10 July 2019

Field Services Procurement: Six Common Mistakes to Avoid

It’s obvious that a good supply of field services is key for company sustainability in this sector. As you know, the different measures your company uses to identify the order quantity and when to order it, have a major impact on its profitability and performance. These measures make it possible to achieve an ideal balance between optimal customer response capacity and low logistics costs.

Yet, even if companies know to do everything possible to prevent their stocks from harming them, we note that many unintentional mistakes are made in this area.

What are the consequences of poor stock management? Which common supply mistakes can be avoided? What are the solutions and practices that best optimize supply management? Today, we’ll help you identify and avoid common mistakes in the procurement of field services!

 

Field Services Procurement Sign

Customer Satisfaction: the Primary Mission in Field Services

As always, your main objective should remain customer satisfaction. It’s time to take concrete steps to manage the situation:

– Set up a client appointment as soon as possible. As soon as you are aware of the client’s issue, your company should intervene as soon as possible. Your responsiveness makes the customer feel valued and heard, an excellent way for you to maintain customer relations!

– Resolve the issue in the same appointment. Are you forcing the customer to be free several times to fix their problem? This is a scenario to be avoided at all costs! This may additionally affect the customer experience and degrade your company’s image.

 

The Consequences of an Incorrect Stock Level

Out of stock

As an immediate consequence of insufficient stock, the shortage causes a serious disruption in the internal supply chain.

In the best case scenario, the part you need is available in another nearby store. You’re able to quickly react, but this is at the cost of an unexpected, yet necessary trip. There is additional cost and a potential delay for the planned activities for the day.

In other cases, the business must order the part. This causes not only client frustration because the problem isn’t instantaneously resolved, but the client must also be available for a later appointment (to pick-up or receive installation). In addition to the delay, there may be additional cost as the urgent order was placed outside the initial replenishment plan. As it is an isolated incident, the usual discounts normally available are not applicable.

 

Overstock

Does overstocking seem like a better problem to have? Having too much stock exposes your company to another list of inconveniences and frustrations.

First, each product stored reduces your company’s cash flow. This capital lockup means a loss of opportunity for your company, which could have been invested in projects with higher profitability!

Another undesirable effect is less storage area because a large quantity of unused products requires your storage space. There may be additional costs to you if this requires you to rent or build more storage space.

Finally, your stock has the potential to be saturated with low turnover references. This excessive stock can force your company to sell at a discount or even at a loss in order to limit storage costs.

 

Incorrect Stock Distribution

When your suppliers or production don’t enable you to have enough volume to cover your network, you’ll need to choose which logistics points to supply or not supply. This situation exposes you to another risk of poor stock allocation.

A reference in the wrong place is a problem that should not to be underestimated. The depot or warehouse supplied has unnecessary stock, and the one who needs it doesn’t have it. It is a scenario of both rupture and overstock with the aforementioned consequences. This at least doubles transport costs because once something is in the wrong place, it must be expedited to the location in need of the reference.

Poor stock allocation is a costly challenge that you must do everything possible to avoid.

 

Common Errors in the Procurement of Field Services

Unclear Communication Between Supply Chain Players

The team in the field is aware of their needs but don’t communicate them to the plant. The result is employees having a flawed perception of the field. To facilitate improved communication, several means can be put to use.

On the supply side, it is best practice to regularly organize field visits to be in tune with reality. You may find that you’re receiving little to no correct information from employees or methods of communication.

On your side, you can establish solutions that promote and simplify this communication channels between the different levels and players in the Supply Chain.

Field Services Procurement Meeting

Untidy Supply Chain Data

You have data but your data lacks quality or volume. To act correctly, it is necessary to be able to rely on true and exhaustive information.

We explain everything in our previous forum: Our advice to better use the data in your Supply Chain

 

Lacking Procurement Performance Indicators

If your activity is insufficiently monitored and your performance remains unmeasured, you will find it hard to identify your strengths and weaknesses. In the Cartesian world of the Supply Chain, it is essential to rely on real indicators, rather than base performance on individual feelings and instincts.

The data you supply will allow you to establish KPIs revealing your Supply Chain effectiveness. Here are several examples for field services:

– “Review Rate”: Know the ratio of clients who have had their issues resolved during the first intervention.  Our client Engie, measures their “Review Rate”.

– Availability: In the most general case, availability measures when the part is available at the time it is needed. In the case of device maintenance, availability can also refer to how much time the device is operational and available, as opposed to downtime.

– Transportation Costs: Your activity in field service exposes you to transportation costs that you need to track. Optimal inventory management will reduce your transportation costs. On the other hand, if your transport costs are high or increasing, there are surely improvements to be made in your logistics.

In summary, your Supply Chain is full of information and it is up to you to reveal!

 

An Imperfect or Hidden Need Forecast

Many organizations lacking anticipated quantities remain. Manual replenishment occurring only when the stock is low could be valid only if certain of the constant need, but this is rare. This leaves us exposed to both shortages and overstocks because sales can weaken after a single replenishment, or perhaps accelerate before it’s been anticipated.

To best respond to an increased demand or to avoid carrying unnecessary parts, address your forecasts!

 

Inadequate Territorial Stock Distribution

As previously mentioned, a mismanaged distribution of limited stock is to be avoided at all costs because it leads to both overstocks and shortages. Your objective is to mobilize as little stock as possible, but not just anywhere, that’s the difficulty!

Alongside this distribution concern, manual management should also be avoided. Some store locations may be tempted to overstock to avoid a break. This will result in under-stocking at other locations that can no longer meet the needs of customers. By default, that leaves us in a situation where the first who come, are the first served.

Your objective is to rationalize this replenishment. Again, based on more detailed and accurate forecasts, you’ll avoid misallocated stock.

 

Failure to Consider Customer Feedback

Is your company meeting customer expectations? Ensure this is the case! Clients may have had a different experience than what was intended. A lack of listening to their complaints and feedback can deprive you of vital information!

To achieve this, set up opportunities for them to express themselves after each intervention by using satisfaction forms, questionnaires, surveys, etc. Above all else, analyse their responses to identify the most frequent points of satisfaction and dissatisfaction. A lot of data is still collected without being used!

 

Future Improvement Opportunities

Let’s look into the future. Information technologies are constantly evolving! They will soon provide Supply Chain managers with new tools that offer ever greater agility and performance to the Supply Chain.

First, predictive technologies. They provide more accuracy and reliability to better anticipate the need. Based on advanced algorithms, these technologies transform your data in anticipation, and can even take into account external data (demographics, school holidays, weather, etc.). With reliable data and quality technology, supply can already be automated. This trend will accelerate in the coming years, as well as the autonomy of the Supply Chain.

A second opportunity to be considered is the democratization of the Internet of Things (IoT). More and more connected objects can communicate in real time about their status. This is a great help in anticipating anomalies or analysing the use of a product by the market, while also providing more services to the customer through an application for example.

We invite you to read the report of our trip to the Gartner Supply Chain Executive Conference in Phoenix, which brings together the Supply Chain trends that will mark the coming years: What I have learned from my trip to the Gartner Supply Chain Executive Conference in Phoenix (french)

 

Conclusion

Gut instinct feeds manual management, showing that supply is often subject to traditional methods. There is a substantial contrast between the methods used by suppliers and the solutions available to them. However, an approximate management of supply leads to lost time, extra costs and immobilization of cash. This leaves the stakes particularly high for your company.

Strong communication between the various Supply Chain players, quality data and relevant KPIs, anticipation of needs, good stock distribution and customer feedback are all key elements to optimal supply, a real guarantee of efficiency for your company!

More than just a matter of Supply Chain, a good supply will have a strong impact throughout the entire company. This will stem from the support of higher daily customer satisfaction and data-based marketing that can correctly re-set your company’s positioning. There is no time to waste!