Category Archives: Services

Are Your Customer Support Services Creating Risk?

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Editor’s Note: This post is from regular contributor Norman Katz, Sourcing Innovation’s resident expert on supply chain fraud and supply chain risk. Catch up on his column in the archives.

Outsourced supply chain services are very common these days. Freight forwarders, logistics providers, warehouse services, data integrators (especially those involved in Electronic Data Interchange), and the like all provide valuable skills in their respective specialty areas.

And they’ve all got to handle customer support communications (calls and e-mails) from their clients.

Whether or not it’s the nature of customer support personnel to be friendly and helpful, it’s certainly a (big) part of their job function. But when the desire to provide assistance crosses the line of expertise, the customer support person — and the company they represent or work for — can place the client at risk.

Often the role of the customer support person is one of objective knowledge, such as how to use a software application from a functional standpoint or to provide information about how their company’s products and services are utilized.

But when customer support advice crosses the line to be subjective, this is where trouble can occur.

Interpretation of a trading partner’s vendor compliance guidelines, knowledge of import/export laws, etc. are not typically areas of expertise that a customer support person is qualified to address. The passing along of bad advice can cause vendor compliance chargebacks or regulatory fines (if not worse) for their customers.

It’s very important that service-related companies educate and train their customer support personnel on exactly what questions they can and cannot field, and what answers they can and cannot provide. Front-line customer support personnel must also be informed that the kind refusal to answer questions not directly related to their company’s core products and services might evoke a harsh attitude from the calling customer, and in these cases the call should be transferred to a supervisor or manager.

Service providers would also do well to educate their customers as to realm of areas of information their customer service support staff are qualified to answer. Proactively informing customers in the sales contract and on the company web site what information the service provider is (and even is not) responsible for should help to mitigate calls in the first place.

It’s important to try and remove the burden of being forced to provide an answer from the shoulders of the front-line customer support personnel; these people should not feel pressured by an irate customer to provide unqualified answers, nor should they be made to feel or believe that they are not providing quality professional services by kindly refusing to answer questions outside their realm of expertise.

By educating their customers, the service provider is able to lower operating costs of customer support by reducing incidences of customer support calls outside of the knowledge area. This reduces the time customer support people spend on non-value-added phone calls and e-mails, and, if the service provider has a toll-free help line, reduces the phone bill by decreasing the number and length of calls they are paying for. The same level of customer support staff is now able to provide a higher-level of qualified service to customers in both faster response time and being able to stay with the customer longer to ensure their questions have been answered.

The desire to be helpful should not come at the price of increased risk for the service provider or the customer. Knowing where certain lines are drawn, and ensuring those lines are not crossed, helps mitigate risk for all parties involved.

Norman Katz, Katzscan

Service Misrepresentation is Fraud

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Editor’s Note: This post is from regular contributor Norman Katz, Sourcing Innovation’s resident expert on supply chain fraud and supply chain risk. Catch up on his column in the archives.

As a consultant, and given my areas of specialty, I never always & fully know what to expect when I am engaged by a client, as there is always something new to discover. But before I accept any assignment, I perform due diligence to ensure I’m the right person for the job. My due diligence involves a detailed discussion as to the problems the organization is having, technology environment, geographic location, etc. Sometimes I can steer the organization towards a different – and better – solution path, removing me from consideration. It doesn’t pay the bills but it’s the ethical thing to do.

I’m often left with the decision about whether I’m the right person for the job because I know better than the perspective client what my skills and talents are. If I’m not familiar with certain software or hardware, or the problem lies in a situation or industry I’ve not experienced, I’ll tell the perspective client this. It won’t necessarily negate my chances of selected as the solution provider, because experience has told me that as long as I can quickly acclimate myself to something and have (closely) related experience, I’ve got a good chance of getting the project.

I believe it’s absolutely necessary, in all fairness, to set the expectations as realistic as possible from before the beginning (during the “interview” stage). In no way do I want to surprise a client with what I don’t know during an engagement, after being paid monies leading up to that point.

Some former colleagues of mine asked me into a company they were trying to help; the discussion would center on implementing several unused modules of their Enterprise Resource Planning (ERP) system, and that some data migration and creation would be required. Now, I’ve helped clients with everything from QuickBooks® to SAP®, and with hardware platforms such as Unix®, Linux®, Windows®, AS/400®, and IBM Mainframe. I’m able to do this because I work with my clients’ technology staff or technology provider service companies in concert with my own technical skills. However, despite expertise in some areas, it would likely be more correct to label me an ERP generalist.

I went in and met with the company, and it wasn’t too far into the discussion that I realized they had been told I was something of a “knowledge expert” on their particular ERP system, and the conversation went down from there, as I informed the meeting attendees that while yes, I could perform the work needed (and had done so before in other ERP systems), certain criteria had to be met on their end, such as did they have administrative access to their database and the import/export module. (I had done my homework on their ERP system before I went in.) For each question I asked, the company operating officer and lead technology person had no idea, and neither did my colleague.

Well, I had two choices: hang my colleague for the misrepresentation in front of everyone, or take the bullet myself, and I opted for the latter rather than the former, because that’s the kind of person I am. Later at lunch with my (now former) colleague, I was criticized for my sales pitch: I should just shut up and take the work and then explain the nuances and details later. (Never mind that it’s those nuances and details that are important to understand up front to ensure I was right in accepting the assignment in the first place!)

One definition of fraud describes it as a breach of confidence, and misrepresenting ones’ skill set is, in my opinion, fraud.

Regardless of what line of work you are in, (purposeful) misrepresentation is fraud, pure and simple.

I’ve probably turned down more assignments than I’ve accepted in my consulting career, but when you compromise your integrity and dignity, you lose your credibility because eventually your fraud will be revealed, and by that time it’s too late.

Norman Katz, Katzscan

Myths and Realities of Services Procurement

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A recent article in the Supply Chain Management Review did a good job exposing some of the myths, and realities, of service procurement.

Myth: You can manage costs through RFPs.
Reality: Sourcing is only the beginning. Over half of all negotiated savings can be leaked during Procurement.
Negotiated savings aren’t realized until a transaction occurs … and they only happen if you pay the right price for the right quantity of the right product at the right time. That’s why you need a good e-Procurement system and someone monitoring all the alerts and running queries and random spend analysis-based audits monthly (for what can’t be caught automatically).

Myth: Managing services spend is complicated and expensive.
Reality: It’s never been easier … and it was never hard to begin with if you approached it properly.
If you know what you’re doing, have a checklist, and have a solution that supports that checklist, it’s a breeze. If a pre-surgery checklist can cut serious complications by over 35% and inpatient deaths by over 40% (Vitabeat.com), imagine what a good solution can do for something, like transaction management, that is a lot simpler!

Myth: It’s just temp labour … let HR handle it.
Reality: Most businesses start with temp labour, but there’s also marketing, legal, and other areas to address.
And don’t forget about print spend, which often presents one of the biggest savings opportunities, at least percentage wise.

Myth: If you build a system, your staff will use it.
Reality: Users find a way around any system they don’t like.
At a minimum, any system you intend to use to manage services spend must include:

  • A consumer-like user interface and requisition process.
  • Single sign-on for any purchase request, goods or services.
  • Visibility into the status of all orders that are in process by the user.

Myth: The best way to cut costs is to cut services.
Reality: It’s sometimes the worst way … the best way to achieve a significant cost reduction is to employ effective spend management practices.
Maverick buying is often the biggest loss of spend in your organization, and the reason that over 50% of negotiated savings are never realized. Manage the spend, and savings will materialize almost instantaneously.

Myth: Any e-Procurement solution can handle services.
Reality: Most e-Procurement solutions were not designed for services.
While you can fit a square peg into a round hole if you trim it down and force it … it’s not always the best idea. Especially when there are solutions defined specifically for services procurement.

Myth: Services are unique …we need point solutions for each one.
Reality: Any service solution should be part of an overall strategy … and some solutions are built to handle multiple types of services.
Multiple solutions can create more chaos, not less.

Myth: Vendor-funded software is Free!
Reality: The hidden costs of vendor-funded software could bankrupt your supplier.
Every time you use a vendor funded solution, you’re costing the vendor money. That means they have two choices, raise their prices to you to cover the cost, or take the hit in hopes that they’ll make it up on volume, which they never do, and this approach, ultimately, takes them closer to bankruptcy than to profit.

Practical Tips for Reasonable Service Levels when Outsourcing

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SourcingMag.com recently ran an article on “getting the service levels you expect with outsourcing” that resulted from a Gartner interview and contained some good tips that are worth repeating.

  • Define Realistic Expectations
    If you’re an efficient organization, don’t expect 30% savings from outsourcing. It’s going to take time for them to learn your business, and even when they do, the economy of scale they offer will only go so far.
  • Realign Expectations Annually
    Demands change. Markets change. You need to make sure your expectations change accordingly.
  • Define the right measurements and metrics.
    Make sure they measure against your goals.
  • Make sure you have a consensus opinion from senior management.
    This insures you define appropriate goals and relevant measures.
  • Prepare.
    Make sure everyone understands where service is going to be increased, decreased, and what they need to do to support the transition.
  • Outsourcing is not a solution.
    If you have a problem, you have to solve it before you can outsource it … otherwise, you’re outsourcing a failure waiting to happen.
  • Build in Flexibility.
    Long(er) term agreements need to be structured to anticipate the change that’s inevitable in business and technology.
  • Relationship Management, and Respect, is Critical.
    You can’t just hand the process off and expect a miracle.

Take Your Eyes Off Of The Yellow Brick Road and Follow The Car

A recent article in Strategy + Business which tells us to Follow the Customer, Follow the Car makes a great point: when customers are scarce resources, you need to focus on your current customers, do more with them, and not churn your customer base.

A prime example of how to succeed is given by the Japanese auto companies who adopted “follow the customer” as a core strategy decades ago. When demand for new cars declined in their home market, they emphasized products that accompanies the car — insurance, loans, inspections, maintenance, parts, and accessories — with revenues that remain stable in recessionary times. This allowed them to survive the recession, and then grow when the market rebounded.

This strategy doesn’t just work for the automotive industry. In the last recession in Japan, it worked just as well for other machinery industries as well. Construction machinery, plant machinery, and aerospace are all prime examples that can benefit. In a recession, people want to keep their assets running longer, and anything you can do to help your customers maintain their hardware longer is a stable, and profitable, industry for you.

And if you’re in sourcing, that means you can expect to be sourcing more parts and services, and anything you can do to reduce these costs will benefit the company immediately.