Monday, September 30, 2013

Effect of Business Intelligence in Service Supply Chain

Having studied about how technology can impact the Supply Chain, this article mentions about how applying Business Intelligence to Service Supply Chain could lead to improvements.

According to the writer Glynn Dodd of this article, Business Intelligence is of utmost importance in the Service Industry. The biggest challenge industry service industry faces in today's world is reducing the cost without impacting customer satisfaction. This challenge becomes even difficult with the current silos approach followed in the Service Industry. Each area of network, like diagnostics and scheduling, parts, logistics, field service and repair is handled by different company. 

The result of not effective communication between these different companies can lead to decreasing the efficiency of the entire service supply chain. For example, there are high chances that an error found by the diagnostics team is not communicated properly to the next stage and hence it passes on with the product to client. Such missed communications will ultimately lead to two major impacts:
1. Decreased level of customer satisfaction
2. Increasing cost on the provider part, as now there would be need to send field engineers to handle the error. 

As per Glynn, all this could be avoided if there is a proper BI(Business Intelligence) in practice. 

The three elements which create each silos should be the target for improvement. These elements are:
- people
- process
- data

1. People  

If the entire set of employee consists of the correctly skilled people, the cost could be reduced considerably. According to Glynn, silos is hindering this improvement. Probably he is saying so because silos lead to complete division of employees in different network areas. This can lead to cases where the employees might be not aware of how are different network areas functioning and might not be able to evaluate the impact of not communicating something to the next network area. The major impact of such miscommunications would be decreased customer satisfaction. The role of Business Intelligence probably would be increasing communication within the network areas. If it is automated, people would not have to put in extra efforts and the entire system would improve. 
According to the Aberdeen Group study,  "58% of respondents stating they want to see an improvement of diagnosis of triage at the initial call level. With further statistics showing there is a 24 per cent increase in first-time fix performance, from 62-86 per cent, when all calls are routed via triage".  This could increase customer satisfaction levels.
Triage involves application of intelligence in terms of planning the entire plan for field service. For the element people, it evaluates who will be the best person to go to the field. Hence if the error was figure out to be in part and was not communicated effectively, this is the time when it would be figure out and an employee of part area would be sent with correct tools and equipments and on the correct time. This increases the chances of the first-visit fixes. 

2. Processes

The writer says that most of the people who could bring about strategic changes in  the processes are not aware of the entire situation. It is possible that they are not aware of current inefficient processes in the system. 
According to study by Mckinsey, 61% of respondents cited reducing operating costs as a priority over the past three years.The costs here could be decreased simply by increasing efficiency of processes in place. Many leaders in order to gain more profit, overlook how the inefficient processes are leading to increased cost. Improving the processes might seem overburden only till they are presented with a perfect analysis using Business Intelligence, to represent the facts about actual scenario.

3. Data

Only having data in the correct form is not sufficient. Transforming it to correct interpretations is what is needed. Business intelligence comes in play here. 
For example, intelligence was applied when Centrex identified a recurring problem on the point of sale system at a fast food outlet. A plastic part of the POS hardware was continuing to break, causing the same reason code in the majority of the support calls. When the business analysed the fault, they found the operators were leaning on the part of this hardware during use. The plastic was simply not robust enough. By tooling a metal replacement part, the problem was resolved permanently.

This shows how a small error will affect the entire supply chain value, had it not been detected. "If businesses diagnose the reason codes, business intelligence can be created, which in turn can be used to offer improved SLA's, rather than accepting a failure rate."The SLA currently are signed mentioning some allowance of failure rate. This could be completely removed if business intelligence is used by the industry. 

One exact implication of it is explained in the article. If company A signs an SLA agreement with company B, saying in case of technical glitch , a field engineer will be sent within 4 hours of time. If suppose B asks for fix at 1:00 pm, and as per SLA a field engineer reaches by 5:00 pm only to find the client place filled with its customers and realize that he would not be able to fix the problem then. This would reduce customer satisfaction. As explained above, triage could help solve this and if BI was applied correctly, there were no chances that the field engineer would be sent at the field at 5:00pm. 

Hence, efficient communication, processes and correct analysis of data sums upto business intelligence which could improvise the entire fragmented service supply chain. 

So why is it yet not implemented by all the industries ?

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