W4_LUCKY_Benchmarking Service Excellence

W4_LUCKY_Benchmarking Service Excellence

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Problem Definition

·         Benchmarking service excellence – synchronizing resource capacity with service demand: the Nigerian maintenance service company experience

Problem/ Need Formulation and Evaluation

In today’s oil and gas equipment and services industry, equipment owners are making more demands for effective service due to aging equipment and dearth of competent operators.

Service providers are faced with shortage of skilled and competent service personnel as they strive to meet the needs of the customers.        

Feasible Alternatives

The following options are available for adoption:

·         Alternative A – Adopt Aberdeen Group Service benchmarking KPI

·         Alternative B – Conduct a market assessment

·         Alternative C – Develop a new set of benchmarking KPIs for adoption

·         Alternative D - Maintain status quo

Criteria Selection

Selection criteria of the alternatives are as follows[1]:

·         Solid link to the business need – the KPI must be linked to the business objectives of the organization ( cost reduction/effectiveness, quality, safety etc)

·         Connect with focus area – areas with opportunity for higher potential for improvement in relation to the upfront investment cost outlay

·         Test the 4-I’s – [Indicators ineffective in isolation] – comparison of an indicator with other related indicators to obtain a full picture of the business aspect under examination. To illustrate, consider the following indicators: Schedule compliance – 50%; Estimate accuracy -95%; Maintenance labor utilization – 110%; Reactive work – 65%. Taken in isolation, schedule compliance appears to be the aspect of the project performance needing attention, whereas when considered along with the other KPIs, it becomes obvious that reactive work is the cause of maintenance staff breaking the schedule.

·         Carefully designed and tested KPIs – KPIs should be formulated by experienced personnel working together as a group and providing an interpretation for positive or negative value returns in a documentation accessible to all stakeholders. Standardization is the key to resolving this concern. The society of maintenance and reliability professionals (SMRP) has published KPIs relevant to the maintenance industry that has been widely accepted.

·         Leading versus Lagging indicators – Leading indicators predict early changes in performance as they are direct measures of a specific step in a process before the cycle is complete and thus can be used to mitigate specific problems ‘within a process before the business is impacted negatively.’[2] (Marin, 2009). Lagging indicators show trends as they measure the effects of changes to a set of steps in a process after the cycle has been completed. They are good for gauging cultural or systemic problems within a process; and for showing the results of ‘changes made to specific actions’ for process improvement.¹ (Marin, 2009).

·         Ease of implementation in stages – the purpose is not to overwhelm those monitoring the KPIs otherwise sustainability issues and missed opportunities for process improvement may arise; and to allow for proper testing and refinement as the organization’s process matures.

·         Ease of establishing business tiers in the reporting structure – KPIs should roll up from front line managers to upper management. This will help in identifying systemic and local performance issues.

·         Ease of setting appropriate sampling frequency and trend windows – KPIs comes handy in determining process effectiveness. Time period to build effective and firm trends is crucial to the process in order to ascertain whether the process being measured is improving, maintaining or degrading. The sampling frequency and trend window for each KPI is equally important.² (Marin, 2009).

·         Robustness to recognize human factors - proactively deal with human factors that can compromise the KPIs input data’s integrity by automating KPI report generation with minimal effort to input values, educating all personnel in the reporting chain and focusing on all KPI set, positive or negative.2 (Marin, 2009).

Selected Alternative:

Using the criteria stated above, alternative A is selected for use as the benchmarking service excellence KPIs as it has more favorable outcomes compared to the other alternatives –B, C and D. (See Table 5 below).

Table 5: Feasible Alternative ROI Worksheet

Issue: What is our best service excellence performance measure?
Item	Link to Business Objectives	High Potential	4-Is Test	Tested KPIs	Balanced Leading/Lagging KPIs	Implementation in stages	Business Tier Structure	Sampling Frequency	Human Factors protection	TOTAL
Alternative A	3	3	2	3	3	3	3	3	3	26
Alternative B	3	2	2	2	2	2	2	3	2	20
Alternative C	3	2	2	1	2	2	2	3	2	19
Alternative D	1	1	1	1	1	1	1	1	1	9
Scoring Range: 1 (low) - 3 (High)

Selected Alternative

Using the Aberdeen Group service benchmarking KPI had the highest scoring, and thus was picked as the feasible alternative.

Since resources are limited, synchronizing the resource capacity of the organization with the service demands apparently offers the best ROI for the organization.

The Aberdeen benchmark report[3] (Jain, 2007) showed that forward-thinking companies that undertook strategic actions to achieve service excellence by accurately forecasting service demand and effectively planning and provisioning service resources to meet that demand had impressive results (p. 2):

According to Jain, such strategic initiatives have yielded:

·         22% increase in first-time fix rate

·         18% higher SLA compliance rate

·         27% improvement in workforce utilization

·         14% lower overtime costs

 

Table 1: Potential Savings from Achieving Best-in-Class Dispatcher-to-Technician Ratio[4]

# Techs.	# Disptchs @1:14 Ratio	# Disptchs @1:19 Ratio	Difference in # Dispatchs	Cost Savings from Reducded Headcount ($ millions)
100	7	5	2	$0.20
500	36	26	10	$0.80
1,000	71	53	18	$1.40
5,000	357	263	94	$7.10
		Source: Aberdeen Group, August 2007

 

Conclusion

I am working on my third draft which I intend to send to Dr. PDG in a short while. This draft comprises of chapters four and five.

References:

1.       Sullivan, W., Wicks, E., Koelling, P., Kumar, p., & Kumar, N. (2012). Engineering economy (15^th edition). England: Pearson Education Limited.

2.       Jain, A. (2007). Underpinnings of Service Excellence: Synchronizing Resource Capacity with Service Demand. Retrieved from http://www.astea.com/en/forms/webinar.aspx?t=whitepaper17

3.      Purdue OWL APA style, (2011). APA formatting and style guide. Retrieved from http://owl.english.purdue.edu/owl/resource/560/19/

4.      Giammalvo, P. (2012, October 22). Integrated portfolio (asset), program (operations) and project management methodology course (cost engineering) slides (An AACE methodology course). Lagos, Nigeria: Lonadek

 

 

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[1] Sullivan, W., Wicks, E., Koelling, P., Kumar, p., & Kumar, N. (2012). Engineering economy (15^th edition). England: Pearson Education Limited.

[2] Marin, J. (2009, December 7). What gets measured gets done – is only partly correct: Tips for establishing effective key performance indicators. Retrieved from http://www.ivara.com/index.php/2009/12/07/tips-for-establishingeffective-key-performance-indicators/

 

[3] Jain, A. (2007). Underpinnings of Service Excellence: Synchronizing Resource Capacity with Service Demand. Retrieved from http://www.astea.com/en/forms/webinar.aspx?t=whitepaper17

[4] Jain, A. (2007). Underpinnings of Service Excellence: Synchronizing Resource Capacity with Service Demand. Retrieved from http://www.astea.com/en/forms/webinar.aspx?t=whitepaper17