Fluctuating demand is a particularly big problem in the service sector. This is because you cannot sell the retained capacity at a later date, as is possible in the product business. Idle time is dead time. How do we deal with this?
In times of low demand, you are stuck with unused capacity and the associated costs, wasting resources. If there are too many inquiries, some have to be put off until later, the earnings potential is not fully exploited and some customers react angrily.
This problem is familiar to every Service Manager This is a well-known problem in the industry and a major threat to the profitability of your own department. There are therefore a few goals that you should set in order to avoid this situation in the best possible way.
Expanding capacities is only possible to a limited extent
The term capacity or resources in service refers to the buildings, equipment, labor and infrastructure necessary to provide your services. You can extend some of these capacities for a short period of time. This is usually not the best and, above all, not the most long-term solution, but it is usually unavoidable when demand peaks.
Employees can work overtime, and in some cases the required equipment can be used to its overload limit in the short term. In the long term, this naturally leads to wear and tear on staff and equipment. It therefore makes sense to proactively consider the balance between capacity and demand in advance.
Making capacities more flexible
You have additional resources at your disposal to respond to peaks and troughs in your department's workload. Downtime phases and low utilization of your service area can be planned for. Of course, this primarily affects the capacity of your technicians. However, creating suitable incentives to plan days off around periods of low capacity utilization is not everything. As part of the Skill management it is advisable to have as wide a range of personnel as possible. The more diversified the skills of your technicians are, the more flexibly they can be deployed.
Those who can fall back on a pool of part-time workers who can step in when needed can also count themselves lucky. For simple tasks, these can be temporary workers, for example. For more complex technical tasks, it makes sense to work with former technicians, for example, who may already be retired, and to maintain a good relationship with them.
In addition, you can also try to encourage customers to use Self-service-offers when you cannot be there for them personally. This can also take some of the pressure off and allow you to concentrate on other tasks.
You can also vary the time and place of service provision as required. Some services can perhaps be provided remotely instead of on-site in emergencies. Training courses, for example, can also be carried out online to save the journey.
Order slack periods can be put to good use by focusing on internal matters and to-dos or by specifically processing tasks that have been in the queue for some time. Retrofitting and troubleshooting on existing machinery is a good option here.
Recognizing patterns in demand
In order to plan capacities in the long term, however, it is necessary to have access to suitable data. Demand for service often fluctuates randomly. Nevertheless, peaks can be predicted or at least typical trends can be derived from historical data through the targeted collection and analysis of interaction data. If you know that you typically receive the most repair requests during the ramp-up period after the summer vacations, it makes less sense to schedule additional maintenance here. However, it is important to break down the collected data as precisely as possible according to different segments in order to recognize existing patterns and be able to act accordingly. This is because service often requires a high degree of specialization and not every technician can be deployed for all tasks.
Managing demand
If you wait for demand to stabilize on its own, this will of course have the consequences described above: Poor efficiency when things are slow and overworking your team on better days. The result is usually dissatisfied customers and employees. So do we also have the opportunity to influence demand ourselves?
On the one hand, marketing elements can be used here. For example, the regulation of classic communication measures in relation to the expected ups and downs of your business over the course of the year. An equally simple trick is to influence pricing. Set higher prices at full capacity and lower prices otherwise to create incentives for customers to buy. However, this works only with difficulty in the bread and butter business of repairs, as customers would see this as arbitrary. For some value-added services, however, this is a tried and tested method.
However, this is not the end of your toolset. If necessary, you can also offer additional services and aim to upgrade existing orders in your favor.
Prioritization of customers by service level
If capacities are tight, you should aim to complete important tasks first. This includes, among other things, evaluating orders according to their urgency and keeping an eye on customer satisfaction. However, you must also focus on prioritizing the most lucrative tasks, but you cannot only consider the financial aspect. The activities that are particularly important for customer satisfaction must also be taken into account.
Furthermore, the categorization of customers is crucial. Your most important customers should enjoy preferential treatment. The introduction of service levels is a crucial way to achieve this. If you establish a service level system, you can sometimes communicate more easily to a customer why they now have to wait a little longer if the contractually agreed service level is not as high as for other customers and this relationship has been compensated accordingly.
Promote the conclusion of maintenance and service contracts!
All the methods mentioned above are helpful and for the most part very obvious. However, the biggest lever for making your business less volatile is simply more Service contracts and land more maintenance orders. The greater the proportion of predictable business, the less you will be under pressure in terms of capacity. This includes inspections, maintenance, retrofits, but also installations, as these usually have a longer lead time.
By their very nature, repairs are ad hoc and can rarely be planned. Between you and me: most companies are still a long way from being truly "predictive" in their maintenance efforts. And as long as this is the case, repairs will cause stress in service planning. Maintenance orders can be planned flexibly to a certain extent and most customers generally have no problem if they have to postpone a maintenance order by 2 weeks in exceptional cases.
A simple calculation example:
The daily repair requests in your service departments fluctuate between 5 and 15 technician resources and on average over the year you need 10 technician capacities. This means that you are constantly overloaded or underloaded and have to absorb this through massive overtime set-up and dismantling scenarios, postponements or other means.
If you had half of your machines under service contracts, this would possibly already be a basic capacity utilization of 20 technicians. The capacity requirement would then no longer fluctuate by +/- 50% around the annual average, but only by slightly more than +/- 16%. This means considerably less stress for your team, better planning, better capacity utilization, higher customer satisfaction and, at the end of the day, in most cases considerably increased profitability.
