Author: Dan Silva, Flash Global's Chief Customer Officer (CCO)An original equipment manufacturer (OEM) and its customer enter into a service contract that includes a service level agreement (SLA) that is a pledge. a pledge to support the OEM's product after the sale. A framework that has been mutually agreed upon to guarantee that, in the event that the client has unplanned downtime, a technician or part will handle it and replace or repair it within the SLA's agreed-upon timeframe (i.e., four hours, the following business day).
However, OEMs far too frequently fall short of client SLAs. not as a result of broken supply chains or shortages of parts. Instead, it's because the OEM customer's business realities aren't sufficiently reflected in the SLAs included in the service contract.
These ‘failures’ are frequently attributed to the OEM, with repercussions ranging from brief consumer displeasure to, in the worst situations, corporate loss and reputational harm.
How can inconsistent SLA performance be resolved? Easy. Compose SLAs for services that are more appropriate and effective.
Here are five quick ways to accomplish that. and enjoy the advantages of the outcome.
1. Design Service Contracts with ‘Optionality’
Every service agreement need to be made such that your client can select (and pay for) the SLA alternatives that best suit their particular maintenance or outage scenario. It should go without saying that not every client in your portfolio or every outage calls for the same delivery schedule. In certain cases, if your customer has redundancy built into their design for that particular piece of hardware, an equipment failure can be handled with best efforts. In other situations, the equipment in question is a single, crucial piece of equipment, therefore the quickest response time is required in the event of an outage. Serving your clients too much can be expensive and lead to unreal expectations being maintained. Thus, offering clients a range of SLA alternatives in their service contracts that are customized to particular outage scenarios and their urgent remediation requirements can not only help you save money but also enable you to effectively manage your inventory to optimize the performance of your service contract. Moreover, and this is crucial, the option-based SLAs in your service contracts should be consistently attainable, taking into consideration the product, region, closest distribution center with the necessary stock, delivery window, late payment penalty, and any other factors that have been mutually agreed upon.
2. Insist on Real-time Visibility
Because of parts that are left unused, age out, or get ‘lost’ in the warehouse, OEMs may lose up to 30% of their ROI on inventory. This ROI drain is mostly caused by inaccurate data and poor visibility. They are also major contributors to poor service support.
The resolution: Implement procedures and technologies that allow for ‘in-the-moment’ inventory visibility throughout your whole service supply chain. In order to meet your customers' SLAs, you must have real-time visibility. Your SLA performance is probably going to be below average without it.
With real-time inventory visibility, you can also minimize the amount of money you spend on inventory overall and prevent situations where there is an excess or shortage of inventory. For example, daily or weekly trend analysis to track demand trends versus transportation expense is made possible with access to real-time inventory movements and consumption. This comparison might assist in determining which delivery-related expenses you could be overspending on because of unavailable inventory. Nothing is more expensive than having to constantly ship inventory from one coast to the other or pay for expensive air transportation the following flight out because you don't have visibility into your inventory or predictive intelligence.
Your brand, your clients' contentment, and, eventually, your financial line are all directly impacted by visibility. It is essential.
3. Set Clear Disposition Directives
An intelligent and effective returns management authorization (RMA) process is a crucial part of your SLAs and the cornerstone of your financial performance. You can evaluate an asset's state or health and determine its appropriate disposition by swiftly and effectively recovering it from dark sites or from a customer's data center or location.
However, it is exceedingly costly to arrange for and transfer allegedly defective products to a repair facility, only to discover upon inspection that there was "no fault found," and to incur needless expenses for transportation, time, and labor.
It is less expensive and takes less time to get your assets back into the service parts network that supports your service contracts when you work with a company that can provide advanced replacement of your material in addition to defective returns management, asset recovery, onsite assessment, repair loop management, and dispositioning services.
4. Know your Lifecycles
The cornerstone for building your service contracts and related SLAs is a thorough understanding of the lifecycle of your equipment and service components. Equipped with lifetime and parts obsolescence data, you can create a proactive service parts supply chain.
This entails having the ability to utilize data to forecast demand and make sure the necessary parts are on hand and available for usage when needed, all while informing and designing a service supply chain appropriately. Put an end to speculating. Your SLAs may be compromised by guesswork that leads to delivery delays, stock outages, and other problems.
A thorough understanding of the lifecycles of components and equipment leads to improved customer service, lower inventory, lower costs, and higher return on investment. It results into more asset uptime for your clients. All of which strengthens your bonds with customers and increases revenue for both you and them.
5. Find the Right Partner
Any aspect of a firm that is outsourced might be intimidating. Since the partners they select will be reflecting the OEM's brand, OEMs must have faith in them.
The service supply chain can also be outsourced. Seek out a service supply chain partner with a track record of working in tandem with clients to create the best service network possible in order to fulfill their service contract goals. Consequently, it is crucial to carefully screen a service supply chain provider and assess how well it performs in meeting the SLAs of its clients. It's wise business to include SLA performance as one of your selection criteria.
A Bottom-Line Benefit
OEMs guarantee their clients a range of post-sale services and support within the parameters of their service contract SLAs. OEMs may enhance their SLA achievement rates, safeguard their brand, enhance customer happiness and retention, reduce expensive inventory waste, and boost profitability by implementing these five strategies to improve performance in satisfying SLAs.
About Flash Global
Flash Global (Flash) is a global service logistics provider, and their Chief Customer Officer, Dan Silva, gives equipment makers tips on how to improve service agreements and fulfill service level agreements with their clients.
With its headquarters located in New Jersey, Flash Global develops and executes comprehensive service supply chain plans for businesses that are growing quickly, such as numerous high-tech enterprises globally. Flash develops locally driven, global solutions that help businesses grow effectively across borders.
