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Predicting service levels - managing information

This free article by Derek Stockley highlights the importance of predicting service level requirements at the earliest possible stage. The key role of information management is explained.

On demand - the nature of service businesses

Taxis are a demand business. Although it is possible to predict some peaks and troughs, demand can still fluctuate. A sudden downpour of rain can suddenly increase demand. Taxi companies have to have the right number of available drivers, coupled with the available cars, waiting in locations where they are needed.

Many service organisations face similar problems. Service provision is often the combination of staff with tools and equipment ready to complete the task/s when requested. Some services should be instant, like staff answering telephone or counter enquiries.

Most of us will only tolerate a short wait. Other services, like equipment repair, can and must include lead times. However, these should be as short as possible. Delays only generate poor customer goodwill and follow-up enquiries. If service is prompt, customers will not make follow-up calls, which reduces the workload substantially.

Providing services is different to providing products. With products, you meet demand by taking them off the shelf. You cannot do that with a service oriented business.

Service management - managing information

Every business should have good information that helps to predict service demand levels.

Taxi companies will know from past experience that Thursday nights are social nights and that finance workers will be working overtime in the month after the end of the financial year. However, some demands will still be difficult to predict.

I was recently talking to some senior managers in a successful and growing service business. Their demand was directly related to sales growth. The problem was that another company sold the products. Although they were business partners, they were two separate businesses. The sales company guarded their financial and sales information.

We were talking specifically about the recruitment and selection cycle for new staff. The growth meant more staff were required. The problem was that the workload information was only available after the work was completed. The information only quantified the workload increase.

It turned out that the service workload was directly related to sales. A 10% sales increase generated a 10% increase in service workload over the months following the sale. Workload could be predicted.

I suggested discussions with the sales company could be mutually beneficial. The service company did not need profit information. It just needed to know the sales figures. This would bring forward the information two or three months. As sales went up, recruitment and selection activity could occur so that the new staff were 'on board' when the workload arrived.

The sooner you have information, the better. Sometimes it may take an innovative approach. For example, building companies with relationships with architects and designers will know of an upturn when it occurs. This is in addition to the official statistics on 'finance approvals'.

Summary and conclusion

Every business needs information. It is a competitive advantage to have the information earlier than your competition. Sometimes, it just makes management easier. Develop systems that provide you with the information you need, when you need it. Use external parties if that helps.

Personal reflection

Do you receive timely information?

Are you actively seeking alternative information streams?

Are you looking outside your organisation for mutually beneficial information sharing?

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Derek Stockley conducts a variety of public training courses in Melbourne, Victoria, Australia.

This article was last modified on 20 April 2006.