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Lean Six Sigma in Field Service Organizations – Identifying and Eliminating Waste
You have no doubt read various examples where Lean Six Sigma was used to identify and eliminate waste in both manufacturing facilities and service companies (i.e. financial institutions and hospitals). Most of us can quickly see how concepts such as inventory reduction and improved product quality are applied to physical objects or documents. But what about Field Service Organizations where the primary product (a completed service request) is often vaguely defined and the main component (technical expertise) is intangible? How can we apply the same techniques to obtain the same results (increased speed, reduced costs, and improved quality)?
In this article we will focus on just one element of Lean Six Sigma: Waste Reduction. While service managers may intuitively suspect that there are many areas of waste within their organization, they may not realize that the same tools used to streamline production assembly lines can be used to improve field service processes.
Let’s begin by comparing the fundamental activities performed in both a manufacturing facility and a service field organization:
- Manufacturing: Product sales order is entered directly into the MRP
- Field Service: Phone call or e-mail manually entered into SMS
- Manufacturing: MRP checks parts stock lead times, current inventory, etc. before sending detailed demand to plant floor.
- Field Service: Typically SMS only checks technician availability before dispatching (with limited detail).
- Manufacturing: On plant floor – fabricating; assembling; testing.
- Field Service: At customer site – replacing parts; troubleshooting; adjusting.
- Manufacturing: Final QC inspection; Ship; Invoice.
- Field Service: Customer Sign-off; Forward info; Invoice.
Although the specific tasks are different (along with the terminology), you can see that there are many parallels within the two processes. And, being similar processes they often are subject to similar sources of waste. Below we examine the most common areas of waste that are normally targeted by Lean Six Sigma projects.
Processing waste is often the results of over processing in both manufacturing and service. In manufacturing this refers to making products at higher (and more costly) specifications than required by the customer.
In a field service organization you can over-service a customer by exceeding the contractual Service Level Agreement (SLA). For example, you may provide an average one-hour on-site response when the SLA only specifies an average 4-hour response. While it is usually better to over-perform than under-perform on SLAs, it still represents waste as you are not matching the customer demand requirements – which can lead to higher costs or missed revenue opportunities.
TIP: Measure your actual response times separately for each service area and compare to the local competition. In some areas you may have a competitive advantage (e.g. lower than industry standard response times) that can be leveraged by your marketing team.
On a manufacturing floor, products are transported from station to station throughout the process. When these are mapped and measured carefully, you will often find the product moves great distances throughout the facility, and represent potential opportunities to reduce waste.
Transportation waste in a field service organization takes the form of miscommunication. Service request information is transported (communicated) from the customer to the call center, from the call center to the field technician, and (often in paper form) from the technician back to a central billing location. If you have a separate dispatching or triage help desk, there are even more handoffs. Each handoff represents an opportunity to introduce delays, errors, and non-value-add activities.
TIP: Create a pipeline report that shows the number and average age of service requests in each stage of the process (Opened – Not Dispatched; Dispatched – Not Started; Started – Not Completed; Completed – Not Invoiced; Invoiced). This will help you to identify bottlenecks that are caused by transportation delays within the process.
There are several Lean Six Sigma tools that focus on creating effective work areas by, among other things, reducing the unnecessary and awkward movements an operator may experience while performing their activities.
Perhaps ironically, motion waste in a field service organization is often the result of an attempt to improve quality. For example, if a Dispatcher needs additional clarification of a SLA requirement, they may physically walk over to the Contracts area to retrieve a paper file. Likewise – especially during an end-of-month billing frenzy – the Invoicing team may run to the Finance area to find a “live” person to check credit status.
TIP: How often do you observe call center personnel walking around the office while speaking to customers over their wireless headphones? Consider physically rearranging the work areas and/or creating electronic data marts where customer account information will be easily accessed by everyone in the office.
Spare parts inventories in either central warehouses or technician vehicles are often subject to management review and scrutiny. In fact, this may be the one area where you have already applied Just-In-Time or other Lean Six Sigma techniques.
However, inventory can also be thought of in terms of unutilized field service hours. These hours are typically non-productive and non-billable. Since Field Labor cost (excluding overtime) is essentially fixed, even minor productivity gains will have a significant impact on your bottom line.
TIP: Revenue-by-tech is an often-used and sometimes misleading measurement. Technicians can boost this metric by replacing more parts or increasing repair times. While your company may benefit from short term revenue, customer satisfaction and overall profitability will suffer. Technician productivity (hours billable / hours available) is a key metric for any field service organization and should be measured continuously and reported daily.
Just like a worker on the production floor or a teller at the bank window, field technicians are generally paid even during idle times. But beyond this obvious cost concern, delays within a field service process are typically passed directly and immediately to the customer – leading to increased frustration and lower satisfaction.
There are multiple opportunities for waiting in a field service process including: Dispatching (technician waiting on service requests), Parts Shipping (technician waiting for parts to arrive at site), Invoicing (billing personnel waiting for completed paperwork from field technician), and Contract Administration (waiting for site audit information or pricing to enable contract set-up in SMS).
TIP: When measuring Time-To-Dispatch, make sure you measure from the service request Open time to the technician Accepted time (not when the call center first relayed the request to the field). This ensures you are measuring delays that impact the customer, not just when calls are “thrown over the wall” to the field.
Most manufacturing facility closely monitors product defects throughout the production process. The goal is to identify and correct defects before they are passed forward to downstream operations.
You are probably aware of (and currently measure) two of the most common and visible product defects in service organizations: Call Backs and Re-bills. But note that these are end-point defects, that is, they are often the results of other errors passed throughout the process. For example, the Call Center may mistakenly identify the wrong piece of equipment when the service request is entered into the Service Management System. This defect could lead to assigning/dispatching errors and/or the technician arriving to the site without the proper replacement parts. If the technician then returns the completed paperwork without correcting the product information, the Invoicing team may apply the incorrect pricing and payment terms. The same defect is passed through multiple operations causing multiple errors.
TIP: As a general rule, you should divide Call Backs into a least two categories: with and without parts. If parts were used, you may need to review stocking practices and policies. If no parts were used, it may indicate a technician training issue (insufficient troubleshooting or other repair skills).
Producing too much product is easily visible as excess inventory in a factory setting. But how does overproduction affect field service? Remember, your finished product is a completed service call. While it may seem counterintuitive that you could have too many completed service calls, you must consider this in terms of scheduling. For example, a technician may have four Preventive Maintenance (PM) visits scheduled over the next two days (two PM visits each day). If the technician completes all four PM visits on the first day you may feel you have gained some advantage. But what if these PM visits are performed at the expense of other non-PM service requests? What about the schedules of the other technicians in the same service area? Were their PM schedules affected as they covered the non-PM workload of the first technician? Did the service office as a whole experience more overtime expenses as the team scrambled to meet customers commitments?
Smoothing out field service production is as important as a manufacturing floor. Not only does it make you a more efficient organization, it also reduces the stress on the Dispatch Team, Field Management, and (most importantly) the customers by reducing the need to constantly adjust and communicate ETAs.
Tip: Segment the each field technician’s labor hours by Time-of-Day, Day of Week, and Service Type (PM, non-PM, Install, etc.). Then compare this information among technicians working in the same service area. If the hours-distribution varies significantly among technicians it could indicate a scheduling or performance issue.
The items noted above represent just a few examples where waste could be found throughout the field service process. There are many, many more – each which could have a significant impact on your service business. Also, you may have noticed in the comparison above that manufactured products are typically subjected to various quality checkpoints throughout the production process. This helps ensure defects are not passed to the next work station (an important Lean Six Sigma objective) or, even worse, to the customer. However, field service events have no final inspection – except by the customers themselves. This factor alone should encourage you to consider using Lean Six Sigma to proactively identify waste and other process issues.
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