This article considers successful companies and their emphasis on combining effective service management and operational excellence to transform their operation.
Increasing the focus on, and improving the delivery of, service is a major reason why leading businesses are achieving growth and profit improvement in an environment where some are experiencing little or no growth, and unpredictable revenues and shrinking margins. Leading edge businesses have recognised and responded to the benefits of emphasising the strategic role of their service, and understood the need to think in terms of linking product and customer, to achieve significant revenue and profit growth.
Service Management has become an extremely complex function that is recognised as more than just an extension of logistics or scheduling, because it has to create order within the various complex supply chains that have been woven together to form intricate networks. There is a recognisable challenge for the business to balance the demands of such a network while generating revenue, reducing costs and ensuring effective consistent fulfilment, in an ever-demanding environment where the customer has assumed sovereignty.
The increasingly complex requirements necessary to deliver effective and efficient Service Management is presenting service organisations with significant challenges. Service Level Agreements (SLAs) are ever more demanding and based around sophisticated resource management of inventory and staff. There is a need for increased control and enhanced visibility of the inventory within the total operation, as companies strive to utilise their inventory assets in a more effective manner in order to attain the critical performance levels necessary to achieving SLAs. This situation is complicated even further by a need to manage and support an increasingly complex array of suppliers and customers. These demands on service management need to be fully supported by systems and process to produce an effective service operation for an efficient, profitable organisation to emerge.
Historically, most service organisations are now run as profit centres and although most are now aware of the revenue potential, many of the support processes, like logistics, are still operating with the mentality and measures that reflect the persisting attitudes associated with managing a cost centre. A consequence in many cases, is that management teams are responding with actions designed to manage costs, and tend to remain reactive in their outlook, characterised by operations responding to fault calls and dealing with part shortages through expediters and selling off (or worse - writing off), excess and obsolete stocks. Many operations have become relatively adept at using and applying these techniques but they still represent a cure rather than prevention, and as such represent avoidable costs. This transformation of cost centre attitudes, to revenue generation has become a significant differentiator for those companies capable of seizing the opportunity.
Given this backdrop, it becomes a major challenge to the business to consider service management and its major support operations, as strategic weapons that in many instances are currently grossly under-utilised by most businesses. This under-utilisation is exacerbated when all the systems and controls are driven by productivity measures and not profit or true customer measures.
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