Revitalising Service Operations in Leased Diagnostic Equipment – A Case Study

Overview

This case study examines how a tech manufacturer in the biochemistry and haematology industry, transformed its field service operations from a reactive, cost-heavy model into a proactive, efficient, and customer-focused service operation. With a large installed base of leased medical diagnostic instruments—from benchtop units to large floor installations—they faced significant challenges, including inefficient field team deployments, uncontrolled spare parts inventory, and low customer satisfaction. Through strategic changes and a focus on quality, service delivery improved, instrument reliability improved, and operational costs significantly reduced.

The Challenge

The business model involved leasing medical diagnostic instruments to customers under a pay-per-sample and reagent contract. All service and support were included in the price, making the service operation a pure cost centre with no path to profit, or plan to do so. The primary objective was clear – reduce service costs and improve customer satisfaction. This would be achieved through improved service delivery and enhanced instrument reliability.

However, there were several significant challenges:

  • Inefficient Field Team Deployment: the field service teams were spread across the country but not necessarily located strategically, leading to delayed response times and increased travel expenses.
  • Reactive Maintenance Culture: A significant portion of support focused on swapping suspect parts and replacing machines rather than diagnosing root causes. Preventative maintenance was poorly executed, causing instruments to age rapidly due to exposure to chemicals in reagents and biological samples.
  • Inadequate Data Management: the service system was Lotus Notes—a system ill-suited for our needs. This led to poor visibility into service activities and inefficiencies in scheduling and resource allocation.
  • Uncontrolled Spare Parts Inventory: Spare parts were stored haphazardly across various locations—a large off-site warehouse, an unsecured on-site warehouse, and even in the personal stockpiles of field technicians. There was no effective system to monitor or control inventory levels.
  • Overworked Administration: the lone service administrator was overwhelmed, juggling multiple phones while handling parts deliveries and scheduling service calls. Maintenance tasks were often overlooked amidst the chaos.
  • High Costs and Low Satisfaction: Urgent parts shipments were common, and repeat visits for the repeating issues plagued the service operations. Both customer and employee satisfaction were low, but this was deemed to be a normal situation for service by both the service team and the customer.
  • Ineffective Cost-Cutting Measures: In an attempt to reduce costs, technicians resorted to using salvaged parts from older instruments or misidentified parts that had been replaced but not faulty. This not only failed to solve underlying issues but often made problems worse.

The cumulative effect was escalating costs, frustrated customers, and a demoralised team. Incremental change would not resolve these issues.

The Solution

Recognising the urgent need for change, we embarked on a comprehensive strategy to overhaul the service operations. My goal was to move from a reactive, inefficient model to a proactive, quality-driven approach.

  • Emphasising Preventative Maintenance
    We shifted our focus from reactive repairs to proactive maintenance. Maintenance schedules were meticulously planned and strictly adhered to, with follow-ups to ensure compliance. We applied Reliability-Centred Maintenance (RCM) principles both in the workshop and on-site, which helped extend the lifespan of our instruments and improve their performance.
  • Enhancing Technical Training
    Our service team underwent extensive training on effective troubleshooting techniques. By equipping technicians with the skills to diagnose and fix issues correctly the first time, we reduced the frequency of repeat visits and improved overall service quality.
  • Implementing a New Service Database
    We introduced a robust service database to track work orders, parts usage, service activities, and customer interactions. This system provided better visibility into our operations and enabled more efficient scheduling and resource allocation.
  • Overhauling the Refurbishment Process
    We established a thorough refurbishment program across our entire product range. This involved removing previous patch repairs, addressing neglected maintenance, thoroughly cleaning instruments, applying necessary upgrades, and recalibrating for optimal performance. Essentially, we revitalised aging equipment to extend its useful life.
  • Strengthening Administrative Support
    We hired a second service administrator to manage office tasks and data entry. This allowed our senior administrator to focus on customer queries and effectively schedule service calls, improving both internal efficiency and customer communication.
  • Rationalising Spare Parts Inventory
    All salvaged parts were subjected to rigorous inspection. Only mechanical parts free of corrosion or damage were retained, and some long-life electrical components were kept if they passed stringent testing. However, since testing was time-consuming and costly, we ultimately discarded 98% of salvaged inventory—including the stockpiles hoarded by field technicians.
  • Securing and Controlling Warehouses
    We secured our spare parts warehouse to prevent unauthorised access and implemented a min-max inventory control system. This ensured we had the right parts on hand when needed, reducing reliance on urgent shipments and associated costs.
  • Eliminating Patch Repairs
    Patch repairs were no longer permitted unless explicitly approved by management and accompanied by a clear plan for a permanent fix. This policy not only improved repair quality but also made technicians more mindful of the long-term implications of their work.
  • Expanding Field Support
    Recognising the challenges posed by distant locations, we hired additional field-based support to ensure timely service delivery across all regions.
  • Proactive Customer Communication
    We developed clear processes for customer communication, focusing on proactive outreach rather than reactive responses. Customers were kept informed about maintenance schedules, potential issues, and the steps we were taking to improve service quality.

Cultural Shift and Internal Attitudes

Transforming our operational processes was only part of the challenge; changing the entrenched culture and attitudes within the service team was equally critical.

Initially, there was significant resistance:

  • Scepticism Among Technicians: Many team members believed they knew best and were doubtful of the new direction. The prevailing mindset valued the number of service visits and quick fixes over quality and efficiency.
  • Normalisation of Customer Frustration: Frequent apologies and dealing with dissatisfied customers had become the norm, which was demoralising but accepted as part of the job.

Despite the pushback, strong support from upper management provided the necessary backing to implement these changes. Investments were made not just in tools and systems but also in people and training.

Over time, the results spoke for themselves:

  • Building Confidence: Within a year, as positive outcomes became evident, confidence in the new approach grew among team members.
  • Raising Standards: After two years, the focus on quality had become so ingrained that veteran technicians began to critique new hires for not meeting the high standards now expected. This was a remarkable turnaround, considering these were the same individuals who had initially resisted change.
  • Continuous Improvement: The culture shifted towards continuous improvement, with technicians taking pride in their work and the performance of the instruments they serviced.

Results

The transformation yielded significant benefits across multiple facets of the business:

  • Operational Efficiency
    • Reduced Support Costs: After four years, support costs had decreased by more than half, even accounting for the additional hires. This was achieved through reduced repeat visits, better inventory management, and more efficient use of resources.
    • Improved Instrument Performance: Refurbished instruments outperformed factory-new units in both precision and reliability. This extended the useful life of the equipment and enhanced customer trust.
    • Shift from Breakdowns to Maintenance: Scheduled maintenance visits became more common than emergency breakdown calls, reflecting improved reliability and proactive service.
  • Inventory Management
    • Zero Stock Variance: With controlled and secured warehouses, spare parts stock variance was reduced to zero. We always knew what parts were available, reducing delays and costs associated with urgent orders.
  • Customer and Employee Satisfaction
    • Enhanced Customer Satisfaction: Proactive communication and reliable service improved customer relationships. Clients appreciated the transparency and reduced downtime of their instruments.
    • Boosted Employee Morale: Technicians took pride in their work, and the reduction in customer complaints made their jobs more rewarding. The supportive environment and focus on quality contributed to higher job satisfaction.
  • Unexpected Sales Impact
    • Improved Sales Performance: With service no longer being a bottleneck, sales teams saw improved performance across most regions. Satisfied customers were more likely to invest in additional equipment or renew contracts.
    • Accountability in Sales Team: Previously, some sales personnel blamed poor numbers on service issues. With the service problems resolved, it became clear that other factors were at play. In one notable case, a salesperson who had been vocal about service-related hindrances continued to underperform while his colleagues improved, revealing that the excuses were unfounded and led to sales team improvements.

Conclusion

The journey from a reactive, inefficient service operation to a proactive, high-performing one was neither quick nor easy. It required strategic planning, significant investment in time since costs were strictly limited, and a willingness to challenge and change long-standing practices. However, the rewards were substantial: reduced costs, improved customer and employee satisfaction, and even a positive impact on sales.

This transformation demonstrates the power of a comprehensive approach to operational challenges. By investing in our people, optimising processes, and embracing a culture of continuous improvement, we turned our service operation from a cost centre into a strategic asset that drives overall business performance.

Key Takeaways

  • Holistic Change is Effective: Addressing multiple areas simultaneously—staff development, process optimisation, and technology upgrades—drives meaningful transformation.
  • Management Support is Crucial: Strong backing from leadership provides the momentum needed to overcome resistance and implement significant changes.
  • Invest in Training: Ongoing training improves skills and boosts employee morale.
  • Effective Inventory Management Matters: Securing and controlling spare parts inventory reduces costs and improves efficiency.
  • Proactive Communication Enhances Satisfaction: Keeping customers informed builds trust and improves relationships.
  • Cultural Change Takes Time but Pays Off: Shifting from a reactive to a proactive mindset fosters a culture of continuous improvement.

If you would like to discuss how to transform your service business, contact Creekline Consulting.

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