Total Value Stream

 

 

 

recently interviewed at EnGen Inc. (EGI), an engineered-product manufacturing company that designs and produces CNC-controlled equipment for OEMs throughout North America. As a consultant, I was fully-prepared to ask the tough questions.

Present in the meeting were EGI managers:

Tom Green, Aftermarket Service

Phil Brown, Retrofit Products

Lisa White, Product Engineer

The interview questions from the team were situational in nature. For example, Tom stated that it is often to receive irate phone calls from customers because a production line in down. He further explained that, at times, there is a shortage of field service personnel because they are busy assisting other customers.

So the question becomes: how do you handle an irate customer when field personnel are not available to visit with the customer to fix the machine?

This was the first situational question in a series of four. Tom’s question is relevant, but also problematic.

 

After he asked the question, the room went quiet—the managers were waiting for my answer. Within a short time, Tom decided to break the silence to explain, “We receive over 19,000 service calls a year with a 99.5% resolution-rate.”

I paused for a moment to think about what I just heard. It’s not what Anthony said that caught my attention, but how he conveyed the statement—he was proud of the fact.

My immediate comment to the team, “19,000 service calls are way too many!” Again, there was silence in the room, as if I just told a bad joke. They were distraught and perplexed.

Tom went on to say, “We currently have over 6,000 machines in the field.”

It was clear he was trying to justify the large amount of service calls. Again, I said, “19,000 calls is an extremely high number!”

I further stated that the high number of phone calls were a byproduct (symptom) of processes that are not in control—upstream in the companys’ value-chain.

The room remained silent, as their body language told the whole story.

 

 

Unfortunately, the meeting was adjourned early and both parties went there separate way. The team thought their after-sales service function is performing at a high-level. It was clear that my comments were perceived as unfavorable. I thought to myself, "The 19,000 service calls per year is a huge cost burden that must be eroding profits and product brand, but why is the 99.5% customer-resolution-rate metric being perceive as outstanding?"

 

It’s common for managers to view resolving a customer complaint as a job well done—the outcome provides a level of job satisfaction—the call-service employee feels-good, thinking that h/she has solved another customer issue. Let’s bring-out the party favors and celebrate the occasion.

 

But wait! Out on the production floor, there is a much different atmosphere and attitude. The following comments are from EGI employee, Mark Snow, who tells a much different story:

 

 

 

March, 2019

"One of the worst contracts I have ever done"

 

Former Contractor - Technician

Doesn't Recommend

Negative Outlook

Disapproves of CEO

 

I worked at EGI for 2 years.

 

Pros

Pay was reasonable for the position

 

Cons

Toxic culture. People fighting and arguing verbally. Frequently sent off machines that didn't pass the final check because no one wanted to fix it. Departments constantly complaining about the other departments. Poor communication between departments resulting in errors and misunderstandings. No desire to fix anything. I couldn't believe how terribly people treated each other and how no one cared about resolving errors before sending machines off to customers KNOWING they were not operating as they should be. My manager told me to ignore other department requests because "They're stupid and can figure it out themselves". Absolutely no valuable training but an expectation to inherently know their home-grown software. Demanded 8+ hour days standing on the shop but refused to provide safety shoes. I don't know how they even function as a company.

 

Advice to Management

The culture is toxic and once all the middle aged people who have been there for 15+ years retire you're going to have problems retaining new and young employees who have expectations of professionalism and fairness.

 

 

 

Mark's comments are worth our attention, as they support the fact that too much variation is present in the design and assembly processes. The disconnect between the relationship of downstream outputs and upstream inputs are at the center of managements' missing link. Often times, organizations fail to show employees how their work-related tasks and work-related attitudes affect the value of a finished  product or a delivered service.

 

 

Many companies don't care how a product performs in the field, after the sale; it's not a high priority or concern as compared to the goal: converting raw materials into a final product and out-the-door as quickly as possible, so we can gain a profit.

 

 

The statistical measure, "19,000 customer call-ins and 99.5% resolve-rate"is a root-cause indicator of what is happening on the production floor, as Mark so clearly described. Yet, it is this type of metric that goes unchallenged by the executive management team—their focus is net sales and net profit. When profit is in decline-mode, the push is on for more sales. And, when the opposite occurs, all is well.

In my opinion, a 99.5% customer-resolution rate is nothing to be proud of. It is much different than a 99.5% customer satisfaction metric. The latter measure being an indicator of internal organizational performance as a whole, while the former metric reflects external product performance out in the field.

 

Both metrics, however, are laggards. After-the-fact. Too late.

 

Perhaps, the real question is:

 

Is it possible for a manufacturing company to achieve zero customer complaints? Imagine if your company had zero service calls. No irate customers calling-in. Zero negative reviews on social media. How would you respond? With Delight. With Concern. Don't Care.

Most companies believe that customer service activities are just a cost of being in business, and not a function that should be studied and analyzed, scientifically. And Yes. Customer Centricity is a popular topic and strategy—a goal that every business would like to achieve and sustain. But, it will not happen in any organization, where all employees, (A) can't see the series of steps that convert a customer request into a final product or a complete service, and (B) they don't understand how decisions that are made at the beginning of the customer value stream, affects all other steps downstream.

 

Sentences A and B describe what is happening at EnGen Inc., as evident from Mark Snow's letter and end-user complaints. The lack of insight about how work flows or doesn't flow will be felt, first, at the end-user level; then, an employee in customer service receives a phone call and gets an ear-full. The disconnect between service calls and operational performance is common within companies that do not clearly understand how various organizational activities fit together and how value is delivered and received by the customer.

 

The following business model depicts this process:

 

Direction Calls occur mostly in the presale side of the customer value-stream; this segment concerns itself with prospect education, mainly, providing information to very specific questions and inquiries—the prospect is evaluating cost/benefit of a purchase. Customer Complaint calls happen in the postsale side of the value-stream; this segment deals itself with coaching and guiding. Most often, the customer is having issues with product performance or product malfunction. Sometimes, the topic can relate to product assembly and missing parts.

MANAGERS

CUSTOMER SERVICE

MANAGERS

ENGINEERING     MANUFACTURING     SALES

Customer

Conversion

Process

Over 19,000 service calls being recorded into CRM, but the data is not being analyzed statistically for insights.

99.5% customer-resolution metric offers no evidence of root-cause.

High volume of service calls suggest:

 

  • variation in manufacturing

  • potential design flaws in product

  • lack of customer training

  • misaligned organizational priorities

  • outdated assembly procedures

  • consumer misguided in presale

  • packaging flaws and errors

The 19,000 service calls are not recognized or correlated to upstream activities of design, supply, and mfg. 

High volume of service calls suggest:

 

  • infighting with leadership team

  • information-intensive company

  • unclear on how employees add value

  • weak supply-chain relations

  • shotty work design and layout

  • knowingly using defective parts

  • silo-structured and disjoined departments

  • lack of team culture and communications

 

SOLUTION

Total Value-Stream Mapping

Customer

Value Stream

Voice

of the Customer

Voice

of the Employee

Hartwig Consulting

Kurt@hartwigconsulting.com

© 2019 by Kurt  H Hartwig