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Challenge
Ms Office Solution had been handling reverse logistics services for a key segment of this technology leader’s business when it discovered that problems with the client’s in-house dispatching operations were slowing returns velocity.
In its effort to get the right parts and the right technicians to customers at the right time, the client was paying premium costs for replacement part transportation and labour, yet still suffering from late returns. And by using manual, silted methods to manage various aspects of dispatching, the client’s dispatching and downstream supply chain processes had become inefficient and error-prone—all of which was being exacerbated by corporate growth.
In order to handle the customer demands that come with fast growth, we needed a much smarter, streamlined and more cost-effective way to dispatch parts and labour to the field, and help increase velocity of replacement part returns,‖ said the VP of Service Supply Chain at the Fortune 500 company. ―It was clear that, to accomplish this, we needed greater visibility into, and the ability to implement comprehensive analytics across, our post-sale supply chain. It was also clear that, since this wasn’t our core competency, we needed to turn to post-sale supply chain experts.
Solution
The company chose to extend its engagement with Ms office Solution beyond reverse logistics to also include dispatching. ―Ms office Solution understands the end-to-end service supply chain better than any other provider and is second-to-none when it comes to using advanced analytics to deliver the outcomes we need,‖ said the client’s VP of Service Supply Chain.
Ms office Solution conducted a complete analysis of the client company’s post-sales service
operations, focusing on global parts and labor dispatch, and transportation costs. It also “leveraged existing technology to connect the client’s CRM and ERP systems, transportation and 3PL providers, and disparate data sources, and provided an all-inclusive data view on a single screen, instituting front-end management of their triage and entitlement processes. Ms office Solution is a managed services provider that specializes in complex, global service
supply chain operations – the flow of people, parts and services following the sale of a product. It is widely recognized for its unique combination of domain expertise, technology-driven delivery and embedded analytics-based process improvement.
Analytics Approach
Ms Office Solution’ overall analytics approach includes quantitative, qualitative and predictive methods.
• Operational Segmentation results in specific actions that Ms office Solution can take to address the most at- risk, underserved segments of the client’s customer base.
• In Depth Voice of Customer data ensures Ms office Solution understands the customers’ top issues and remedies for addressing them.
• Predictive Analytics, which is deployed against these data points and intelligence, are used to continually improve client performance and reduce customer effort.
• Causal Effect Analytics allow clients to demonstrate that actions taken and improvements enabled by Ms office Solution are a direct result of their plan.
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Many of Ms office Solution’ clients also take advantage of OPTvisionSM, the company’s proprietary visibility and real-time alerting platform, which transforms these analytics into insights and specific actions that improve processes, preemptively eliminate issues and accelerate resolutions— all with the aim of saving money, boosting revenue and enhancing the client’s end-customer experience.
For this Fortune 500 technology leader, Ms office Solution handled front-end management of their triage and entitlement processes, enabling it to improve SLA adherence and first-call resolutions. This led to a significant reduction in truck rolls and related service labor costs. By incorporating advanced data analytics into each part of the process, Ms office Solution’ subject matter experts were able to identify opportunities to dramatically reduce labor and transportation costs while improving asset recovery and the end-customer experience.
Results
Saved $8.7 million in global parts transportation costs Using advanced analytics, Ms office Solution found that same-day dispatches accounted for 50% of all global replacement parts shipments. And, by conducting days-to-usage analysis, Ms office Solution discovered that same-day and next-day shipments were only being utilized within their SLA timeframes 33% and 41% of the time, respectively. In fact, parts were often not installed or used until eleven or more days after delivery
Ms office Solution then built a predictive model to forecast whether replacement parts would be utilized within their shipped timeframe. It segmented parts on a scale of one to 10, with 10 essentially guaranteed not to be used within the SLA window. Based on the categorization, Ms office Solution proactively communicated with relevant customers to determine if a deferred, less-expensive shipment option—such as Next Business Day (NBD) instead of Same Day (SD), or Customer Engineer Pickup (CEPU) instead of Next Business Day—would be acceptable.
As a result, Ms office Solution was able to schedule the dispatch for when customers could receive and utilize the material. By replacing shipments with less expensive methods, and reducing unnecessary truck rolls, the client was able to save $8.7 million annually.
Reduced field engineer visits by 11%, saving $3.4 million Ms office Solution used the same approach that was successful with parts dispatch analysis, to examine field labor dispatch. It found that, unbeknownst to the client, the third-party providers the client was using for field engineer services automatically scheduled a technician every time a case was created. Since the providers generated hundreds of dollars/ event, it was in their interest to do so.
Ms office Solution analyzed a number of data points, including geographic region, type of part, customer and third-party vendor, to predict which service events didn’t require field technicians. It then called these customers to ask whether they wanted field engineer assistance. In about 11% of the cases, customers said not only didn’t they need help, they were happy to convert to parts-only dispatch It was much easier for them than dealing with on- site support. This saved the client $3.4 million in annual labor costs.
Improved inventory utilization and return velocity, saving $9 million The front-end utilization improvements that Ms office Solution made possible naturally enhanced back-end asset recovery as well. Using parts when they arrive minimizes exceptions that slow returns – such as lost parts that need to be resent, rescheduling that has to occur when planned system downtime is required and field engineers holding parts until they can do the installation, all of which leads to customers not returning old parts until new ones are in place.
Not only did the client’s average Return Material Authorization cost drop 42% per dispatch, but also its 30-day returns velocity improved by 20 points, which led to substantially lower new purchase and holding costs (Figure III). All of these factors contributed to saving approximately $9 million annually. Figure III, Domestic Field Recovery Rates Utilizing service parts within their respective SLA windows drives faster and greater recovery rates.
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