Managing third-party service providers

For companies with a rapidly growing customer base, meeting an expanding demand for field service can be daunting. You can’t be everywhere at once, and the costs associated with trying to build out your own network of parts depots and service offices, along with hiring and training technicians, are high.

Increasingly, field service organisations with a widely dispersed and growing customer base, or those that experience significant swings in demand because of seasonality or other factors, are outsourcing some portion of their work to third-party service contractors.

Doing so can provide wider geographic coverage, scalability, improved efficiency, enhanced service offerings and a more cost-effective solution in the face of escalating costs and increased profitability pressure.

Aberdeen Group’s Field Service 2013 study found that 21% of best-in-class companies cited outsourcing as a top strategy. 64% of respondents reported using third-party technicians to complete at least some field service tasks.

According to Aberdeen: “The value driven from a blended workforce who incorporates third-party technicians isn’t solely a cost-cutting exercise. Field service ... must never be viewed as merely the cost of doing business; technicians, whether internal or outsourced, must be able to deliver value and resolution to customers.”

Whether partially outsourcing work or handing over a service business in its entirety, selecting the right partners is critical to maintaining customer satisfaction and meeting service level agreement (SLA) requirements. Hiring third-party providers (3PPs) requires total accountability and the ability to monitor and manage performance, but maintaining visibility into other operations can be difficult.

The benefits and challenges

Effective outsourcing can provide a number of benefits, including reductions in call centre and contract/warranty administration costs, labour reduction and lower costs of logistics network and spare parts management.

3PPs can help meet fluctuating service needs, expand a company’s service footprint and improve response times by flexibly expanding the technician force.

According to Aberdeen, more than half of respondents reported positive impacts from outsourcing relative to geographic service area coverage, cost of service delivery, customer service response times and service differentiation.

Outsourcing service operations can be challenging, however, and those challenges can manifest themselves on multiple fronts. According to Aberdeen, 42% of respondents cited service parts planning/forecasting as the most difficult element to outsource, followed by logistics network management (20%) and field labour (18%).

Maintaining the overall quality of customer service is critical, but service delivery can be inconsistent if the right controls are not put into place. Accountability and performance management can be especially challenging when multiple tiers of contractors and subcontractors participate. Using 3PPs means establishing ways to track processes and controls across the network.

Monitoring these processes means connectivity becomes even more important. Service organisations must be able to quickly communicate information electronically to their partners and receive data back in real time or near real time in order to ensure customer service levels are maintained and to provide valuable data to other segments of the business.

A key component of managing 3PPs is the ability to measure and manage KPIs, such as SLA compliance, service costs, first-call resolution rate, mean time of repair and profitability. To gather this, workers must be able to capture customer, product, equipment and technician data, and transfer that information to stakeholders across the network.

Connecting third-party providers

According to Aberdeen, companies are: investing in mobile tools that provide technicians with better access (55%), developing standardised scheduling processes (49%), improving forecasting and planning for service demand (44%), making captured service information available across the enterprise (38%) and developing real-time visibility into field assets (35%).

Third-party vendors also need a window into operations in order to schedule jobs efficiently, retrieve critical customer/asset data and effectively communicate back to the primary vendor. Using field service automation software with 3PP management capability ensures real-time, two-way communication with 3PPs that provides that visibility.

Using an automated vendor and third-party management platform, service companies can send service requests directly into a 3PP’s dispatching system. These solutions include portal and mobile functionality that serves as a single point of information for all full-time and outsourced stakeholders. Companies can then gain the necessary level of up- and downstream visibility and accountability critical to service network automation and optimisation.

This type of software solution provides all parties with parts and equipment tracking and management capability. Proper connectivity means service organisations can allow partners to use consigned parts inventories, their own inventory or the service organisation’s inventory, and to track the usage of those parts.

A 3PP can access additional information so that technicians are armed with the most complete information available about the asset or customer. They can tap into troubleshooting guides and repair statistics, and call centre staff can use the same technology to access scripts and questions and predefined answers, to better service customers during the initial call.

In the field, technicians can view all of the notes related to the customer or asset and have full visibility into equipment history, service notes and other data. They can update service orders in real time, open new orders and view upcoming jobs.

Service agents can accept calls and provide status updates so that both the 3PP and the primary service organisation are kept informed. They can also be alerted if a call risks slipping out of compliance with the SLA.

Third-party management solutions help service organisations respond faster to service calls using local resources; automate access to dispatch, repair and other information; automate administrative tasks such as documenting failures, noting corrective actions, enabling parts returns and initiating inventory replenishment; and help provide more uniform service delivery.

Outsourcing service activities to third-party providers can provide service organisations with greater geographic reach, reduced costs, a wider range of service capabilities and a more flexible technician workforce that can be expanded or contracted based on demand levels. However, doing so requires careful partner selection and rigorous control over processes, procedures and data, in order to ensure SLA compliance and uniform service delivery.

Deploying a mobile technology and field service management solution that combines vendor and third-party management capabilities can provide the visibility and management tools necessary to a successful service outsourcing program. Using these tools allows the third-party providers greater access to customer and asset data in order to provide optimal service, while giving the primary service organisation the ability to track work orders and inventory in real time, improve parts and service demand forecasting, and ensure quality service for each client.

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