What About Customer SatisfactionBy Ron Slee
Article Date: 03-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
They've told us what they need and want - the rest is up to us.
The recently published Parts and Service Opportunities Handbook details the outcome of an extensive survey our customers completed to help us better understand their needs and wants. This is in keeping with the structure of the Balanced Scorecard. They told us very clearly that in the service department that they wanted responsiveness above all else. In the parts department they want availability. Please notice that price is not the No. 1 issue with our customers.
So what could and should we do about these two issues?
First let's look at responsiveness in the service department. This should be an easy one this year as things have slowed down somewhat, but there is an inherent problem in how we operate the business. How about a broader view of our business strategy? In the equipment business we have an inventory of new and used machines to facilitate the sales function. This inventory is not utilized at a 100 percent level. We have inventory on hand that has not sold for a number of months and it is still in inventory.
And how about the parts business? We have a large percentage of the parts inventory that has not met our stocking criteria. Why is that the case?
Back to the service business: How much unapplied time do we allow the service manager to have before we are pushing for a staff reduction? Where is the inventory to support the service business like the equipment and parts that we have on hand? It doesn't exist. So when we have an asset - labor hours - that is fully utilized, is it any wonder that our customers don't think we are responsive. Is it any wonder that our market capture rate on labor is less than 20 percent?
What about the availability of parts from the parts department? On any given week most dealerships will have backorders on what would be fast moving parts. Is it any wonder that customers view parts availability as their No. 1 concern? How can we have backorders on fast moving parts when inventory turnover in most dealerships is less than four times a year? That provides you with 90 days sales on hand doesn't it? How can you have a backorder on a fast moving part when you have 90 days sales on hand?
Both of these customer needs are easily satisfied. Yet we continue to operate as if we didn't know that responsiveness from a service department and parts availability from a parts department are the customers' No. 1 priorities.
On responsiveness, isn't this simply a case where we need to allow some percentage of unapplied time all the time? I don't mean the technician is sitting around waiting for work. They can be gainfully occupied with many things. But not billed out to customer, internal or warranty work orders. How about having an inventory of technicians available and accept an unapplied time greater than 1 percent?
And what about parts availability? Why not have fast moving parts in inventory all the time? Why not keep 60 days' supply of fast moving parts on hand? The old thinking on inventory control was that fast moving parts were easier to manage. The demand was more predictable. You didn't need as much inventory on the fast moving parts as you needed on slow moving parts. What nonsense is this? Our customers know as well as we do which parts are fast moving and they expect us to have the fast moving parts on hand. When we don't have them customers think we don't know what we are doing. And do you know what? They are right.
So let's look to the second stage of the Balanced Scorecard excellence internally. To achieve excellence we should be able to respond to our customers within a 24-hour period. We should be able to provide completion dates on service work and meet them. It is that simple.
So how about we make a late New Year's resolution - let's measure our responsiveness to our customers and publish the results on our Web sites. On parts availability, let's define fast movers as those parts that sell 60 times a year or more. Any of you who have attended a Quest class on Parts Management knows that my view is simple: If you as a parts manager have a backorder on a fast moving part, don't bother coming to work tomorrow. It is that simple.
I believe we know what our customers want. I also believe that we know what to do to satisfy them. So how about we start delivering. Let's start excelling in customer satisfaction. Isn't it about time?
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