Don’t Defend Your Product. Protect it.
The Economic Times
Sunday, 17 January, 1999
The service function should interface with marketing rather than manufacturing. Convinced of this, G K Gureja recommends appropriate reporting structures.
A Pune-based textile processing unit, working on an expansion plan, decided not to take any chances with the ‘quality’ of a boiler needed to meet its process steam requirement. It chose to buy a packaged boiler from a local, highly reputed boiler-maker, at a premium price. Within two weeks of its commissioning, the boiler started malfunctioning. The customer got nervous, made a serious complaint and requested the manufacturer to redress the problem immediately.
The problem landed in the works manager’s lap. Keen to restore the boiler into operation without loss of time he decided to send Kulkarni, the engineer-in-charge of the boiler test bed to attend to the complaint. Kulkarni did not take too long to find the technical fault. So, he declared with considerable sense of achievement that the boiler feed water was not ‘treated properly’ and that the customer was entirely responsible for the lapse and therefore, for its consequences. The testing engineer reported the ‘facts’ to the works manager, got a thumping pat on his back and as advised arranged to send to the customer, an offer for the choked heat exchanger. Thus, the ball was promptly thrown into the customer’s court, inflicting on him a major unexpected cost to run his processing plant.
It took six months for the company to realise that while the engineer had won a technical argument the company had almost lost the customer to competition when it came to buying a second boiler. That would vindicate the stand that the service manager had taken at the time of the event but had been over-ruled. The ‘expert’ had stoutly defended the boiler as a piece of mechanical equipment. But did he protect the company’s product and its image?
This incident took place more than ten years ago but such short-sighted approach is by no means uncommon in engineering industry even today. Neither is the ongoing controversy: What is better for achieving higher degree of customer satisfaction? A service department that reports to the manufacturing chief or the one that forms a part of the marketing group?
Reporting Relationship
With focus on total quality management that espouses process oriented thinking and use of cross functional teams to meet specified objectives, the controversy is meaningless. We have learnt that customer satisfaction is every one’s job.However, a large number of companies have not yet convinced themselves that quality of products and service can be improved only if the relevant operating processes are improved. This calls for a change of the mindset.In the meanwhile, the lessons learnt by the supplier of the above boiler years ago are still relevant for other organisations.
Way back, this company had extended its product range by adding a few more boilers in relatively larger sizes. As equipment population grew and shortage of some indigenously developed critical components persisted the company ran into considerable field problems. Collective efforts were made in the right earnest to retain customer good-will but the magnitude of field complaints was so overwhelming that it created tremendous internal tensions. The game of buck-passing between manufacturing and marketing became too violent for any rational thinking.
With manufactured product as the focal point the managing director raised a question: Why should the service manager not report to the manufacturing director instead of the marketing director so that manufacturing is held squarely responsible for customer satisfaction? The overwhelming argument in favour of seeking a change was “closing of an escape route for manufacturing”. Since it was not for the first time that this question was raised the service manager offered to objectively study the whole issue at some length and submit a report for collective consideration. This is what the study brought out.
Focus on Co-ordination
Functioning of a service department is not materially affected, whether it forms a part of manufacturing group or of the marketing group or whether it is independent of both provided a product is well engineered to meet the negotiated fitness-for-use requirements, selling practices do not allow deviations from standard product specifications and Internal information systems are adequate. In practice, however, many events can influence the extent of inter-dependence and nature of co-ordination between sales, service and manufacturing. Manufacturing, for instance may face delays in completion of the prototype and rush through some of the steps to meet a deadline; bought out components may cause quality failures; time lag may occur in developing the needed production facilities and inspection procedures; equipment may be shipped – some time even on the insistence of a buyer – before the `production design’ is completely debugged.
Marketing may be compelled to meet special requirements of a given customer; use after-sales-service as an aggressive weapon of competition; commit ‘all’ technical service support without defining it. This results in service resources being consumed as a compensation for other lapses. Service department itself may be excessively obsessed to provide high degree of responsiveness as means of image building and offer service support to optimise customers’ costs rather than only help when needed for trouble-shooting.
Phase-specific co-ordination
From the point of view of sales-service-manufacturing networking two distinct phases usually exist in the early stages of a new product. A product is pushed into the market, as a matter of deliberate strategy (though it is a highly questionable strategy today) before it is fully tested and debugged under simulated conditions. In the period that immediately follows on commissioning of such units a number of field problems arise which need to be sorted out with exceptional alacrity. At the same time design and process changes have to be incorporated without loss of time to restrict the number of units being put to commercial use with known defects. In the meanwhile inspection facilities and processes have to be put in place. This ‘conformation-to-production-design’ phase may be called as phase-I. A `production design’ is released for full scale production after all necessary tests have been carried out in simulated conditions and defects, if any, have been de- bugged. However, within three to six months all possible defects begin to surface.
After necessary corrective action is taken the product progressively begins to conform to production-design and moves to a new, continuing, life-time phase. For the purpose of structural positioning of the service manager this phase may be called phase-II.
Change in emphasis
In a fast expanding organisation ideal conditions hardly exist. The clue to determining an appropriate reporting structure, therefore, lies in the nature of interaction and need for co-ordination between manufacturing, sales and service during phase-I and phase-II of product marketing. It is in the first phase of product marketing that calls for closer co-ordination between manufacturing and service. Also, because of limited equipment- population the field engineers are in a position to give more meaningful feedback that can be readily studied, analysed and acted upon. Corrective action follows for the equipment already in the field and for future design changes. As the product gets progressively debugged and moves on to Phase-II and as more and more machines go into the field, three major factors come into play.
With lapse of time, the nature of feedback on the same equipment changes. It relates more to the question of service life and maintenance requirements rather than to elimination of recurring component or design faults. An increase in equipment population necessarily means more users calling for after-sales-service and therefore, the priorities for the field engineers are altered. The need to have a larger number of users as good reference becomes more prominent.
With these changes, emphasis shifts from closer co-ordination between manufacturing and service to better co-ordination between marketing /sales and service.
Since, ideally, a product would not be put in the market before it has been brought to Phase-II, it would follow that service function should be more closely connected with marketing even if in some customer-oriented companies the national service manager might report directly to the managing director. There are certainly some advantages, partly psychological and partly situational, which the service manager and his team may secure by being a part of manufacturing group. These advantages include :
- Better sense of commitment to the product
- Easier exchange of field/ factory personnel to benefit both manufacturing and customer service by cross fertilisation
- Better credibility in field / factory communications
- Satisfaction to the service engineer of belonging to a group which is directly connected with control of inputs to processing of feedback and improvement of quality
- Likelihood of customer regarding the service engineer as a more competent engineer
- Better logistical and technical support by factory in case of emergencies
Apart from the fact that these advantages can still be retained in a company in which customer service objectives are clearly spelt out and the organisation has been built accordingly, there is one most important reason which goes against service personnel working as a part of manufacturing. This reason is also of a psychological nature reason but one which cannot be overlooked in the larger interest of the company.
Manufacturing identifies itself with the product with greater intensity. Therefore, those connected with design, engineering, production or quality control begin to look at the product rather than the customer as the master of the overall situation. The factory engineer, intuitively begins to defend the product rather than protect it and that is where unintended short-sightedness begins to take over from long term prudence. One draws considerable satisfaction in having wriggled out of a bad situation with a customer and confuses customer satisfaction with winning of technical arguments. There is no case for soft pedalling of issues with the customer but no company can afford to take a posture which reflects that the customer is always or even most often wrong.
The managing director of the boiler company decided that the service function stays as part of marketing and that manufacturing does not require a new reporting relationship to fully support customer service as a company’s key value The service manager’s report finally ended in the following policy decisions:
Customer-perceived value addition by a product and related services has become an all-important satisfaction signal in the current market scenario. Marketing is re-defining itself as management of long-term customer relationship rather than managing of transactions. In this background after-sales-service cannot but be treated as an integral part of marketing.
The author is a former whole-time director of Thermax Ltd.