Stand by your brand
After-sales services tops strategy list at Whirlpool
By Roberto Michel, senior contributing editor -- Manufacturing Business Technology, 9/1/2005 6:00:00 AM
When Tom Welke thinks back to the days before a new warranty-claims processing system streamlined the interactions between Whirlpool and its thousands of service partners, one issue—waste in the service chain—is top of mind. Welke is VP of North American customer care for the Benton Harbor, Mich.-based home appliance manufacturer.
Prior to implementing the new claims system, only 40 percent of Whirlpool's 5,400 North American service partners were able to submit claims online. That meant a heavy load of manual claims processing, and longer cycle times for claims payments. Keeping information current for those service partners also was manually intensive.
When repairs are needed with in-warranty appliances today, Whirlpool's service partners have a Web-based system to speed claims handling. The same system also points consumers to the best-qualified service partners in their area, and keeps partner data updated.
"We've attacked a critical area of waste," says Welke. "We also build loyalty when the customer is well cared for by our partners and our company."
Improved service processes are just one way U.S.-based manufacturers are gaining competitive advantage. In Whirlpool's case, it also gained kudos for product development. Its Duet front-load washer/dryer combinations were recently highlighted in an issue of Fast Company magazine devoted to design innovation.
While less glamorous than design perhaps, "After-sales service is part of the customer experience," Welke says. "At the heart of what we're doing is trying to set Whirlpool apart by working closely with service companies and parts distributors so that between us we're solving customer problems quickly."
There is no rulebook that says after-sales service is the best strategy to improve profitability of U.S.-based manufacturers. For some, finding ways to quickly configure complex products brings gains, while others use close ties to academia to come up with breakthrough products not easily copied by anyone. Still others use contractors to manufacture for them, but put a great deal of attention on global order fulfillment. In fact, U.S. manufacturers aren't ready to cede any aspect of their operations without good reason, and are adopting a range of strategies to ensure competitiveness (see table, Strategies for improved competitiveness, p. 20).
Service excellence
Before turning to a claims-processing solution from ServiceBench, 30 people were needed at Whirlpool to keep up with paperwork for processing claims and ensuring partner information was up to date. Virtually all partners now use the system's claims-processing function, and a service directory automates partner information updates.
"We have fairly complex rules on what is and isn't covered under warranty, and interpreting those had been a manual process," Welke says. "ServiceBench's system has a front-end rules filter so that when a partner submits a claim, the system can match that with our rules, and immediately move forward, or identify why a claim is being rejected."
Online claims processing is so efficient that after a year of using the system, Whirlpool mandated all claims should be filed within 45 days. This nudge, says Welke, was intended to boost the strength of partner businesses.
"Even the association for service companies said we were right," says Welke. "By using this tool, the service companies get paid faster, and they will be healthier. The stronger they are, the more they'll invest in their capabilities, and the better service they'll provide."
Stephanie Patterson, Whirlpool's manager of warranty claims, says the system gives Whirlpool a history of why repairs are being made, and on what models and serial numbers. Quality information is fed back to Whirlpool's engineers, while the system tracks how long partners are taking to file claims. The end result, says Patterson, is a "pulse" of claims activity.
A dispatch function includes information on parts related to models or common problems so that partners can stock likely parts on their trucks prior to calls. This improves the "one-time complete" goal of fixing a problem on the first visit.
"Service companies avoid the costs of rolling a truck for a second or third visit," says Welke. "It's better for them—and for us—when they fix a problem on the first visit. It boosts that consumer's confidence level. It's all about being very expeditious with the consumer's time."
Since other appliance manufacturers such as Frigidaire use similar solutions, rather than seeing it as a stand-alone source of competitive advantage, Welke says the system is a means of reducing waste while complementing other activities that strengthen Whirlpool's service channel. These other activities include technician training, which increased from 20,000 hours three years ago to 140,000 hours this year.
Says Welke, "At the end of the day, the solution is taking care of the stuff that used to consume our efforts, so we can now drive fundamental changes. I think that helps separate us from our foreign competition."
Instruments of innovation
While service can set a company apart, products need an allure of their own. A company that sets itself apart via engineering is Imago Scientific Corp., a Madison, Wis.-based maker of scientific instruments.
Founded in 1998 by Dr. Thomas Kelly—then a professor at the University of Wisconsin-Madison—Imago invented and commercialized the LEAP Microscope, an instrument for materials analysis down to the nanometer, or one-billionth of a meter. These "atom-probe" microscopes cost about $2 million each. But rather than being purely for academic research, they're being bought up by makers of computer hard drives, semiconductors, advanced materials, and in industries interested in nanotechnology, says Timothy J. Stultz, president and CEO, Imago.
"You have to be solving problems if someone is going to spend two million on an instrument," says Stultz. "So while we're clearly a high-tech company addressing nanotechnology, and a large part of our revenue goes into R&D [research and development], we consider ourselves a market-driven company."
The basis of Imago's intellectual property, or "IP," grew out of two technologies the company licensed from research that began at the UW-Madison. However, as the company grew, says Stultz, Imago built up more IP in the form of patents and applications for its microscopes, and moved from focusing mainly on the instrument itself to the intricacies of how it will be made, supported, delivered, and installed—regardless of language or regulatory requirements.
"We started as an R&D organization, but then hired applications people that are more users of the tool rather than developers," Stultz says. "They can expand the number of ways the tool can be applied to an industrial problem."
Investment strategies
Imago still maintains deep ties to academia, and has drawn many of its top engineers and scientists from UW-Madison. But it also reaches out to other universities and companies like Intel to partner for research, says Stultz.
To go from a company with a breakthrough product to one that can fulfill orders and distribute on a global scale takes investment in people and systems, says Stultz. Part of that includes the Vantage ERP system from Epicor Software Corp., which is vital to staggering materials procurement for the microscopes—each of which has about 1,200 components, with lead times varying from days to 12 weeks.
Stultz says Imago faces no direct competitors for its type of instrument, and with its patents and the nature of the product, doesn't fear the "China price" like some other U.S. manufacturers. "We do protect our IP and have an aggressive patent program, but I see the rest of the world as a market, rather than competition," he says, noting that international sales already make up about 35 percent of Imago's revenue. Some companies that manufacture globally are looking to make production as lean and efficient as can be, regardless of locale.
For example, WIKA Instruments, a German manufacturer of temperature and pressure gauges with global operations, has instituted lean manufacturing processes and systems at its Lawrenceville, Ga., plant.
First, material flow and assembly were reorganized into flexible work cells and a pull environment, says Darren Hogg, CIO of WIKA's Americas operations. Kaizen events were held to study assembly processes. It was determined that the calibration step was the key bottleneck around which to pace production.
Next, senior management organized a "strategic management leadership" process to decide on lead times, inventories, and other goals. Managers also worked with key customers—most of them distributors—to get orders placed more frequently.
The company's legacy ERP system was customized so that as orders come in, they can be directly loaded as demand on the work cells. At the same time, the company is deploying Axapta, an ERP system from Microsoft Business Solutions, including its lean manufacturing and electronic kanban modules.
Just by moving from push to pull, order lead times were cut from nearly six weeks down to five days. The basic reason for the sharp improvement, says Hogg, is the shift to procuring and producing in increments that match actual customer orders. The lean effort at the U.S. plant has been so successful that WIKA plants in other countries are taking a page from Lawrenceville's story and studying ways to institute lean-pull. "They are all carrying out kaizen events and working toward reducing lead times and becoming more customer-driven," says Hogg.
U.S.-based enterprises cannot broadly cede any business function to other global regions.
"It's almost a retreat strategy to say we can't be competitive at manufacturing, so we'll just be smart in other areas," concludes Imago's Stultz. "If you get too far away from actually making things, you can lose insight on the innovations that will move your products to the next step."
