In the field service industry, everything goes smoothly if we start with a solid plan. Just kidding. The last two years have shown us sometimes the plan goes out the window! Global supply chain disruptions happen, and our First-Time Fix Rate (FTFR) falls short of projections. However, metrics are still important to track, even if they seem āunfairā given the circumstances. This article explores how to manage metrics in a world where ships get stuck sideways in canals and pandemics rearrange workforces.
On-Time Delivery & Hit Rate
Two of the most useful metrics for field service companies to track are On-Time Delivery (OTD) and Hit Rates. The importance of On-Time Delivery is evident: In the field service industry, you must prioritize service. It means complying with the Service Level Agreement (SLA) you set with your customers. Fulfilling these agreements is a baseline for staying alive as a company. When you overpromise and underdeliver, you not only compromise your contract with the customer at hand, but you damage your potential to enlist new business. That said, On-Time Delivery could easily consume your attention.
You also need to remain profitable, which means getting strategic about how you comply with SLAs. If you constantly splurge on expedited shipping to meet them, especially with todayās fuel prices creating shipping surcharges, itās time to reevaluate your approach. This is where āHit Rateā comes in.
Baxter coined the term āHit Rateā to represent a specific functionality of BaxterProphet, our Service Parts Management software. Hit Rate goes a step further than On-Time Delivery to measure part availability. The phrase āthe right part in the right place at the right timeā may be overused, but thatās exactly what Hit Rate measures. If you meet your SLA in the most efficient way possible, itās considered a āhit.ā BaxterProphet would mark the part requirement as a āmissā if you got your materials from an inconvenient location or unexpectedly had to expedite shipping, even if you complied with the SLA. This more granular metric helps your business ensure youāre actually meeting your goals of delivery, efficiency, and cost-effectiveness. It can also help you determine the root cause of any misses.
Based on the data weāve seen from BaxterProphet customers, the root cause of misses roughly falls into these three categories:
- Data issue: Data is insufficient or inaccurate.
- Configuration issue: Planning parameters donāt align with business processes.
- Execution issue: Execution of service delivery doesnāt align with business processes, as in the case where a planned stocking target goes unfilled due to a late part delivery.
The more āmissesā you analyze and categorize, the easier itāll be for you to see which issue you should prioritize. Some miss root causes can be fixed, so you can avoid another miss the next time, creating a cycle of continuous improvement. For example, identifying and correcting an issue with master data like installed base or bills of materials may change your inventory plan, so the issue wonāt happen again.
Measuring Spare Part Availability
Stellar On-Time Delivery and Hit Rates rely on parts availability, which is why itās critical to measure Hit Rate independently of OTD. How often can you get the parts you need? How do you predict which parts will be accessible when you need them? Should you get them elsewhere if you determine they wonāt be available from your usual supplier?
Hereās where you acknowledge that things might not go smoothly and account for this turbulence in your metrics. Youāll miss out on the complete picture if you use On-Time Delivery as a proxy for measuring part availability. A more effective way to measure part availability is to determine whether the part came from the ideal location or if obtaining it incurred unnecessary costs.
Another way to look at this concept is to consider both process and results metrics. In the field service world, the ends donāt always justify the means. Thatās why itās essential to look at both kinds of metrics. Results metrics are clearly important in that they measure if youāre delivering on your goals or not. But process metrics, or data about how your operations are performing at critical benchmarks, can give you even more insight on how to improve your operations.
Is It Ok to Fudge Metrics?
No, giving your metrics a makeover isnāt in your best interest, even if unfortunate circumstances threw you off. You missed your metrics for a reason, so youāll have to face why at some point. While it may feel unfair to get penalized for something out of your control, such as global supply chain issues, the metrics are just neutral information. You can use this data to uncover patterns that may lead to process improvements.
I recommend you consider all your metrics and group the failures into root causes. Even āout of your controlā misses should be tracked so you understand the full scope of the issues and know whether theyāre getting better or worse.
By embracing your unfavorable metrics, you might realize you have more control over the situation than you initially thought. Are you consistently missing OTD due to part availability issues in a specific region when you try to get parts from a particular supplier? Have you looked at the delay from every angle? Maybe a lack of automation or fuzzy communication is to blame.
At a recent Field Service conference, one of my co-speakers in a panel on OTD shared a story about a customer where certain employees had gotten into the habit of ignoring planning system requests. This negligence happened due to a lack of automation. When this customer took on a high-profile miss on a critical customer, they researched to find that the planner had been ignoring the part movement request because the āship fromā location didnāt have the part. Instead of fixing the inventory discrepancy or trying to recreate the order from another site, they turned a blind eye to the issue. More anecdotes like this may come up for you than you realize when you diligently measure orders and have a process to track them down to their root causes.
When Itās Time for a Workaround
As I mentioned at the beginning of this article, you want to meet your SLAs in the most cost-effective way possible. However, thereās an exception to every rule. Sometimes it makes sense to invest in costly workarounds: another key benefit of looking at data trends and analyzing root causes.
When you have a clear idea of whatās going on at each stage of your process, and you know whatās in your power to change, it becomes clear which instances warrant the expense of expediting to make OTD when you experience a Hit Rate, or part availability, failure.
Some part availability failures are inevitable because you will never achieve 100%-part availability. Itās not practical and the expense in inventory to do so is just too high. However, understanding that not all misses are equal, instead of reactively investing in expedited shipping each time you run into a potential SLA miss, you can proactively allocate resources to this circumstance for when it truly makes sense. For example, misses at certain clients will harm your business more than misses at others. Sometimes misses donāt impact the customer if they have redundant equipment and may be acceptable to take. Have this information at your fingertips so you can be strategic about workarounds.
The Importance of Aggregation & Automation
At a surface level, delivery and part availability metrics tell a one-dimensional narrative: Youāre more likely to deliver on time when parts are available. But when you run into the issue of part unavailability, for example, itās time to illuminate a more nuanced story. The number of variables that impact your end-to-end operation is vast. That said, you canāt feasibly get effective data insights by using a spreadsheet; you need software that can aggregate data from multiple sources and generate metrics that speak to the big picture. Baxter Planning also launched a new product LynX in 2022 to help solve this problem proactively and close to real time.
Automation is also essential. Thereās simply too much data available today to think about collecting, collating, and aggregating it manually, and then layering on a repeatable metrics calculation. From what Iāve seen over my years in the Service Supply Chain, businesses make the most of their data when they can traverse the continuum from complexity to simplicity. Start with as much data as possible, then distill it into digestible dashboards and actionable, easy-to-prioritize insights.