Many service operations are running much more successfully than the managers give themselves credit for, partly because measures tend to record productivity, not operational effectiveness. These operations can be improved as, although sections of the operation work well, when it comes to joining it all up, the process gaps can cause problems.
Most service operations have processes that are heavily supported by "work-arounds". These little fixes may not be evident if they have been in place for a long period, but when they unravel, chaos normally results. Quite often the final straw can be attributed to human error but process issues will be contributory factors. Most service companies depend on their service operatives, possibly more than they realise. Over time, the performance of these put-upon individuals can deteriorate if they have been subject to poor management or inefficient processes, or are promoting products that, in their opinion, have become less reliable. 
Translating a strategy into a realisable goal is not always achievable top-down because there is not a clear understanding of the drivers or customer environment at senior level and sometimes too much emphasis is placed on dealing with symptoms, rather than tackling causes. However, converting a strategy into an achievable goal is also not achievable bottom-up, unless there is top-down commitment. Successful companies marry these two together. But it is not easy to combine top-down commitment with bottom-up understanding.
When dealing with a service organisation, working from the bottom up means working from the customer interface, so the approach must recognise the customer will be responsible for some of the input and reaction to change. A major change in operation may require moving engineers from one area to another. This will have an impact on the engineers, but also their customers, which could jeopardise any relationship that the engineers have managed to develop with individual customers. The processes can cause some of the biggest problems and a new engineer might not be able to protect the customer from them as well as the original engineer did because the problems brought about by the new processes are not so visible. Making changes without considering the need to examine the process, or the way it has been modified, is not advisable and could end up with a symptom being addressed but the cause remaining unresolved. The impact is often a loss of customer loyalty. The figure above illustrates the impact poor processes can have on customer loyalty, compared to the impact of a poor engineer.
Understanding these nuances only comes with experience of the way service operations work at the customer interface and how they are developing in response to the changing environment. It must seem like a cry-wolf situation to the rest of the company when service says the customer requirements are changing rapidly and becoming more and more demanding. Others may not be aware of the change because the business is making the same products, and customers still appear happy to buy them. The problem is that the feedback into the rest of the business tends
to lag reality as it is based on sampling
during product development and product introduction (illustrated in the figure overleaf) and does not refer to continual sampling of the current usage of the product.
Service can provide continual customer views through the service engineers, but very few companies realise the value of continual sampling or that they can use their service personnel to provide such feedback. They instead prefer to see the role of service only as a means of looking after the customer so that they are satisfied.
This misses the point that the customer can be very satisfied with both the product and the service but still provide valuable information as to the quality, versatility and usability of the product. This can feed in to upgrades and development to enhance the potential of the product to remain ahead of the competition.
The service operation has to become the voice on the board, supporting its primary role to feed back the response from the customer to the business. This close alliance with the customer is often referred to as "customer intimacy". It recognises the role of the customers in helping the supplier to continually improve product quality performance and in increasing the relevance and usability of the products to themselves and the customers.
The best way of achieving customer intimacy is to gain recognition from the board that the service operation is not simply a provider of good service and satisfied customers but can generate and contribute to the profit of the business by working closely with product development, sales and marketing.
Product quality will have a profound effect upon the cost of service and the overall level of customer loyalty and satisfaction, but the service operation can still add value, as a conduit for the customer to improve and focus the product towards the customers' needs.
One key area where the customer relationship is changing is in the way in which most people now obtain service. Establishing the most effective mode is a strategic imperative, and the switch from time and materials to contract-based support has heralded this change in how customers receive service. Product quality is improving the lifespan of products and the requirement for equipment to be working at all times is becoming more pressing. Consequently, contracts on equipment that is "mission critical" (equipment without which a business cannot function) as opposed to "mission sensitive" (equipment which the business can function without for a while) are now a regular offering. More and more customers are taking these up, demanding excellent performance to ensure continuity of operation.
Service contracts come in a number of types, from complex penalty-driven service level agreements to basic extended warranties. Many of these contracts were originally set up around performance targets - first-time fix, response time and restore - driving the wrong kind of behaviour, and not allowing a real consideration of customer need. Many of the contracts being drawn up today focus on what is valuable to a specific client and on the availability of equipment. Such considerations will vary by type of asset and quantity, providing a much more effective value-pricing policy through which the customer and supplier can work together to the benefit of both.
Recognising this change in relationship as strategic positioning helps the business to consider any important changes in operation that must be put in place. There must be a switch in emphasis from simply reactive repair towards proactive prevention of failure of the product, with follow-through once the equipment is up and running. This requires a whole new way of working for both supplier and customer. A straightforward example could be a scanner in a hospital, where remote monitoring can identify early symptoms of equipment problems, and reduce the unplanned downtime. If a failure does occur during a clinic and it is necessary to rearrange patient appointments and re-schedule doctors, physicists and clinicians, a pre-planned contingency process can be quickly implemented to reduce the effect of the machine not working.
Most service operations have become very good at reactive repair but are still getting to grips with prevention. They are unsure that the concept is truly valid - is it possible to really predict random failure? Preventative support is now at a premium and can be delivered through a number of activities, including preventive maintenance, remote monitoring and machine-to-machine downloads. Many companies have not considered beyond fixing the failure and have not considered the opportunities of broadening the service role. They consider the disruption caused by the failure as not their responsibility.
But it is generally the disruption that causes the most stress for the customer. Minimising such a problem positions the supplier as a value-adding partner, not just a cost-effective repair agent. Most customers see such follow-on activity as true added value. Dealing with the ramifications of any failure has reportedly increased revenues for service providers by over 50% and can cement the relationship with the customer as the provider capable of providing total support.
A visible service operation performing constructively can come to be viewed very favourably and follow-on sales become much easier as the company gains endorsements from a wide range of staff.
Positioning the service operation in this way is a significant strategic move and transforms the image of the service operation from a group of great fire-fighters into much more. They are a professional support team able to avoid a problem in the first place, fix it quickly if it does arise and offer support to deal with the consequences of failure in a planned, efficient manner. That relationship can strengthen the bond and increase the loyalty between customer and supplier, positioning the supplier company and the support team as providers of a service solution, not just a service repair. SM