Matching the infrastructure to fit the strategy

The design of your service infrastructure is in essence logistics driven. Information is completely mobile, allowing you to put your hotlines and customer-care centers in any location where the right people can be recruited and the IT costs are competitive. The logical repair shop location for mobile products is driven by the service level requirement and typical transport times to the major markets. For products to be repaired the logistics are more demanding than for products that are exchanged and refurbished. Within a workshop, the workflow and spare parts availability is key. Most repairs that may take weeks to return to the customer actually take an hour or less of net repair time. The rest is logistics.

Traditionally, many companies have taken country-specific, in some cases even regional  approaches to service infrastructure. Every center conducted all types of repairs occurring in the area of responsibility, sometimes hotlines and complaints management were decentral as well. When this is the case, the restructuring needs tend to be the largest. The logistical realities will dictate the consolidation of repair centers for mobile products and the centralization of hotlines. Required service levels will be reachable with less complexity and lower costs.

• Centralize hotlines and complaints management

The recognition that hotlines can be centralized and consolidated for a number of European countries is not new. Some companies operate call centers for Europe in the Netherlands, UK or Ireland, others log-in their assigned language agents to take calls globally. A German speaking agent in Los Angeles may take a call originating in Austria. It has been done, and it is a question of economics rather than technical feasibility.

The issue becomes one of consistency of service; soft skills and process reliability, not infrastructure. We will return to them below. Suffice it to say that logic dictates a central infrastructure for hotlines, customer care, and complaints management activities. Avoid the trap of believing that local dialects are important. What counts is that you solve your customers problems, not location.

• Make logistical parameters drive your workshop locations

The design of the repair infrastructure is rather more complex than of hotlines. We mentioned that for immobile products, local service activities are inevitable. These will typically be outsourced, but supported by central workshops providing diagnostic support, parts- and exchange modules. Supporting material and parts need to travel to the local service team.

For mobile products, the defective item travels to the workshop, with similar logistical parameters to consider. The distance from the market must be chosen in such a way as to ensure the required service levels. The characteristics of Western Europe are such that about 5-6 repair or exchange centers are sufficient to be within an overnight reach of the most populated areas. With adequate capacity in the centers, a three day repair or exchange is feasible for most areas. If five days turnaround are sufficient, such centers should be able to cope comfortably - at least from a logistical perspective.

The reason why workshops should be centralized whenever possible is that the support logistics and the trouble shooting become much easier. In the past, urgent parts were often in those centers that did not need them and a multitude of redundant parts built up over time. Miniaturization and electronic complexity have made some equipment and measuring kits so expensive, that the investment can be justified in large workshops only. Finally, the skill base is more productive and more effective in solving the problems that arise when a critical mass of similar products is dealt with.

The trap to avoid here is to neglect the pickup and delivery point. One empirical study showed that over half of the perceived repair time was due to this type of waiting time. Many dealers encourage a store visit to handle a service problem, but whenever possible, shipment to the center and back should be direct. It saves valuable time and handling costs.

• Specialize your repair, exchange and refurbishing centers

In the past, it was common to train technicians broadly, allowing them to deal with a multitude of different technical products. This variation of challenges was seen as a source of job satisfaction and as an argument against specialization. There is no question, however, that from the point of view of repair speed and efficiency, specialized centers work best. Wherever they have been implemented, the jump in productivity has been spectacular, as has the improvement in repair quality.

It follows that you might have a logistical center where all mobile products are sent, be it for repair or exchange. The repair workshops themselves, however, must be specialized by category of product. Job rotation among workshops can counteract the "burning out" syndrome of  technicians, but the principle of workshop specialization should not be negotiable.

Refurbishing centers are different from repair workshops in that they do not have a customer waiting for the return of the individual product, which has been exchanged. They are subject to very different operational rules and form a category of specialization on their own. For a start, the logistics time is no longer critical, allowing you to create them in remote, low-cost locations. Moreover, refurbishing is typically a labor intensive and low-skill activity, done in large "lots" when all the required spares, cosmetic parts and packaging have been procured. This factory-type repair run will be highly efficient when compared to repairs, provided the logistics costs and the refurbishing stocks are managed properly.

• Balance technical, non-technical and administrative skills

A further taboo topic in the context of repairs has been the skill level of technicians, at least in Germany. Traditionally, the technician opened the product, diagnosed the fault, fixed it, and assembled it again. Modern repair methods recognize that defects by product-type have a tendency to be repetitive, and that many activities do not require technical skills. Accordingly, a repair team of  four might require only one technician to achieve a high level of quality and productivity. Here too, the results have been spectacular in terms of speed, quality and costs.

For a while, it was fashionable to mechanize workshops with transportation belts and parts delivery conveyors. On the whole, they have not withstood the test of time. Simple trolleys and "islands" of activity have tended to yield the best results. They have also been the most adaptable in the face of product changes. Workshop design also fundamentally affects the number of  administrative staff required. To keep this number in the order of 25% of total workshop staff, simple and effective processes are necessary.

• Adhere to flexible working arrangements

Seasonality is a fact of life in many industries, and repair activities are no exception. If there is a mismatch between capacity and seasonality, inefficiency is inevitable and it will be impossible to achieve consistent service levels at reasonable costs. It is critical, therefore, to implement flexible working arrangements for all service activities, not just technicians.  

The basic system should be as flexible as possible in terms of plus and minus hours as well as weekend work. It should have a long period of reference starting and ending in the off-season. Yearly seasons can not be managed with quarterly arrangements. Accounts running over several years are rare, but  best suited to ensure stable service levels. In the next section, we will discuss how to anchor flexible working arrangements in an incentive system that ensures the support of the front line.