Healthy Margins: 2 Steps That Medical Device Service Leaders Must Take to Drive Profitability
As the medical device industry sets sail into 2018, one thing is clear: running a services business as a cost center is something very few companies can continue to afford.
In fact, trends suggest a variety of industry players are charging aggressively in the opposite direction. Companies from OEMs to service providers are increasingly looking at their service channels as a way to contribute to overall profitability. While products and solutions involving innovations related to IoT, augmented reality, and machine telematics are getting the most industry buzz, none of them directly solve the simple but critical problem of reducing the time and cost associated with getting a skilled technician directly in front of a machine that requires immediate support.
So what should medical device service leaders do? How can service leaders solve for the twin challenges of providing fast, high-quality service outcomes while also improving margins?
The answer is to embrace an agile, “on-demand” service model. This requires two important steps:
1. Embrace contractors as a strategic part of your service delivery model
Many service leaders today consider their only delivery options to be their internal employees and / or outsourced service vendors, with a few ad hoc contractors thrown into the mix every so often. Leaders find this rigid model challenging because it doesn’t scale. The internal employees workforce can deliver speed and quality, but is costly and can be extremely time consuming to grow, often with unforeseen utilization issues during peaks and valleys. Outsourced services vendors can fill service gaps, but charge a hefty mark-up while offering with no visibility or control over service outcomes.
Embracing contractors as a strategic part of the delivery model enables a more cost-effective way to respond to everything from standard maintenance to demand spikes. But simply developing a list of contractors isn’t enough. Building a strategy for how best to integrate contractors into the service process is also critical. Frequently, there are opportunities to break a service request into multiple parts - some parts requiring a higher skill set (complex machine software programming) and some parts requiring a lower skill set (basic wiring and maintenance). Today, a service business will send equally expensive employees to do both parts. The optimal end state would match a vetted, skilled, less expensive contractor to the lower skilled work, thereby completing the work at a lower cost, while also preserving a high-value employee for higher value engagements.
Once a process have been developed...
2. Leverage technology to organize, vet, and gain access to these groups of workers “on demand”
Once a strategy has been adopted and a process has been developed, the next important step is to leverage a technology solution that enables codification of that process to access and dispatch contractors on-demand.
Ideally, that technology solution will have the following attributes:
Talent Clouds - Many companies are still using spreadsheets to manage their contractors. A technology solution featuring Talent Clouds offers the ability to better organize and digitize their contractor workforce, as well as mixing and matching them with other key labor assets (employees and vendors). Talent clouds provide service leaders with the visibility and flexibility to organize and access the right labor asset for the right engagement.
Mobile Capability - Today’s remote workforces require immediate access to dispatch notification and information, making mobile capability critical to success.
Algorithmic Quality and Compliance Monitoring Tools - Compliant engagement of contractors is essential, but also a formidable stumbling block for many service businesses. Ensuring contractors have signed all legal agreements, provided all certifications and background checks, and fulfilled other compliance steps has historically been a major burden to back offices. The right software can streamline and alleviate that process, while also monitoring the expiration dates of key compliance requirements. Automation of this process is extremely valuable because it saves time while also ensuring that the contractors you engage are fully compliant with your business needs at all times.
Quality Control - Quality outcomes are the ultimate goal of any service business. Therefore, the ability to monitor contractor performance quality on every single engagement is imperative. The software solution should capture rich data that is both quantitative in nature (on-time arrival, on-time deliverables, pay rates, etc.) as well as qualitative (professional demeanor). This data is important because it informs strategy and enables a service leader to build stronger relationships with their best contractors, increasing the potential for future high-quality outcomes.
By taking these two steps, medical device service leaders can measurably enhance the performance of their service business in the near-term, while continuing to grow margins over time by applying rich engagement performance data to iterate and optimize their processes.
To learn more about how an “on-demand” workforce can streamline your service operations, please contact us any time.
Want additional information on how medical device service providers are becoming more sophisticated through automation, analytics, and AI? Check out this exclusive whitepaper, "Medical Device Field Services: Trends Impacting Delivery in 2018."
Delauno Hinson is a Strategic Accounts executive specializing in designing agile labor models and guiding digital workforce transformations. To get in touch, you can reach him at [email protected].