maximizing service profitability at optimized cost to serve: next generation service process...

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

Maximizing service profitability at optimized cost to serve: Next generation service process execution

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© 2014 Copyright Genpact. All Rights Reserved.

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


“A business absolutely devoted to service will have only one worry about profits. They will be

embarrassingly large.”

3

Henry Ford

“An excellent product no longer guarantees business success. Finding new sources of income and growth has become a matter of competitive

necessity for traditionally product-oriented companies”

© 2014 Copyright Genpact. All Rights Reserved.4

Organizations with higher “services” than “product” revenue growth see their stocks rising!!!

Source: Report by Mckinsey - 2011


Are companies heeding the advice and FOCUSING well?

5

The real struggle lies in “FOCUS”


The Aftermarket Services (AMS) value chain

6

• 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 • IB service

coverage %

• Cost per sale /

renewal• Contract

profitability

• Response time• First call

resolution

• On-time

delivery• Back orders

• Claim to

recovery TAT

• Analysis

accuracy

Service Growth Focus Service Execution FocusTransaction Processing

and Reporting

Setup and Planning

Service Request

Management

Warranty Management

Service Fulfilment

Parts Management

Service Invoicing and

Reporting

Contract Management

Product Returns and Refurbishing

Gen

pac

t A

MS

O

ffer

ing

s

• Remote

resolution %• FE utilization

• Cost of

reverse

logistics • Repair TAT


A close look at the AMS space

If 100 units go the ‘Forward’ route

FORWARD via dealer or direct to home

REVERSE: Reuse, repair, recall, recycle

At least two units take the ‘Return’ route

7


AMS is an integral part of the reverse supply chain

Customer Support Operations

Call center, email support, or chat support.Often it is a combination of all of these.

Logistics Operations

Receive goods from customers, move back to origin for resale/replacement or to eWaste facilities

Storage & Warehousing Operations

Returned goods and parts are tagged, tracked, and stored until decisions are taken for repair, reuse, resale, and scrap

Repair/Refurbish/Resale Operations

Inspect returned goods, repair, refurbish, revive and re-sell

AMS

Control

Control

ManageManage

8


What customers expectThey do not expect “too much.” They just expect “service delivery”

Availability

Service

Reliability Predictability

Customer Delight

Customer Ecstasy (High Maturity Level)

Customer Service (Base Maturity Level)

5%

95% of your customers

will be happy just with this

basic compliance

High Maturity State

9

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

No Automated Escalations

No Checks & Controls for

measuring Partner Performance

Lack of Service CultureCost Concerns

preceding service

priorities

Lack of Systemic

Interventions

High Dependency on ASC/ISCs

No control over

product and service

life cycle

Manual and

outdated processes

No objective review

mechanism

Despite best efforts, the result mostly is…

Customer and cost issues10


Challenges to achieving $$ impact

11

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

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

12


Focus and Forward: Effectiveness drives a much bigger impact than efficiency

Effective measurement drives improvement: Interplay of “smarter” processes, people, and technology is the key enabler

*Source: Blumberg Report

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%*

Service Factory: Integrated process and

execution


The 5 Cs of the foundation

C C CCustomer Satisfaction Cost Cash

CommitmentCommitment

CompetencyCompetency

ChangeChange

CaptureCapture

CollaborateCollaborate

To serve Translated to goals and guidelines

To execute Across the value chain

Mindset Focus on issue and customer

C

C

C

C

C

Sources of revenue (out of warranty) Segments of customer

In the “service” ecosystem With external and internal parties


The fundamentals: R5 and A5

A5

R5


Did you know?

Process

People

Technology

Companies that build Service Value Chains often find that 50 % or more of their profits end up coming from after-sale service and support

Service businesses have much higher profitability than the overall business unit – 76% higher on average

Consolidation of field engineer support and parts triaging teams can result in potential savings of ~15%

Remote monitoring deployment can reduce emergency dispatches by 30% and result in savings of ~5%

Manufacturers often have individual, disjointed IT systems to manage post sales services. An interconnected, holistic system of related processes and technology platforms is MISSING

Over the past few years, investments in service management software have grown by 25% annually – 2.5 times the rate of overall IT spending

Source: Reports by Accenture, Mckinsey, Deloitte; Genpact Insights


Service organizations are struggling to transform from cost to profit centersAn effective “service delivery model” will enable this process

Enabling service transformation

“Cost to Profit”

Optimize Cost to Serve

Increase customer satisfaction

Drive service revenue

Enhance service profitability

PeoplePeople ProcessProcess

TechnologyTechnology

Service Delivery Model

KPImeasurement

framework

KPImeasurement

framework


Building blocks of an effective service delivery modelNext generation service and business process execution

Creating next generation processes and institutionalizing KPIs

Creating next generation processes and institutionalizing KPIs

1

Technology platform as a key enablerTechnology platform as a key enabler

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

Creating a strong “backend” and service delivery model

Creating a strong “backend” and service delivery model

2

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

3


Presentation Title Goes Here


Intervention 1: Institute KPIs centrally and create next generation processes


KPIs to measure using AMS Smart Enterprise Processes

ILLUSTRATIVE

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

Service Fulfillment

Warranty Management

Parts Order& Logistics

Setup & Planning

Service Invoicing & Reporting

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

percentage• Resolution TAT• First time fixed

right

percentage

• Tat• Answer rate• Accuracy • First time

response

• Order accuracy• Tat• Back order %age

• Tat• Availability

percentage• Tools calibration

percentage

• Tat • Compliance

percentage

• Debriefing

accuracy• Missed billing $

SAMPLE


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


How KPIs link to business outcomes to drive action

Service Parts Management

2

Service Issue Resolution

Higher customer satisfaction Reduced service resolution TAT Reduced service cost

Optimized field/warehouse Inventory Improved order fill rate Reduced order fulfillment TAT

1• Percentage of total calls

resolved on initial contact

• Average cost per service request

• Average length of call as a percentage of target time limit

• Just in time (JIT) delivery %

• Order fulfillment TAT

• Back orders as a percentage of total parts orders

• Wrong shipment percentage

Business Outcome/ImpactService Area Related KPI




Intervention 2: Creating a strong “backend” and service delivery model


De-Couple, consolidate, and centralize: Building blocks

24

Field ServiceField Service Parts ManagementParts Management

FE SchedulingDispatch Creation

FieldRepair

Manage & Track Field Parts

Parts Ordering Tools Sourcing

Manage Field Returns

FE DebriefField Admin & Support Tasks

Field Service Metrics Reporting

Invoicing AuditUpdating 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


Centralized support platform: People and process

25

Call CenterCall Center

Product Support &

History

Product Support &

History

Field Service Support

Field Service Support

PartsSupport, Planning, and

Fulfillment

PartsSupport, Planning, and

Fulfillment

Returns Management

Returns Management

AdministrativeSupport :

Service invoicing, etc.

AdministrativeSupport :

Service invoicing, etc.

ISC/Field Engineer

Parts Supply

Customer Calls for Service

Via email, chat, phone, etc.

Knowledge Management

Centralized Support Platform

OEMOEM

Warehouse/LSP

Installed Base Management

Installed Base Management

Contract ManagementContract Management




Intervention 3: Technology as a key enabler


Beyond technology: Driving value across the AMS chain

27

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


Technology Platform: What does the market need?

Customer setup and admin

Add OEM Add product, parts, incidents,

installed base Add user Add policies, etc.

Service fulfillment support

Geo-tagged field scheduling and follow-ups

Step-by-step diagnostics Service checklist Voice of the customer (VOC)

Warranty management support

Warranty entitlement check Warranty payout definitions Warranty claims management Quotations

Service request management

Service requests, customer registration (contact center)

Service requests at carry-in centers

Online registrations

Parts inventory management

Parts request management Parts MSL, reorders, and

forecasting Defective returns,

replacements, DOA

Service vendor management

Add vendor Define vendor role Define vendor area of ops Vendor terms Credit management

Knowledge management

Guided troubleshooting Service manuals Repair history Product features Self-servicing

Contract management

Automated contract generation

Contract workflow (lead to conversion)

Contract profitability Contract SLAs

Service analytics and rigor

KPI visibility and analytics Scheduled reports Service quotations, partner payouts, and service financials Reminders and escalations


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

29


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

30

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


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/

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