providers. With field service experiencing its own peaks and valleys in demand, a service provider can now convert a short-term fixed cost into a variable expense.

Options for building a variable workforce
[quote float="right"]Field service companies have a number of options available to them for obtaining variable field service labour.

Today, companies who support or maintain large sets of geographically dispersed technology and environments such as ATM machines in retail locations, Wi-Fi access points in coffee shops, or Internet of Things enabled technologies, have a number of options available to them for obtaining variable field service labour. These include: [ordered_list style="decimal"]

 

1. Implement Master Service Agreement (MSA) with one or more companies. This usually requires the OEM hand-off all on-site service requests to the Field Service Organisation who is responsible for managing their own workforce. While this is one of the simplest ways to obtain access to a contingent labour force, it is often the most expensive; particularly if the FSO is using its own workforce to perform the on-site request. This is because the FSO’s price per service call usually takes into account direct labour costs, plus parts, overhead, risk and profit.
   Furthermore, the FSO may not be able to provide their client with full visibility, accountability and control into the service delivery process. Basically, the client is alerted to when a call is dispatched and when it is completed, not to what occurs in between.
2. Manage subcontractors on their own. Another option is for a company to build its own variable workforce through a “Direct-To-Tech” approach. This requires that a company hire independent contractors either directly or through a staffing company, or they can reclassify existing full time FSEs as independents. Reclassification could create problems from a legal and financial perspective.[quote float="left"]The Direct-To-Tech model can be very successful but only if the nature of the work is truly independent contracting, not a second class worker.

    

   More importantly, setting up and managing a variable workforce labour pool requires an investment in mobile communication and collaboration technology, as well as new processes, procedures, and training for both management and dispatch staff.
   Companies who don’t approach this challenge strategically often end up with ad hoc systems and processes that are cumbersome and unscalable. All too often, companies end up blaming the subcontracted or freelance workforce when the real root cause of the issue is a lack of robust and scalable systems that lead to mismanagement.
3. Adopt a “Sharing Economy” model. Companies who are willing and able to manage teams of individual workers can turn to a sharing economy model. In this scenario, a company would use an Internet platform, provided by a 3rd party technology vendor, to recruit, on-board, train, dispatch, manage, and pay individual contractors. There are substantial cost savings to a company who is willing to pursue this course of action. Improvements in service quality and productivity are also possible .Freelance contractors are typically more engaged and motivated since their income is directly proportional to the quality of work performed and number of assignments they accept. More importantly, it avoids the risk of misclassifying workers. Freelancers who make themselves available through this type of labour model have made the decision to become a small business. In their work as independent contractors they have the ability to decide how many companies they contract with and which types of jobs they select, how and when they go about performing their work and how to best use their own tools and equipment.
   [/ordered_list]

All things being equal, we believe the sharing economy model offers the optimal solution for obtaining access to a variable workforce. This is provided the company using this model is prepared to engage in the necessary leg work required to manage teams of independent contractors through a Freelance Management System (FMS) platform.

 

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Watch out for Part 2 of this White Paper. Download the version here

 

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Service organisations who have integrated field service and reverse/service logistics processes report a higher level of service performance than those who have not, reports Michael R. Blumberg, President and CEO, Blumberg Advisory Group, which has conducted a survey of 250 field service companies companies in the high-tech sector.

Much attention has been given in recent years to the need to automate field service and service parts logistics processes through the implementation of Enterprise Service Management (ESM) systems, . Although the benefits from improved automation are well documented, there is a segment of the market that faces challenges to achieving measurable gains in productivity and efficiency as it relates to key performance indicators (KPIs). This is especially true for KPIs associated with service parts logistics activities. We believe these shortcomings are due in part to lack of integration between field service and reverse/service Llogistics functions.

In order to validate this hypothesis, we conducted a survey among a cross representative sample of companies in the high technology service and support industry. Over 250 respondents participated in the survey, which was sponsored by IFS.  The survey results reveal a number of very interesting trends:

1. Greater reliance on remote support: The survey results support the growing trend toward resolving service requests remotely without the need to dispatch a field service engineer. 40% of companies can resolve more that 25% of service requests remotely by sending out a replacement spare part. Over one quarter of respondents expect this trend to continue to increase over the next 18-24 months.
2. Best of breed solutions outperform integrated solutions: Despite the breadth of functionality found within integrated enterprise systems, our results indicated a higher level of satisfaction with Best of Breed solutions than with Integrated ESM platforms. Over one-third of respondents were extremely satisfied with their Best of Breed ESM solution compare to 14% with integrated ESM platforms. We believe this is because best of breed solutions are more focused on the detailed processes and transactions involved in managing a field service and/or reverse logistics operation.
3.  Perceived gaps in reverse logistics functionality: Many companies perceive their ESM solutions have gaps in the ability to deal with reverse/service logistics issues particularly when it comes to depot repair activities. For example, 27% of respondents claim that their ESM is not very effective in tracking the results of depot repair test and screening activities. Another one quarter indicated their systems are not very effective in automating the work flow or business rules associated with processing returned materials.
4. Integrated automation is critical to success: The level of integrated automation between field service and reverse/service [ogistics functionality has a direct impact on ESM effectiveness. More importantly companies with a high level of integrated automation perform better on key service performance metrics than those who do not. Companies with some level of integrated automation experience a higher SLA compliance rate than those have no integrated automation (93.4% v 87.9%) as well as a lower no-fault-found rate (26.1% v 38.3%).[/ordered_list]

In summary, our research findings reveal that companies who have been able to successfully integrate field service and reverse/service logistics processes report a higher level of service performance than those who have not. The most effective integrated solutions are those that incorporate integrated, best of breed functionality for both field service and reverse/service logistics processes. More importantly, the data reveals that these integrated, best of breed solutions are not only highly effective in managing ongoing service requirements but essential to overcoming critical business challenges such as improving remote resolution rates and improving field service engineer productivity rates.
We’d like to thank IFS, a leading provider of ESM systems, for sponsoring our research study. IFS has made available the results of our study in a 14-page whitepaper that can be downloaded at Whitepaper Download. To better understand the implications of these findings to your organization or to define requirements for a best of breed, integrated solution, schedule a free strategy session with us today by clicking here.

 

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President and CEO of the Blumberg Group, Michael Blumberg, takes a detailed look at the tablet repair market... 

Adoption of tablet computers among consumer and enterprise customers is growing at an incredible rate across the globe. Though the concept of tablet computing was introduced unsuccessfully in the early 2000s with the Microsoft Tablet Computer, the launch of the original iPad in 2010 ushered in the boom era in which we’re currently living. Computer industry giants and young upstarts alike design and sell tablets in an ever-increasing variety of shapes and sizes, with features ranging from basic touchscreen functionality to complex integrated networks of sensors and input/output options, and at a wide variety of prices.

As the rate of tablet adoption and usage climbs, so too does the need for testing, screening and repair of these devices. Current implementations of in- and out warranty service models suffer from myriad reverse logistics inefficiencies that result in increased costs associated with processing returns and getting back into the market. The issues involved range from front-line customer support challenges, to costly testing, screening processes to the geographic distribution of quality repair facilities.

In a new market research study of OEMs, Retailers and Wireless Carriers in the tablet repair market; respondents highlighted key factors in selecting a tablet repair vendor. In this feature we discuss how the booming tablet market makes choosing a 3rd Party Reverse Logistics vendor critical to increasing associated forward and reverse logistics velocities and cost efficiencies, which ultimately affect the bottom line.

We emphasise the market and benefit of “optimised” screening and cleaning for retailers and wireless carriers (with generous customer returns policies), as well as the manner by which functional testing can augment the speed and quality of the return, repair, and/or replacement, of tablets. Additionally, we describe the characteristics of the ideal tablet 3rd Party Service Provider (3PSP) and the business benefits with this approach. Finally, we take a look at the multi-tablet testing system, global facilities and IT infrastructure of one particular vendor, CTDI, illustrates some of these concepts. New Developments in Tablet Computer Repair

The tablet computer market

The Tablet Computer market is young, already large, and very much still growing. Even in North America, which leads the world in early adoption of tablets, the market is far from saturated. Tablet computer shipments in North America will have nearly doubled between 2012 and 2014, to almost 120 million units shipped this year. North American Tablet Installed Base is on a similar trajectory, doubling from 104 million in ’12 to a projected 220 million this year. Continued rapid growth is projected over the next several years, as well, with the installed base projected to double again to more than 320 million units in 2017.

We can trace this exponential growth to a number of trends in the consumer and enterprise spaces, including the continued evolution of both technology and usage habits away from desktop machines and towards mobile devices. As tablets become cheaper, better and faster, users are replacing ageing PCs with sleek new slates. This trend is now commonly referred to as the dawning of the “Post-PC era.” New Developments in Tablet Computer Repair

As this so-called Post-PC era evolves, manufacturers are experimenting with varied tablet computer sizes, feature sets and price points. Major software vendors focus more on developing tablet-specific platforms and applications, as well resulting in the development and deployment of Tablet Computers in vertical market applications like Point of Sale, Supply Chain, and Healthcare. With more hardware and software applications to fit more and more use cases, tablet adoption has moved from leading edge early adopters to mainstream consumers. And the early adopters are upgrading to newer models. Refresh cycles for both hardware and software are being established and, as such, the distribution between new vs replacement tablet shipments is a key data point to understanding the overall market. New Developments in Tablet Computer Repair

Current support models

Organisations involved in the tablet support market are first and foremost affected by the high return rate currently associated with retail sales. Generous return policies often allow buyers 15-30 days to return a tablet even after opening the box and using the device. As such, buyers’ remorse has become a significant cause of return. Often times tablets returned due to buyers’ remorse exhibit little or no defects - however small - but become liabilities due to insufficient reverse logistics supply chains. This is because these units still need to be processed so that the seller (i.e., retailer, carrier, OEM) recovers maximum value.

Another problem with the current tablet support market is a lack of front-end screening and diagnostics to resolve end-users technical issues and challenges with the devices. Sufficient telephone-based or remote screening of tablet problems would greatly reduce the number of units returned through the reverse logistics supply chain, often as easily as walking the end-user through some simple knowledge-acquisition to “fix” their device problems. Similarly, not enough troubleshooting occurs post-return, before the units are shipped back to the manufacturers or their authorised repair providers. Roughly, consumers return 5% to 10% of all new tablets sold in North America, with retailers usually sending those units directly back to the manufacturers without screening or diagnosing the units themselves.

Of these returns, some 30 to 40% are classified No Fault Found (NFF), and another 40% are Cosmetic Repair. The remaining 20% or so suffer from cracked screen and broken board issues that require more costly repairs. However, the repair yield on defective units is typically in the range of 50% to 60%.

For some OEMs, this cost is too great, and results in selling the defective components for scrap value. In other words, more than three-quarters of returned tablets are either fully functional or in need of only minor, topical fixes before being repackaged and placed back in finished goods inventory. But almost all of these units are immediately sent back to a 3PSP where they are screened, tested, cleaned, refurbished, repackaged and then resold. Even when it comes to devices covered under warranty, consumers send their defective devices through the same reverse logistics supply chain in exchange for a new, replacement device. These activities, especially those related to testing & screening, have inherent challenges. For the most part, they are largely an inefficient, in terms of both cost and time as they are often extremely labor intensive and may not take advantage of advanced technology for automating the process.

Furthermore, the time spent transporting tablets to and from centralised return and facilities adds to the overall inefficiencies when processing returned units.

The optimal solutions is to move towards a regionalised reverse logistics model with several facilities located strategically throughout a region (e.g., North America, Europe, etc.) for screen, clean, and repair. This offers the shortest time between out-of-service tablets and those either returned and in use again; remarketed as is; utilised for maintenance replacement; sold as a refurbished unit or for reclamation, etc. Very few vendors operate multiple facilities across the world, let alone high volume regions like North America. As such, the screening and repair process suffers from reverse logistics inefficiencies based largely on too many devices having to travel too far for problems that could be solved locally.

New Developments in Tablet Computer Repair

Volume of tablet returns is expected to rise over the next several years. In turn, the volume of devices needing test, screen, and repair activities will also increase. For 2013, tablet returns in North America were estimated between 7.6-14.3 million units. By 2015 the volume of returns could rise as high as 20 million units. Those numbers will continue to increase in the near-term following 2015. New Developments in Tablet Computer Repair

Alternative solutions pros & cons

Clearly the tablet repair market operates inefficiently. As things stand now, everyone loses: retailers, manufacturers, service providers and consumers alike. A variety of alternative solutions to the current methodology offer benefits, but these are not without their downsides as well.

Improved front-end diagnostics is the first line of defence that could aid efficiencies. Diagnosing the problem with a tablet before its returned by the consumer - and subsequently returned to the manufacturer by the retailer - would significantly reduce the number of devices needlessly returned, tested, and repaired. The problem here lies with both retailers’ and consumers’ attitudes towards adding a layer of remote support. Many retailers currently offer a “No Questions Asked” return period of 15-30 days on tablet computers. Consumers like this policy because it gives them the chance to try a new device in their real life workflow with the safety net of getting their money back should buyers’ remorse set in. Retailers, of course, are reluctant to do anything that might drive their customers away to a competitor.

This undoubtedly includes revoking existing policies. Moreover, adding a layer of remote diagnostic support will introduce an additional cost to retailers’ tablet sales operations. Even when it comes to in-warranty repairs, manufacturers are more likely to issue an advanced exchange unit then attempt to diagnose the problem remotely. The defective unit is then sent back through the reverse logistics supply chain and added to the costs and liability associated with warranty support.

As suggested earlier, a second way to improve reverse logistics efficiencies is to move the return & repair facilities closer to the customer/retailer through a regional service model. Many 3PSPs currently offer only one, centralised US-based repair facilities. This practice directly contributes to inefficiencies in the reverse logistics supply chain - i.e. Increase time and fuel costs associated with shipping tablets great distances for testing and screening work, and then possibly on to other facilities for refurbishment and liquidation. Performing critical reverse logistic functions in strategically located facilities throughout the United States would cut transit time, resulting in increased velocity associated with turning distressed inventory from a liability into an asset. Of course, the downside associated with this solution is cost. Opening additional facilities on American soil, if ones do not exist already, is costly, both on its own and as compared to running offshore operations.

More effective device testing and screening prior to repair is a potentially viable alternative solution. Various methods of testing exist and, again, each carries with it pros and cons: New Developments in Tablet Computer Repair

MANUAL TESTING:

Inexpensive and fast to implement but subject to human error and costly in the long run.

DIAGNOSTICS TESTING:

Automated but reliant on device/API/OS-specific software wrappers. New tests may need to be created with new releases of a device, an API or OS.

BOARD LEVEL TESTING:

Testing the devices in developer or engineering boot mode. This process can be automated. The problem is that it does not address the problems with the device from an end-user perspective and, as such, real-world functionality problems may be missed.

OPEN UNIT TESTING:

The device’s screen and cover need to be removed in order to test the board on a bed of nails. This breaks the integrity of the tablet’s seal and adds time to the process, resulting in increased cost.

EMBEDDED DIAGNOSTIC TEST:

This type of testing can query the hardware, but not stress its functionality.

AUTOMATED TEST EQUIPMENT (ATE) OR “BED OF NAILS” TESTING:

This type of testing, leveraging the investments the OEM or their contract manufacturers make in end-of-line manufacturing testing, is costly, difficult to duplicate and locate regionally, and may require considerable labor in terms of the finished product and the multiple stages of testing implemented. It is also generally slower, due to it being an end-of-line test, and geared for manufacturing facilities, not repair facilities. Furthermore, Bed of Nails tests the connectivity between components as opposed to their functionality.

As evidenced, current test methods for tablets possess significant shortcomings, though testing on the whole unit does offer efficiency improvement over the “just send it back” handling of returned tablets. New Developments in Tablet Computer Repair

LIQUIDATION IS ANOTHER OPTION.

Liquidating returned tablets for their asset recovery value may seem like the most expedient approach for extracting value out of returned devices. However, it is a money-losing proposition in the long run given the high rate of NFF and cosmetic repairs, combined with the increasing volumes in the industry. Furthermore, it does not address issues associated with defective or failed components. As such, the manufacturer and its 3PSPs loose valuable intelligence that can be utilized to improve the design and/or engineering of tablet devices. Though tablet liquidators persist, this approach in the current market will have limited benefits as volumes increase and consumers hold onto their devices for an extended length of time. New Developments in Tablet Computer Repair.

Optimised test & screening solution

An optimised screening system can maximise efficiencies while avoiding many of the shortcomings exhibited by the aforementioned testing methods. Screening systems able to test 10 or more tablets at a time can offer increase speed and reduce costs associated with testing. Consistency of process and results will also rise thanks to the use of automated and semi-automated testing systems. Thus, “Screen and Clean” promotes the cost effective recovery of good units with minor cosmetic refurbishment to be processed for resale. Additionally, they can be used as maintenance replacements, or for the dispositioning of products into other markets at the best return for the retailer.

Leading-edge screening technology includes application diagnostics and embedded diagnostics that can be loaded onto devices. Tests can be run on devices in user mode as opposed to “developer” or “engineering” mode to ensure that everything works as it should from the end-user’s perspective. Functional testing of device circuits may take the form of “parametric” testing, which leads to an even greater level of reliability and quality of results.

 

A regionalised approach to testing, screening, and cleaning the units can also speed up the reverse logistics flow. Performing these functions in strategically located facilities in high volume areas within miles of major metropolitan areas will improve efficiencies as described in Section 4 above. Authorising these facilities to handle key activities like repair, refurbishment, and liquidation will reduce costs for retailers while improving asset recovery values and the speed at which tablets are returned back into consumers’ hands. This increased efficiency has the added value of making retailers’ extended warranty plans more economically viable. Furthermore, the regional model described here will also fulfil OEM's requirement to minimise costs and deliver superior customer services as measured by repair turn-around time. New Developments in Tablet Computer Repair

Vendor Selection Criteria

We surveyed a cross-section of OEMs, Retailers and Wireless Carriers regarding their needs and attitudes towards the tablet repair market. The majority of respondents surveyed indicated that their customers are required to mail in defective units to an Authorised 3rd Party Service Provider (3PSP). Many of these 3SPSs are managed by OEMs and/or their subsidiaries, speaking to the OEM lock on the still-nascent tablet repair industry.

Survey respondents spoke to a number of criteria important in choosing and sticking with a vendor. The most important factors in choosing a vendor, ranked in order of priority, are:

• QUALITY OF REPAIRS
• COMMITMENT TO QUALITY METRICS
• ABILITY TO MEET TURNAROUND TIME (TAT)
• REQUIREMENTS (2-5 DAYS)
• WILLING TO INVEST IN TRAINING
• QUALITY & THOROUGHNESS OF REPORTS
• QUALITY OF IT INFRASTRUCTURE

Clearly repair quality is paramount in vendor selection. Qualified vendors must be able to meet OEM specifications and otherwise offer consistently high quality test and repair services. Long-standing, standardised processes across a vendor’s network demonstrate commitment to quality metrics.

With turnaround time being ranked second in priority, demonstrated high-velocity forward and reverse logistics is also a key criterion in choosing a vendor. Vendors who operate multiple facilities in high-volume regions and those who offer innovative time-saving services, such as in-field warranty services, excel at meeting and surpassing TAT requirements at scale. New Developments in Tablet Computer Repair 13

Also indicated are the quality of reports and IT infrastructure. Tablets have become highly complex pieces of equipment, and a vendor’s diagnostic system must be able to test many components, sensors and functions (e.g. Microphone and speaker, Cellular and WiFi connectivity, Accelerometer / Gyroscope / Magnetometer, and so on). The vendor must also offer a thorough and reliable methodology for reporting results in both high-level “Pass/Fail” and granular detail. New Developments in Tablet Computer Repair

Vendor spotlight – CTDI

One vendor whom we’ve worked with, and regard as a highly capable and qualified service provider, is CTDI. This company excels in all areas of tablet diagnosis and repair, including the specific factors identified as critical by our survey respondents. CTDI brings 39 years of technical expertise, innovation in service models, and global testing and repair capabilities to the market. They have the ability to test more than 75,000 unique model types and offer the most comprehensive repair service portfolio in the world.

CTDI’s NightHawk Test System, an advanced multi-unit tablet tester is a prime example of the company’s commitment to technological innovation in a rapidly evolving sector. NightHawk can test 10 tablets simultaneously, leveraging innovations like front-loading tablet trays that greatly increase test capacity and daily productivity. With NightHawk, CTDI has the flexibility to keep pace with the latest tablet models, operating systems and APIs while also leveraging extreme efficiencies that keep reverse logistics velocities high. NightHawk performs fully functional testing of tablets utilising CTDI designed and developed Apps tailored to access and utilise the Tablet API’s.

The purpose of these applications is to simulate the end-users tablet experience and will test the following tablet functionality:

• Connectivity
• Multimedia
• Battery
• Touchscreen, Buttons, LEDs
• Sensors
• System Information

CTDI’s ability to offer fast, high quality screening and diagnosis of multiple brands and models of tablet devices couples with their OEM authorized repair and excess asset management services to provide a comprehensive portfolio of service offerings. CTDI employs over 350 engineers to develop testing for a variety of OEM technologies, ensuring ongoing innovation to keep pace with this fast-moving market.

CTDI has a network of 69 facilities operating in 15 countries, with 48 facilities in the US alone. This mature, global network allows CTDI to offer high velocity reverse logistics by cutting down on transit time to and from their facilities. The quality of CTDI’s infrastructure is outstanding, and efficiencies are further increased by way of CTDI’s innovative, scalable Web-based testing technology. The company’s proprietary Warehouse Management System (WMS) and eBusiness tools also allow customers to enter and track orders online 24/7. In summary, CTDIs’ state of the art technology, world class processes, and global presence allow for high speed, high quality in region repairs which supports customers’ demands New Developments in Tablet Computer Repair for immediate or very short interval repair or replacement as well as meets the OEMs’ requirements to minimise costs. New Developments in Tablet Computer Repair

Summary:

The rapid growth of the tablet computer industry has created a demand for a highly efficient approach to diagnosing and repairing returned units. Our research findings show that a majority of tablet computer suppliers (e.g., OEMs, Retailers, and Carriers) waste time and money due to multiple issues in the current flow of reverse logistics. Specifically, too many devices are needlessly returned to the manufacturers’ 3PSP where time and effort is spent on testing the devices instead of screening via phone or at the retailer, and too many devices have to travel too far a distance for quality diagnosis and repair.

Market research surveys confirm that the tablet market will continue to expand by virtually all measures, including units shipped and install base. A byproduct of this growth will be the continued, increased need for in- and out of warranty repair. Our survey of decision makers across the OEM, Retail and Wireless Carrier segment confirmed the need for quality screen and repair service vendors, and also identified the key criteria involved in selecting and renewing relationships with vendors. Factors ranking high on the list of criteria included quality of repairs, ability to meet turnaround time, willingness to invest in R&D and training, and quality of reports and IT infrastructure. The primary methods discussed to alleviate such inefficiencies are: improved front-end diagnostics, moving the return & repair facilities closer to the customer/retailer through a regional service model, and, perhaps most importantly, optimised test and screening that forgoes the costs and slow speeds associated with standard testing.

As analysed in the vendor spotlight, CTDI is one vendor who meets all of these criteria with their automated multi-unit test systems and deep roster of highly trained technicians and innovative engineering talent. CTDI is also uniquely positioned to leverage their global network of repair facilities, technical competencies, and logistics support services to increase reverse logistics velocities, add value, and drive costs down. Given the huge potential for cost savings, risk protection, and revenue gains, companies should seriously consider building a business case and ROI justification for investment in solution such as the one offered by CTDI. New Developments in Tablet Computer Repair