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Podcast on Critical Incidents in Complex Service Contracts

last modified Nov 15, 2016 11:32 AM
Podcast from Chara Makri on 'Critical incidents in complex service contracts: Safety challenges and means of prevention'

Detail matters when it comes to ensuring safety in contracted out services provided by manufacturing firms  

Chara Makri, a PHD student at the Cambridge Service Alliance talks about her new paper “Critical Incidents in Complex Service Contracts: Safety Challenges and means of prevention” which she co-authored with Professor Andy Neely. Chara interviewed 23 experts from servitized manufacturing companies and their partners, in roles directly linked with safety.

2016 July Paper CoverMakri explained: 'A critical incident doesn’t necessarily mean that someone gets fatally injured, it could be any case where the service was not properly delivered to the customer, and the main organisation would be responsible for this. In service contracts, while there is a transfer of responsibilities from the customer to the manufacturer, customers often feel reluctant to let go of the control they had previously. This situation often does not allow the manufacturer to take proper actions increasing the risk of incidents. But in order to deliver services properly, the involved organisations need to trust each other and form real partnerships.

She continued: 'Over 60 per cent of the respondents felt there was confusion over accountabilities. What this means is that due to the large number of parties involved in these contracts, it is not always clear who is responsible for performing a certain task. One of the respondents said to us: ‘I don’t think it will ever be fully defined who is accountable and responsible for what’. But they are trying to make people understand more about this. On the other hand, just over half of the respondents also felt that even if they knew what they have to do there is a general lack of control that doesn’t allow them to do so.'

Makri sets out three main risks companies faced: control; attitudes within the service network; competencies and training. She goes on to comment: 'It is not just one thing that needs to be done to deliver services safely, you need to be aware of all the characteristics and different cultures in the network in order to drive the right behaviours. For example, some sectors are more regulated than others, while in others there are more nominal requirements. Understanding of safety may also be different depending on the sector.'

At the same time customers and regulators are becoming more demanding, says Makri:

'Services are important, and more manufacturers are going to turn to services in the future, but at the same time customers are becoming more demanding. The EU for example, has set ambitious roles for air traffic control for the next decade, covering capacity, safety, costs and environmental impact. These different targets compete against each other. We see that environments are becoming more demanding.'

She concludes by saying that although we need more research to be able to say the exact characteristics that will provide servitized manufacturers with high levels of safety, it is important to understand that there is not one single thing an organisation should focus on. It is all the little things, and all the individuals need to be aware of how their performance affects the performance of the whole network.'

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