A CASE STUDY: THE DUPIT CORP. PROBLEM
The Dupit Corporation is a long-time leader in the office photocopier marketplace. one reason for this leadership position is the service the company provides its customers. Dupit has enjoyed a reputation of excellent service and intends to maintain that reputation.
Some Background
Dupit has a service division that is responsible for providing hight-quality support to the company’s customers by promptly repairing the Dupit machines when needed. This work is done on the customer’s site by the company’s service technical representatives, more commonly known as tech reps.
Each tech rep is given responsibility for a specified territory. This enables providing personalized service, since a customer sees the same tech rep on each service call. The tech rep generally feels like a one-person territory manager and takes pride in this role.
John Phixitt is the Dupit senior vice president in charge of the service division. He has spent his entire career with the company and actually began as a tech rep. While in this initial position, John took classes in the evening for several years to earn his business degree. Since then, he has moved steadily up the corporate ladder. He is well respected for his sound judgment and his thorough understanding of the company’s business from the ground up.
John’s years as a tech rep impressed upon him the importance of the tech rep’s role as an ambassador of the company to its customers. He continues to preach this message regulary. He has established high personnel standards for becoming and remaining a tech rep and has
built up the salaries accordingly. The morale in the division is quite high, largely though h efforts.
John also emphasizes obtaining regular feedback from a random sample of the company customers on the quality of the service being provided. He likes to refer to this as keeping ear to the ground. The customer feedback is channeled to both the tech reps and management for their information.
Another of John’s themes is the importance of not overloading the tech reps. When he was a tech rep himself, the company policy had been to assign each tech rep enough machines in his or her territory that the tech rep would be active repairing machines 90 percent of the time (during an eight-hour working day). The intent was to maintain a high utilization of expensive personnel while providing some slack so that customers would not have to wait very long for repairs. John’s own experience was that this did not work very well. He did have his idle periods about 10 percent of the time, which was helpful for catching up on his paperwork and maintaining his equipment. However, he also had frequent busy periods with many repair requests, including some long ones, and a large backlog of unhappy customers waiting for repairs would build up
Therefore, when he was appointed to his current position, one of his first moves was to make the case to Dupit top management that tech reps needed to have more slack time to ensure providing prompt service to customers. A major part of his argument was that customer feedback indicated that the company was failing to deliver on the second and third parts of the company slogan given below.
1. High-quality products.
2. High-quality service.
3. All delivered efficiently.
The company president had been promoting this slogan for years and so found this argument persuasive. Despite continuing pressure to hold costs down, John won approval for changing company policy regarding tech reps as summarized below.
Current Policy : Each teach rep’s territory should be assigned enough machines so that the tech rep will be active repairing machines (or traveling to the repair site) approximately 75 percent of the time. When working continuously, each tech rep should be able to repair and average of four machine per day (an average of two hours per machine, including travel time). Therefore, to minimize customer waiting time, the gold is to have an average of three repair calls per working day. Since the company’s machines now are averaging 50 work days between needing repairs, the target is to assign approximately 150 machines to each tech rep’s territory
Under this policy, the company now has nearly 10,000 tech reps, with a total payroll (including benefits) of approximately $600 million per year.
The Issue Facing Top Management
A long succession of very successful products has helped Dupit maintain its position as a market leader for many years. Furthermore, its latest product has been a particularly big winner. It is a color printer-copier that collates, staples, and so on. As well as having faxing capabilities. Thus, it is a state-0f-the-art, all-in-one copier for the modern office. Sales have even exceeded the optimistic predictions made by the vice president for marketing.
However, the success of this product also has brought problems. The fact that the machine performs so many key functions makes it a vital part of the purchaser’s office. The owner has great difficulty in getting along without it for even a few hours when it is down requiring repair. Consequently, even though the tech reps are giving the same level of service as they have in the past, complaints about intolerable waits for repairs have skyrocketed.
This crisis has led to an emergency meeting of top management , with John Phixitt the man on the spot. He assures his colleagues that service has not deteriorated in the least. There is agreement that the company is a victim of its own success. The new machine is so valuable that a much higher level of service is required.
After considerable discussion about now to achieve the needed service, Dupit’s president suggests the following four-step approach to dealing with the problem.
1. Agree on a tentative new standard for the level of service that needs to be provided.
2. Develop some proposals for alternative approaches that might achieve this standard.
3. Have a management science team work with John Phixitt to analyze these alternative approaches in detail to evaluate the effectiveness and cost of each one.
4. Reconvene this group of top management to make a final decision on what to do.
The group agrees.
Discussion then turns to what the new standard should be for the level of service. John proposes that this standard should specify that a customer’s average waiting time before the tech rep can respond to the request for a repair should not exceed some maximum quantity. The customer relation manager agrees and argues that this average waiting time should not exceed two hours (versus about six hours now). The group agrees to adopt two hours as the tentative standard, pending further analysis by the management science team.
Proposed New Service Standard : The average waiting time of customer before the tech rep begins the trip to the customer site to repair the machine should not exceed two hours.
Alternative Approaches to the Problem
After further discussion of various ideas about how to meet this service standard, the meeting concludes The president asks the participants who had proposed some approach to think further about their idea. If they conclude that their idea should be a particularly sound approach to the problem, they are to send him a memorandum supporting that approach.
The president subsequently receive four memoranda supporting the approaches summarized below.
Approach Suggested by John Phixitt : Modify the current policy by decreasing the percentage of time that tech reps are expected to be active repairing machines. This involves simply decreasing the number of machines assigned to each tech rep and adding more tech rep. This approach would enable continuing the mode of operation for the service division that has served the company so well in the past while increasing the level of service to meet the new demands of the marketplace.
Approach Suggested by the Vice President for Engineering : Provide new state-of-the-art equipment to the tech reps that would substantially reduce the time required for the longer repairs. Although expensive, this would significantly reduce the average repair time. Perhaps more importantly, it would greatly reduce the variability of repair time, which might decrease average waiting times for repairs.
Approach Suggested by the Chief Financial Officer : Replace the current one-person tech rep territories by larger territories that would be serve by multiple tech reps. Having teams of tech reps to back each other up during busy periods might decrease average waiting times for repairs enough that the company would not need to hire additional tech reps.
Approach Suggested by the Vice President for Marketing : Give owner of the new printer –copier priority for receiving repairs over the company’s other customers. Since the complaints about slow service are coming mainly from these owners, this approach might give them the service they require while still giving adequate service to other customers.
The president is pleased to have four promising approach to consider. As previously agreed his next step is to set up a team of management scientists (three from the company plus an outside consultant) to work with John Phixitt in analyzing these approaches in detail. They are to report back to top management with their results and recommendations in six weeks.
Review questions
1. What is the company’s current policy regarding the workload for tech reps?
2. What is the issue currently facing top management?
3. What is the proposed new service standard?
4. Discuss in detail about four alternative approaches that have been suggested for dealing with the issue facing top management? Which approach seems most promising?
5. Identify the Quantitative Analysis models that should be applied to this case study?