Customer service processes, non–value-added activities Daniel Morris purchased a 42-inch plasma television, manufactured by TVCO, from a local electronics store that permits customers to return defective products within 30 days of purchase. Approximately 45 days after Daniel’s purchase, the TV began to malfunction periodically. Because Daniel could not return the TV to the local store, he turned to the warranty information and found that the warranty included picking up the approximately 100-pound TV from the owner’s home, repairing the TV, and delivering the repaired TV to the owner’s home. TVCO’s customer service process for handling warranty repairs is as follows:
1. The customer calls Customer Service (CS) to request authorization of the TV repair.
2. CS requests the customer to mail or fax the receipt, TV model number, and serial number.
3. On receipt of the information, CS locates a nearby repair shop to perform the repair.
4. CS forwards the repair request to the Warranty Department (WD) for approval.
5. On approval, WD informs CS so that CS can inform the customer and fax authorization for the repair to the approved repair shop.
6. The customer contacts the designated repair shop to arrange for the TV pickup. The repair shop picks up the TV.
7. The repair shop diagnoses the problem and orders parts.
8. On receipt of the parts, the shop repairs the TV and delivers it to the customer.
9. If the TV cannot be repaired, TVCO replaces the defective TV with a new one.
Accordingly, Daniel called CS to request authorization to repair the TV and faxed the receipt, TV model number, and serial number to CS. CS located a repair shop (RS1) 30 miles from Daniel’s city of Anytown. On obtaining WD’s approval, CS faxed authorization for the repair to the approved repair shop. Daniel contacted RS1 to arrange for the TV pickup, but RS1 refused to pick up the TV, stating that Daniel’s location is too far away. After several more phone calls to CS, with wait times before talking to a CS representative ranging from 25 to 45 minutes, CS authorized another repair shop, RS2. RS2 picked up the TV, and Daniel informed RS2 that he planned to move to Other town in two weeks and therefore hoped the TV could be repaired by then. RS2 did not look at the TV until Daniel called eight days later to check on progress. RS2 then diagnosed the problem and contacted TVCO for parts for the repair and was told that parts would not be available for several weeks. Because of his impending move to another city, Daniel requested RS2 to return the TV to him, thinking that he would get the TV repaired in Other town.
After moving to Other town, Daniel again called CS to request authorization for the TV repair. After several phone calls with sizable wait times before talking to CS, and several miscommunications between CS and WD that led Daniel to talk to a supervisor, CS located RS3 in Other town. However, RS3 was backlogged and would not pick up the TV for at least a week. RS3 picks up only on weekdays during regular working hours. Moreover, the technician would not look at the TV for at least 10 days after the TV arrived in the shop. Given the length of time that had now passed since Daniel’s first contact with CS, Daniel found this situation unacceptable, so he called CS and asked to talk to a supervisor. The supervisor suggested other approved stores for the repair.
Daniel found RS4, which was willing to pick up the TV at a day’s notice and diagnose problems as soon as possible so that parts could be ordered. Daniel called CS to arrange for authorization, and CS promised to call back soon. After a week with no response, Daniel called CS and was told that WD refused to authorize RS4 to perform the repair because WD thought Daniel still lived in Anytown and RS4 was too far from Anytown. Daniel called the supervisor again, and after a week the supervisor arranged for authorization for RS4 to do the repair. RS4 picked up the TV; by now, more than two months had passed since Daniel first contacted CS, and RS4 could not provide a definite date for completion of the repair. However, as promised, RS4 diagnosed the problem shortly after the TV arrived in the shop and ordered the apparently appropriate part. Disappointingly, changing the part did not correct the problem. TVCO suggested that RS4 try changing another part but could not provide an estimated date of arrival for the part. After Daniel’s further phone calls, TVCO agreed to exchange the defective TV for a new one. By this time, more than three months had passed since Daniel first contacted CS.
(a) Assuming that TVCO has a performance measurement system for CS, what measures do you think the company is using to evaluate CS performance?
(b) What measures reflect what the customer is concerned about?
(c) What changes in the warranty service approval process might improve the process from the customer’s perspective?
(d) Compare how RS3 and RS4 have designed their repair process and explain to RS3 how it can reduce the time spent on non–value-added activities.
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