The Competitive Power of Dynamic Field Sourcing

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1 The Competitive Power of Dynamic Field Sourcing July 15, 2007 Martin Reader Executive Vice President Sales and Marketing Field Solutions, LLC Copyright 2007 Field Solutions, LLC page 1

2 A Strategic Imperative: A Field Service Breakthrough With globalization of sourcing for equipment and services, the competitive intensity in virtually all industries is accelerating. In a world of global outsourcing, one frontier remains: finding a high performance, cost effective Quality Field Services strategy. There is a growing demand for a breakthrough in field service, especially in the technology arena, to keep pace with the economic and performance breakthroughs throughout the rest of the product value system. Locating and delivering quality field services in North America, especially for technology and equipment providers, is increasingly a competitive factor underlying success or failure in the marketplace, and leading manufacturers are increasingly aware of this challenge and opportunity for advantage. Underlying this strategic shift, are three core realities: The customer markets are raising the requirement for North American-wide efficient, high quality field service capability. The product development and delivery economic structure is shifting, driving increased focus on economic cost benefit of effective continental field service solutions. The North American labor markets are expensive and increasingly have more specialized skills - creating new and ever increasing challenges to field service performance. The Shifting End-Client Market: Customer concentration, national and global scale, and technology touching the end-users, all drive a demand for a strategic shift in field service. In the past decade, the food service industry passed the milestone of 50% of all units being operated by national chains. In the past decade, money center banks have expanded nationally at breakneck pace through acquisition; the first national healthcare providers have emerged; the airline industry has consolidated to less than 10 major providers controlling virtually the entire industry; chain retailers, the big box retailers, have conquered the electronics, home hardware, office supply, pharmacy, linens, toys, and other retail segments previously served by local and regional retailers. Many other industries continue consolidating into the national chains such as lodging and hotels, financial services, trucking, and others. And new industries are further exploring national reach including the education market, the home health care providers, local transportation (taxi and limousine services), auto retail and repair, among others. What this means to technology and service providers is that to serve these emerging titans well, the providers have an imperative to deliver system-wide capabilities, covering wide geographic areas matching their customers systems reach, matching their customers increased focus on their own core competency, and matching their customers increasing sophistication of Copyright 2007 Field Solutions, LLC page 2

3 measuring the impact of new programs and investments on their end customer satisfaction and overall business results. The impact of a less than perfect deployment or service model has become magnified as the scale and complexity of the customer and the required service and deployment programs have expanded. Now instead of the costs of a hundred units, it is the cost of 50,000 units. Instead of the service challenge of 50 calls a week in 3 states, it is 1000 calls a week across 40 states. Instead of having a field service coordinator, the technology and equipment provider or the end client has to deploy a program office to handle the complexity of skills, timing and activity coordination to make sure the jobs get done right. How many times does management have to hear the refrain focus on your core business? Is your core business technology design build, or field service? For most technology and equipment providers it is the equipment itself, not building a national, dynamic, field service organization that can be deployed ad hoc. If you do have and continue to deploy a national service capability, then flex resources supplemental resources, available when and where you need them - can drive down your operating costs and improve your on time performance. If it is not your core business, access to an outsource field service resource, or field source, can be the enabler of your competitive product strategy. National companies worry about national performance issues, and so are measuring customer satisfaction and loyalty with ever increasing intensity. Is your field service affecting their business result? Increased sophistication in measuring program impact on the end user, and program achievement of projected return on investment in the marketplace are major levers in national companies competing against their peers and local rivals. With technology becoming the face of the national offering (think of the kiosk check-in for airlines and hotels, the demo kiosk in the computer store, the self check out aisle at the supermarket) the technology provider s service program is increasingly closer and more critical to the sophisticated national company s customer interface and experience. The Final Frontier for Cost Optimization: National Field Service In analyzing operating profit and loss, or new technology development and build pro forma, one is struck by how tightly optimized the cost structure is. Parts and assembly are procured on the global stage. Quick turn around time prototyping is outsourced globally. Software and controls revisions are no longer mailed out, but are electronically downloaded through an outsource service. Promotion and sales expenditures are optimized across channels and automated with high levels of self-service. Customer service is outsourced globally. Every operation is six sigma or lean controlled and measured. Cost optimization has not yet reached into one of the last large cost components; that of deploy/service the arena of field service. Today, just as 30 years ago, hardware and equipment manufacturers have just two choices: (1) build an expensive domestic internal national field Copyright 2007 Field Solutions, LLC page 3

4 service organization and work to make it as efficient as possible, and a value added point of differentiation, or (2) establish program offices and wade through up to six layers of dealer, distributor, national/regional/local field service provider, and independent contractor to deploy a national field service footprint. If you choose the latter course, as many companies do, then you are faced with fragmented sourcing, training, assigning, monitoring, payment and reporting systems. It is manual, it is time and resource intensive, and it is inherently inconsistent. You have the perpetual challenge of wooing the service layers to participate at the quality and cost level you have budgeted. The end business result is that your competitive position is driven by a complex service layer frequently out of your control. The Final Frontier of outsourcing: Field Sourcing, becomes strategic option number three for technology providers, and has the potential to break the code for cost and performance advantage and differentiation. The Field Service Labor Gap: Availability, Costs and Skills, The North American workforce situation is stabilizing, however not to the benefit of companies seeking to deploy qualified, capable field service technicians at a reasonable cost. The areas of stability all work adversely to this need: steady low rates of unemployment, steadily increasing costs of healthcare and workers compensation, steadily decreasing numbers of technology trained workers, steady demographic shift away from the core field service candidate with relatively fewer young, technology educated males entering the workforce, and steadily increasing geographic barriers (including traffic congestion) making field service work ever more onerous. The mechanism for bringing field service technicians to the work opportunities haven t changed significantly in decades. Post a job, hire to plan, elbow-to-elbow training, and make do. When there is turnover, the management team has to step in to fill the gap until a replacement has been on-boarded. In fact, 92% of all absenteeism is filled in by co-workers absorbing the workload of the absent employee, impacting their satisfaction, on time performance, and quality. Certainly some innovations have become available. More on-line recruiting services are in place. More on-line screening and verification services, and more remote training options are available today than previously. But, as field service requirements grow in scale and complexity, are these enabling technologies keeping up with service program demands? Are the economics of field service being maintained or improved? Is the quality of field service, as measured by the clients in terms of speed of response, quality of experience, and quality of technology deployment keeping up with the quality expectations of customers? Copyright 2007 Field Solutions, LLC page 4

5 To achieve a strategic breakthrough in field service in the face of the current labor environment a new paradigm is needed. One solution is the Field Sourcing model that couples an internal field resource with an ad hoc dynamic skilled labor pool. A service model - where the dynamic resources are fully screened, trained, certified, and scheduled with ease, in a single program management step, and where the customer experience is assured - is the new field service labor strategy goal. Field Sourcing : A Competitive Strategy Can field service strategy be a competitive differentiator for technology providers? It has to be. As the customers achieve enormous scale, broad geographic reach and sophisticated operating infrastructures and measurement systems, their providers must grow with them in scale, reach and measured performance. As technology gets closer and closer to the end user experience, versus being a back room operation, field service needs to become faster, more perfect, and more universally available. As technology providers further optimize their cost structures, field service must become equally optimized, not just for cost as a percentage of total revenues, but as a continually declining percentage, as a continually declining real cost per operation, and as a continually improving return on capital invested in service program management. Transformation to an optimized Field Sourcing model is a strategic imperative, and new providers will enable this transformation. About the author Martin Reader Executive Vice President Sales and Marketing Field Solutions, LLC and FieldMart.com Marty s business career includes over 25 years of experience in business-to-business services primarily serving in field-centric services companies, including thought leadership roles in marketing, service design, outsourcing and human resource strategy and analytics. Previously Marty has been General Manager of Productivity Analytics and also Chief Marketing Officer with Reed Group, a leading occupational health services provider. Prior to Reed Group, Marty was General Manager of the Strategy and Analytics Practice for The Cedar Group a global Human Resources technology consultancy. Marty oversaw the Cedar Workforce Technologies Research initiative, and managed the consulting practice that delivers HR technology strategy assessment, business cases, and research guidance to HR software and service providers such as Oracle, PeopleSoft and ADP as well as directly to large corporations. Previously, Marty has held senior management and marketing positions with global leaders including Marriott, Ecolab, G&K Services, and IBM. Marty earned his MBA in finance and marketing from Cornell University, and his BA in economics from Colby College. Copyright 2007 Field Solutions, LLC page 5

6 About FieldMart FieldMart connects clients to field service providers. From single order break/fix to complex national field programs, technology providers achieve a breakthrough in the Total Cost and Performance of their field operations with the perfect balance of automation, quality assurance, and program customization. Our mission is to deliver highest quality field service results, create extraordinary value, and continually enhance our clients and members field service experience. FieldMart, Quality Field Sourcing delivers a strategic competitive advantage to our clients by providing a single source automated, dynamic North American field service infrastructure enabling transformation of their field service system into an optimized efficient and high quality performance model. For more information visit us at or call Marty Reader, EVP Sales and Marketing at Copyright 2007 Field Solutions, LLC page 6

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