Courage to Transform and Challenging the Status Quo
By Melissa Schmidt
In a dynamic competitive environment, standing still, means falling behind.
October 5, 2020
By Melissa Schmidt
For a service organization, a consistent customer experience may be rewarded with customer loyalty, important in a competitive market. Courage to challenge traditional long held beliefs and a historic operating model has helped Finning (Canada) undergo a transformation that improves the customer experience, while remaining agile for a quick response required for customers who navigate cyclical demand.
Customer feedback is captured regularly, which places their experience in the driver’s seat. As customers adapted their business models to remain competitive, Finning (Canada) would need to do the same. The feedback was clear, customers were counting on Finning (Canada) to remain focused on consistently getting their equipment back to work quickly. We acknowledged that making continued improvements for customers meant a revitalization of our operating model.
Revising the business model required the organization to identify potential bottlenecks that could interfere with repair efficiency. It was critical that work be distributed in a way that would minimize accumulations of backlog. Quality standards had to be maintained which prompted the review of the existing allocation of tooling, parts inventory, fleet, and employee development. Technology would be key in connecting with the customer through the repair journey. Adoption of the change would require performance measures that would complement the change.
With the vision of transformation clear, the operating model was adapted to a network design that closely resembles that of a hub and spoke model. This model has specific benefits for service providers. Infrastructure and talent are organized into a series of spokes that offer rapid response services and hubs that offer a full menu of repair and rebuild services.
Spokes focus on the quick response to the initial customer needs, offering a timely triage and immediate small-scale general repairs. Customers are no longer stuck in a long queue waiting for their work to be done. Hubs provide support for the network for larger and more complex repairs. Standardization is used in the hubs to gain greater efficiency through economies of scale and consistent quality. When required, a repair is moved through the network based on the available capacity and capability to perform the work within the hub facilities. This network scheduling approach is the catalyst for tapping into the full capacity and capability of the network. The movement of work through the network is critical in maintaining rapid response in our spoke facilities. If they are tied up with lengthy repairs, we risk of a delay to the customer.
Identifying which locations would be rapid response spokes, and which would be support hubs was done by assessing feasibility factors such as availability of local talent, competitive operating costs, location relative to demand and existing facility infrastructure.
Throughout the design, there was keen attention on identifying both tangible and intangible benefits. Priority to improve the less tangible customer loyalty and employee engagement was shared with the need to improve the tangible asset utilization, market share and growth.
Network scheduling manages fluctuations in volume tapping into underutilized resources. Whether it’s people or hard assets, the increased utilization improves employee engagement and reduces cost. Engagement increases when there is enough work to go around. Managing demand for overtime supports engagement when employees can find a comfortable work life balance. The cost for idle mechanical hours, not billable, are reduced when all available resources are used for scheduling.
The skill set required in a spoke facility is broad to respond to all events, whereas the hubs have scale, and so can specialize. This is a considerable pivot from our former model where all facilities required both skill sets. With clear definition between broad response technician and specialists, we needed to update our training strategy to align with the new approach and market population, needed to be updated. This also creates an opportunity to expand the training offerings to include content that focuses on customer relations. The result is an efficient use of our training resources and a well prepared, competent work force.
The broad response technician and specialist differentiation provide additional benefits with tooling investment. Spoke facilities are outfitted with tooling suited to the customer facing rapid response work, leaving the specialty, often expensive, tooling to be allocated to hub facilities. As tool inventories come together, there is the additional one-time benefit from the sale of surplus tooling.
Adjusting parts inventory within the network to align with the prescribed work scope eliminates redundant inventory and creates the financial and infrastructure capacity for more suitable inventory. With order fulfillment an important measurement of working capital performance, this benefit gains a lot of attention.
Hub facilities have a greater opportunity to become more efficient through scale and repetition of the complex repairs. Repetition coupled with standardization will reduce the average number of days for the repairs. Work is done quicker, which means additional work can be performed, generating more revenue. Getting the repairs done right the first time reduces expense related to service redo. We have a service process that complements the standardization, managing work flow, and pro-actively identifying risk. All have a direct relationship to the customer experience. With the undeniable benefits, the focus shifted to implementation.
This new model had widespread impacts throughout the organization. Every aspect from incentives, to inventory, to tooling had to be considered. Engaging with every department in the organization has led to the creation of a cross-functional implementation plan. The plan considers infrastructure and talent simultaneously.
The extensive facility infrastructure already in place needed to be used differently. Additionally, the current state for each location was captured during the design phase. A gap assessment was used to identify where infrastructure investment was required. Common gaps identified were related to internal fleet, tooling, and shop space. Sourcing underutilized assets, increasing capacity by implementing additional shifts, and capital spend helped to close the infrastructure gaps.
With the infrastructure in place, the focus shifted to preparing people for this change. The support and understanding of all employees were instrumental. Challenging traditional culture is never easy, as we were asking employees to remove the wellworn comfortable “location hat” and embrace the “One Finning Network chapeau.”
Creating a common understanding of the “burning platform” and the benefits of this transformation was the first step. Using multiple mediums such as videos, storytelling, toolbox talks, and online resources, the communication and education began. It was important that everyone understood that for Finning (Canada) to remain a competitive player, we needed to make a significant and major change. As the audience received the message, the points of resistance began to surface. Exploring these resistance points helped to form the change management plan.
The immediate question of who would pay the added cost to move equipment needed to be answered. Customers should not be expected to bear the cost of changes to Finning’s processes, unless there is increased value to them. To balance urgency and cost, we revised existing transportation routes were revised using a combination of planned and unplanned routes. Costs to transport equipment are offset by increased revenue opportunities, re-allocation of underutilized resources, and efficiency.
Having the right parts on hand to repair equipment supports front-line workers. Nervousness surfaced that the inventory adjustments would be made based on dollars and cents, not what was required to meet the customer needs. Using a regional planning approach, optimal inventory levels were determined that factored unique needs. An example, it was recognizing that British Columbia has a higher number of forestry machines, that needed to be realized in the inventory levels.
Concerns arose that opportunities to develop diverse skills supporting succession would be limited. Confidence that employee development remained a priority, needs to be created. Skills will continue to be developed through temporary work assignments and employee driven development plans. Specific learning paths are available to outline the path from a generalist to specialist, and vice versa. While the initial focus of the training resources is to prepare the network up to succeed, it serves Finning (Canada) in preparing for future demand.
Similarly, recruitment efforts would need to focus on identifying talent that is adaptable within the network. Potential candidates need to understand how the operating model aligns with their career objectives. This is particularly important for our apprenticeship program. In order to gain diverse experience in the apprenticeship program, it may be necessary to work from multiple locations.
A well thought out design is only valuable if put into practice. Old habits take time to change. In the past, incentives were based on the performance of an individual location. This led to relationship- based decisions that did not always result in the best customer experience. To change this behavior job profiles were revised to increase accountability for customer-centricity. Equally, incentive models were updated to reward performance of the broader network. With an informed and incentivized work force, compliance to the operating model will be further embedded through continued education, auditing and reporting.
Finning (Canada) embarked on this journey to improve the customer experience and improve employee engagement. As a result, customers have taken note and embraced the changes. It has evolved from fragmented supplier to a trusted partner. While it will take continued effort to adopt the operating model, employees seeing the network in action are becoming change ambassadors. In the service industry, happy employees help to make happy customers. MRO
Melissa Schmidt, MMP, has had a diverse career in the oil and gas sector, primarily in heavy equipment. A passion for continuous improvement and innovation led her to the MMP Program in 2011. A 20-year career with a single organization has provided her with ample opportunity to test the practical application of maintenance principles. Working with PEMAC provides her with an opportunity to keep learning through their network of professionals.