Retail Observer

RETAILOBSERVER.COM MAY 2018 62 T he most discussed phrase I've heard mentioned the last few years has been "First Call Complete", otherwise known as FCC. The service industry has become obsessed with this metric. Everyone wants to drive up their numbers and improve their FCC percentage. AND this is a great thing to focus on, no doubt about it! All of the financial models I've seen, both from others and ones I've created myself show significant profit gains when a service company can improve their FCC numbers. However, these projections seldom show any increase to costs, which is never the case. Achieving a higher percentage FCC is not cheap, nor is it the end all for everyone. Before doing anything to drive up First Call Completes, do an thorough analysis of your costs and profits, specifically focused on your call taking processes, scheduling, your COD vs. warranty call mix, customer preferences and satisfaction levels, brands serviced, parts ordering, returns (getting unused parts back from technicians and getting parts back to PD within their normal 30 day return window), credit monitoring, order lead time, carrying inventory, shrinkage, shipping costs, BMS cradle to grave parts tracking, and (add in anything I've left off the list). This data will be critical and necessary in being able to compare the NET effect of implementing changes to your systems to improve FCC. What you really want to know is if the added costs to improving FCC percentages is offset by the higher revenue! In other words, will your net profit go up, stay the same, or go down as a result of your efforts to drive up your FCC numbers. There are two very important aspects to improving First Call Completes. One is anchored to your company's parts handling process and the second is the triage system you'll implement to help determine the parts most likely needed to provide a high percentage FCC. I don't want to focus on triage in this article but confirm it is a critical component to improving FCC, can be expensive and should be tested and perfected with a serious cost analysis before implementing any changes as mentioned above, as well as during and after you've made your changes. Let's look at the parts processes that directly affect profit. Most of us don't have rigorous systems in place or don't stay on top of the systems we use to manage our parts processes successfully. Case in point, many companies have a very large assortment of dead parts taking up space in our warehouses that also show as a hollow "inventory" asset on our balance sheet. And so therein lies the issue with trying to improve FCC. "You can't manage what you don't measure," (thank you for the constant reminder, Paul MacDonald and Otto Papasadero). So, follow me here. If we don't have a solid parts management system in place how are we going to improve our profits from FCC when the formula for improving percentages lies in pre-ordering more parts through our existing parts process? Consider this: Your current parts acquisition costs (Looking up, ordering, receiving and assigning parts) are 30% of your parts purchases, and your shrinkage is 5% (techs or office neglect to turn the part back in, part gets lost in your BMS system, etc.) and your PD rejects 5% of your returns (because the returns are beyond the 30 day return window, the packaging is damaged and they can't resell the part, the part has been installed, lost or misplaced, etc.). For every $100 of parts purchases, you actually spend $140. If you factor in the additional acquisition expenses including triage, every $100 in parts purchases now actually costs $160 (or more) assuming the other cost factors (shrinkage, rejects, etc.) stay the same, which is very, very unlikely driving the acquisition costs higher yet. My point here is to encourage you to do your homework! Don't assume higher FCC numbers equates to higher profits. Certainly try to improve your FCC but keep a close watch on ALL of your numbers. FIRST CALL COMPLETE AND THE PARTS QUAGMIRE! S E R V I C E D E P A R T M E N T Dean Landers, Landers Appliance RO

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