Otis service managers dilema case study

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Otis service managers dilema case study

  1. 1. TERRITORY SCOPE / RESPONSIBILITY 1,300 UNITS 3 Mechanics 4 Mechanics 5 Standby’s UMASS Amherst 2 Standby’s NOTE: Standby Mechanics not available for regular callbacks due to contract requirements
  2. 2. Revenue Margin Vs. Overhead Cost 1990 2002 2014 Revenue Margin Overhead Costs UNSUSTAINABLE!
  3. 3. CONTRIBUTING FACTORS • Directed to push revenue margin as #1 priority • Preventative Maintenance lowest priority • Upselling and “selling your way out of repair obligations” top priority • Reduced allotment of labor hours per unit (reduced number of available mechanics), reduced material spending budget for repairs • Account managers signing on new contracts that are immediately unprofitable (underpriced) • Larger than average mix of old and obsolete units increase complexity of repairs • Mechanic Talent pool issues; reliant on talent provided from local union hall, cannot hire from outside or violate “seniority” rules when hiring • No Adjustor level mechanics directly available for troubleshooting most complex repair issues. Reliant on “borrowing” from other supervisors when available. • Steady increase in number of units per maintenance route (continuous increase in Unit-to- Mechanic ratio) • Geographical challenge – reduced density of units and poor unit-to-mechanic ratio over large territory directly affects response time to repair callbacks. Significant risk when dealing with elevator entrapments or large/high priority customers that demand quick response time. Bottom Line: low prioritization of preventative maintenance >>>>> increase in callbacks >>>>> less time available for preventative maintenance >>>>>> vicious cycle >>>>>> unhappy customers >>>>>> cancelation of contracts

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