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When was the last time you called a business number, got put on hold and heard dead silence? In all likelihood it was some time ago. So why play music when customers are forced to wait? It’s not like anyone really enjoys hearing pabulum played at the highest fidelity permitted your phone’s speaker so there is a real question here for why firms should go through the effort. Slate has an article that tries to get at this question (Your Call Is Important to Us, Sep 8). If you prefer to listen instead of read, here is an NPR interview with the article’s author.

The first thing to recognize is that playing something for callers placed on hold aimed to solve a practical problem: If all you here is nothing, how do you know that the call is still connected?

But in the spring of 1962, an application appeared in the U.S. Patent Office, humbly titled “Telephone Hold Program System.” “In the course of receiving telephone calls,” it began, a bit grandly, before settling into the problem at hand: What to do about that dead silence the caller endured while calls were transferred, their respective parties chased down? Operators were supposed to check in again on callers who had been waiting; but what if they got busy? “In any event,” the application went on, “listening to a completely unresponsive instrument is tedious and calls often are abandoned altogether or remade which leads to annoyance and a waste of time and money.”

So the thought was that using music could improve customer service and operation efficiency. People would be more willing to hang on the line and thus would not need to call back later. Does that actually work? Continue Reading »

Airlines compete, in part, by offering lots of origin-destination pairs. Not matter in which backwater burg you reside, they strive to get you to every equally lonely outpost. That might overstate the case, but most airlines try to offer options that connect most reasonably sized cities. Most airlines consequently favor hub-and-spoke configurations for their networks that funnel passengers from all over into a limited set of points (like Chicago and Houston) before heading back out to a range of cities.

But how should an airline arrange its flight into a hub? One option is to bunch arrivals closely together so that departures can similarly be bunched together. Call that peaked scheduling. Alternatively, the airline can have a smoother flow of planes coming in. Arrivals to a hub are spread across the morning as opposed to, say, having a large number of planes land between 9:00 and 10:00.

Peaked scheduling was used by most airlines for many years but has been on the outs for the last decade or so. Now, however, it is making a comeback (Airlines Create Rush Hours, Crowds and Full Flights, Sep 10, Wall Street Journal).

Instead of spacing flights evenly throughout the day, American in August started bunching them together. The change restores an old format of “peak” scheduling, grouping flights into busy flying times followed by lulls when gates are nearly empty. After Miami International, American next year will “re-peak” schedules at its largest hubs in Chicago and Dallas-Fort Worth. …

In Miami on a typical weekday, 42 flights depart between 9 and 10 a.m. Then between 10 and 11 a.m., only a handful are scheduled to take off. The process repeats during the day with 10 “banks” of flights that fill about 45 gates at a time.

The interesting part of this is that a peaked versus non-peaked schedule is really a trade off between customer service and operating cost. Continue Reading »

It’s been a long time since we’ve posted about the roll of allocation schemes in supply chains, but they remain one of my favorite topics. Allocation schemes involve a pretty simple issue: Suppose a supplier is selling to multiple retailers and at some point gets more orders than it has capacity to fulfill. How should the supplier dole out its limited capacity to its retailers? At one time or another, this has been relevant for high tech goods, luxury items and a number of other industries. But one place this almost always comes up is automobiles — newly released vehicles in particular. A hot new release is going to sell at its full sticker price (and maybe more) so allocating new cars is like passing out thousand dollar bills. So how should an automaker approach this problem?

Here is how Dodge is approaching this for its new Challenger SRT Hellcat — a muscle car with more horsepower than a Lamborghini (Dodge Challenger Hellcat dealer ordering begins — with a catch, Sep 9).

Dodge will base Hellcat dealer allocation on the total number of Dodge vehicles a dealer has sold within the last 180 days, including everything from Dart to Durango to Viper, brand head Tim Kuniskis said.

In December, a second allocation calculation will be made based on the previous 90-days’ sales performance, as well as a traditional 30-day inventory turn.

The dealer allocation for the Challenger Hellcat rewards the dealers “that are selling the Dodge brand,” Kuniskis said. “You sell a lot of Darts for me, Journeys for me, Durangos for me, I’m going to give you the rights to this one, too, because this is a halo of the brand.”

After the initial allocation, Dodge will also begin to measure the Hellcat’s days-on-lot and use it as a factor to determine the number of Challenger SRT Hellcats a dealer will get, Kuniskis said.

The longer a Hellcat sits without being sold — as it might if it were to have a $10,000 or $20,000 market adjustment on it — relative to those on other dealer lots, the fewer future Hellcat vehicles a dealer will receive, the Dodge brand boss explained.

Continue Reading »

One of my sisters-in-law (I have several) runs a frame shop. A trip to my wife’s hometown often means stopping by her sister’s shop and hanging out while mats are being cuts and frames assembled. So I was curious then to read an essay to read in the New York Times about running a frame shop — even more so given its title, The True Price of Customer Service (Aug 21).

The essay is written by the founder of Artists Frame Service, which is based here in Chicago and has generally been very successful. It has been open for more than three decades and (according to the article) is 20 times bigger than the average US frame shop. Part of how it got that way is by promising faster service. Since its founding, it has promised to turn around orders in a week. Consistently delivering on that, however, creates operational challenges.

What I was really asking about was the one-week turnaround: Was it worth the trouble? Did it matter enough to customers? I was asking because it is not an easy commitment to keep. If someone orders framing on Monday afternoon, it will not go into production before Tuesday morning. And it has to be done by Friday for it to be inspected and wrapped and put in the pickup shelves by the following Monday. That means we really only have three days to get it done.

The challenge has always been that some weeks are so busy that my staff members have to work 10 or more hours of overtime, while other weeks are slower and their hours are cut. I considered switching to a 10-day turnaround. This would effectively double the amount of time that we have to complete an order. But I worried: Was this the equivalent of cutting Samson’s hair and losing the magic?

Let me start by saying that in terms of operations, this is a really nice problem to think about. It highlights some important points about managing processes to provide fast service. Continue Reading »

Wal-Mart has had a tough go over the last few years. Sure, they are still a huge force in retailing but they have run into a variety of operational problems largely related to in-store execution. (See. for example, this post.) Now the Wall Street Journal reports that Wal-Mart is gearing up for the holidays by trying to address some customer service pain points (Returning to Wal-Mart: Human Cashiers, Aug 15).

In an attempt to lure more customers this holiday season, Wal-Mart Stores Inc. is promising to staff each of its cash register from the day after Thanksgiving through the days just before Christmas during peak shopping times.

The move, called the “checkout promise,” is aimed at addressing one of the retailer’s biggest customer complaints: long waits in checkout lines, which can cause even more frustration when positions aren’t fully staffed. The pledge will cover hours typically on weekend afternoons but which can vary by store.

“We feel good about price and having the top gifts of the season, so the next priority is about getting customers in and out of the stores quickly,” Duncan Mac Naughton, Wal-Mart’s chief merchandising officer, said in an interview. “Taking the possibility of waiting in long lines off the table will attract more people into stores.” …

On Thursday the retail giant said it allocated more hours to the front end of the store, to overnight stocking, and to deli and bakery to improve customer service during the most recent quarter.

Here are two questions that are worth thinking about. Continue Reading »

If you live here in the States, you may never have heard of the telecommunications company EE. But they are a major player in the United Kingdom with brands like Orange and T-Mobile. According to their Wikipedia page, they have around 28 million customers. EE has a new service offering that I must admit is kind of intriguing. Here is how it is described on their web page.

Priority answer service

From 6 August 2014 we’re also introducing a priority answer service. It’s available to all customers on pay monthly and SIM only plans.

Our priority answer service gives you the choice to get support even faster for just 50p per call when you call 150 and want to speak to customer services. It’s always available so if there’s a queue, you can be moved towards the front – ideal if you’re in a hurry.

How much it costs

The charge for this is 50p. If you’re on a plan that includes standard charging for customer services at 25p, you’ll only be charged an extra 25p for priority answer – so the total for the call with priority is 50p.

The 50p charge applies regardless of how long the call lasts.

To save the Americans the trouble of Googling this, 50p works out to about 84¢. So what do you think happens when customers are given the chance to jump the queue for less than a buck?

Continue Reading »

Here is an interesting factoid for you: 24% of all the vehicles manufactured right now are built on just ten platforms. What’s more, by the end of the decade that number is expected to grow to 30%. The number comes from an Automotive News article that looks at some of the consequences of the trend (With the push for standard parts, quality is key, Aug 6).

First, why automakers are trying to move in this direction is clear. Being able to build multiple model off one basic platform saves a ton of money in product development as well as tooling and build manufacturing facilities. Further, they benefit from a bit of risk pooling; if one model is not selling particularly well, that may be offset by another that can be built at the same plant. Thus, even if a model slumps, all that expensive capacity is till being used. (See this post from last fall on how Ford is cutting its number of platforms from 15 to 9.) Globalization also plays a part in this. What kinds of vehicles sell well might vary across different continents, but if European, Asian and North American models can all be built on the same platforms, manufacturers with a global footprint can be ever more cost competitive.

But what about suppliers? With purchased components making up a significant chunk of the cost of a vehicle, car makers would like standardization there. In a perfect world, you would have the same break system on every model built on a platform, but that brings challenges.

“The requirement that we face is clearly to develop products from the outset in such a way that they can be used in all the platform derivatives without the expense of making changes,” said Sabine Woytowicz, regional quality director at Valeo in Germany.

But with mass standardization, a part with a quality problem can now be supplied to millions of vehicles. That puts a premium on quality. …

Martin Thier, director of corporate quality management at the Mahle Group, said: “When obtaining an order, we check its feasibility for both product development and manufacturing even more closely.”

It comes down to “knowing precisely what you do, what you can do and how good you are at it.”

For example, he said, there is now a more intense interest in investigating how an inconsequential error in one part would produce an effect in a different component.

Continue Reading »

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