Time to rethink your service footprint
Throughout the past decades, companies have been adjusting their service operations footprint, centralising activities locally, regionally or globally, standardising processes, taking advantage of lower cost and access to skilled labour.
Because of a constant focus on cost, globalisation and customer orientation, it is still on the agenda of many business leaders today – whether they consider offshoring, nearshoring, local centralisation, outsourcing or combining these initiatives with automation. We often see companies initially changing their service footprint in Finance or IT and later expanding into other areas, such as customer service or sales support.
The opportunities, however, also come with many questions and considerations. Which activities are suitable for centralisation? What is the optimal location(s)? How do you ensure that the setup is scalable – both in terms of growth in volumes and in the width and depth of scope? Along with these central questions, companies need to consider how to ensure that the new operational setup runs smoothly, considering cultural differences, smooth co-operation across functional areas and efficient handovers between the retained organisation and the centralised service operation. You may even have heard of poor experiences from previous attempts, benefits not materialising, service levels not being met, co-operation not working – and wonder how you avoid these issues.
In Implement Consulting Group, we have seen examples of service operation setups that were successful and some that were less so. And we have experienced how to ensure a successful and scalable service operation setup that ensures that the new service team becomes an integrated and well-functioning part of your organisation.
In this blog post, we will briefly introduce the high-level scenarios we see that you as a business leader are confronted with today when rethinking your service operation, some of the challenges that you may be facing and our take on some of the key factors that you need to consider.
ECCO wanted to have their own in-house e-commerce fulfilment centres, distribution and customer service teams across Europe. They wanted to go live in one market in 6 months – followed by 18 more markets.
To meet the tight deadlines, the project was run in monthly sprints – in close co-operation with experts in IT, Commercial, Operations and Finance. Together, we designed and launched three new teams within their retail business: warehouse operations, customer care and distribution.
ECCO’s new e-commerce supply chain was up and running in 19 markets in 13 months. And orders are ready to ship within 24 hours.
Once a decision to set up a service operation has been made, you will be faced with some obvious questions. The first will be the optimal location to choose. Key parameters you need to consider are for example availability of skills and talent pool, salary cost, your strategic position in the local market, language and cultural fit.
40% of respondents are currently planning to establish a new service operation
(SSON survey, 2018)
Once you start planning the actual transition, detailed Standard Operating Procedures (SOPs) and Service Level Agreements (SLAs) for the new organisation needs to be in place. However, an issue that is often forgotten is updating existing SOPs and requirements for the retained organisation, as well as the considerable change management effort that is required in the existing organisation.
Another important factor is to build an operating system that enables continuous management and improvement of performance. This is critical to avoid a prolonged dip in performance after the transition (as we often see happen in this phase) and to constantly drive performance improvements in the new as well as the retained organisation. Finally, you need to consider how you can make your setup scalable. This means not only that you can grow the current service, but also extent your current service portfolio and serve multiple countries from the same service model.
Whether you want to expand the scope of existing processes or add a new functional area to your service operation, you need to make an assessment of feasibility and potential. You want to use this opportunity to build the framework and the capability to perform the feasibility for future expansions. New technology can be a key enabler for delivering additional value to your customers or serve them in a different way, for example via implementation of chatbots and software robotics.
Only 3% of organisations reported that they had fully embraced digital technologies for their workforce, and they regularly use these capabilities to answer customer issues.
(CCA survey, 2016)
You also want to build a transition methodology that you can anchor within your service operation. The methodology has a mix of project, process, technology and people elements, developing as you learn from each transition and improve your methodology.
A strong operating system is desirable in any organisation. But when increasing complexity with several locations and collaboration across sites, it becomes critical to build a shared structure and culture for how to manage your operation. Can your operating system change a process across multiple locations within 24 hours? That will often require both a flexible operating system and a flexible, efficient IT setup to support the process changes. The latter is often a problem due to outdated and poor IT systems.
71% of respondents reported that poor or outdated systems were a key barrier preventing them from meeting the challenges they faced.
You may find yourself in a situation where your service operation has never really delivered on the original business case, or service levels have not really satisfied the service receivers. It may also be that the performance has deteriorated due to changes in processes, in customer demands or in the surrounding environment. It may be that demands have just increased, or a constant push for higher quality, higher productivity or lower cost.
No matter what the reason is, the key to improving performance is a strong operating system which ties improvement management and process changes together with skills and people development, with performance management and standard work.
Establishing a strong operating system is instrumental in continuously improving the performance and productivity of your service operation.
Rethinking your service footprint should not be seen as a technical exercise. Do not think about how to ensure compliance, rather engage the people to take active part of the change. People from both the sending and receiving part of the organisation. The first step is that senior leadership formulates a strong story, an appealing “why”, speaking to a higher purpose than bottom-line results. Should the new footprint help us delivering step change in quality? Speed? Customer experience?
All change is driven by people. Not stakeholders, resources or FTEs. People. So, start with them. Who are they? What are their dreams, frustrations, passions, purpose? Be truly interested in exploring that. And let your approach to change be coloured by what you learn. Does the change ahead feel meaningful to the organisation? You can’t cascade a burning platform – meaning is personal.
Implement Consulting Group