145 146 EXHIBIT 7. A Spare Parts Services Feedback Form CASE VEHICLE OWNER DETAILS CASE 7.1 SUPERAUTO SPARE PARTS SERVICES Name* China. Three years ago, he led a project to outsource spare parts management to DailyFreight Ltd., a thirdparty logistics provider. Outsourcing is the practice of transferring specific processes from in-house to a third party. It involves a change of process ownership. In Peng Zhang’s project, the outsourced processes included spare parts inventory management, receiving spare parts orders from dealers, and dispatching orders to dealers. Yun Li, the vice president of customer services, recently asked Zhang to assess the impact of the outsourcing arrangement on customer service quality. In the service When Peng Zhang accepted the task from Yun Li, he thought it would be simple—apparently all parties involved in the outsourcing arrangement were better o . He followed the routine procedure of conducting a random survey among all the stakeholders involved by phone. However, he was shocked as he spoke to some vehicle owners: they were very angry about their dealer experiences. They complained that their local authorized dealer had asked them to replace expensive components that were still in a good condition, just to make more profit. When asked how they had discovered the dishonesty of a dealer, some vehicle owners said that their view was based on their experience and knowledge. A few vehicle owners had an availability rate of 95% of spare parts orders. Dai- agency, where the dishonesty was proved. These angry ve- Year of purchase* cover the inventory financing, transportation, and administrative costs. The demand for spare parts is sporadic and urgent. - authorized dealer again, nor would they consider buying SERVICE DETAILS Peng Zhang, although the problem that surfaced did not fall within the scope of the task assigned to him by Yun Li. When Zhang started to ring dealers, he got a mixed response. For the frequently used spare parts, all dealers acknowledged the benefits of faster delivery and reduced freight cost. However, dealers complained that DailyFreight often ran out of stock of some slow-moving items. Consequently, the dealers had to wait many more days, which delayed the fixing of vehicles. Also, some dealers complained that DailyFreight was not professional in handling Dealer Name* next day using a courier service. The courier has a delivery lead time of one day to major cities and two days to the across the country. It was a huge administrative burden for ders, which were highly unpredictable. Dealers complained that the courier service sometimes cost more than the spare parts shipped. In the outsourcing arrangement, DailyFreight orders at its seven regional warehouses at strategic locations in China. Dealers order spare parts from DailyFreight and expect a next-day delivery from DailyFreight’s regional warehouse. Immediately after the implementation of outsourcing, many dealers praised the service model as they got spare parts faster and paid a lower freight rate due to a partment was also very happy with the ease of processing bulk purchase orders in the outsourcing arrangement. Bedecided to discontinue its annual dealers’ refresher training on spare parts services, given that it was no longer directly supplying spare parts to dealers. parcel on a working desk in a rush, without even speaking to or informing anybody at a dealer’s premises. Zhang tried to probe into the possibility of deceitful diagnosis by the dealers for unnecessary replacement of expensive components. However, all the surveyed dealers denied this. Lastly, Zhang called the account manager at Daidealers. He did not give a direct answer when asked whether DailyFreight was not keeping a su cient stock of slowmoving spare parts. He was confident that DailyFreight ed by Zhang, he complained about the cost of financing spare parts inventories and proposed that the price markup be increased from 10% to 20%. Zhang reported his findings to Li. A day later, Li called him to join a meeting with Fei Wang, the dealer (continued ) Email* Telephone* Mailing Address City & Province Zip Code VEHICLE DETAILS Model Number* Cause of the Service* Rate the Service on a scale of 1-5 (1-Very Dissatisfied; 5-Very Satisfied)* Other Feedback *Mandatory Field relationship manager, and Yu Chen, the logistics manager. Fei Wang looked very upset. He asked Zhang, “Could you provide me with a list of dishonest dealers? I am going to be very tough with them!” only give you the names of the few dealers said to be dishonest by the vehicle owners I surveyed. My telephone survey was not meant to investigate into the integrity of dealers. I randomly rang just 30 vehicle owners. We have over 300,000 customers!” “It is not enough to be just tough with them—we need to fire them! How can we still trust these people? They have caused a huge damage to our reputation. I wish I had the time to take them to court!” said a furious Yun Li. “Fei Wang, why did you have no idea about such a serious problem?” “I’m terribly sorry, sir,” said Fei Wang, turning his eyes away from Li. “Nobody has ever told us. . . . Perhaps we shouldn’t have stopped our annual dealers’ refresher training. We used to emphasize our zero tolerance of dishonesty in the training.” “No excuses, please,” said Li, proceeding to give instructions: “You three, please find out which dealers are dishonest. You also need to come up with an e ective procedure to continuously monitor and manage other dealers to ensure that they act with integrity in serving vehicle Freight to see if any revisions are necessary.” After Li left the meeting room, Wang, Zhang, and Chen discussed how to conduct a large-scale survey of vehicle owners to identify possible dishonest dealers. Chen showed the others an old spare parts services survey 147 form (Exhibit 7). The form had been used ten years ago for a mail survey. QUESTIONS 4. what possible revisions should be made to the outsourcing 5. What revisions may be made to the old spare parts services tion for continuously monitoring and managing the performance of dealers in the future? Why? 1. why not? 2. Based on the reports of some vehicle owners, it is apparent Auto not been aware of the issue? 3. Does the spare parts outsourcing arrangement have any negative implications for the quality of spare parts services o ered to vehicle owners? If yes, why? 6. vehicle owners who were cheated by dishonest dealers? Why or why not? 7. managing customer service quality in outsourcing?
