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SERVICE PROCESS KAIZEN: ADOPTING PROCESS STABILIZATION METHODS TO CONTROL SERVICE WORK FLOW AND TO IMPROVE CUSTOMER SERVICE A Thesis Presented to the Faculty of California State Univer

SERVICE PROCESS KAIZEN: ADOPTING PROCESS

STABILIZATION METHODS TO CONTROL SERVICE

WORK FLOW AND TO IMPROVE CUSTOMER SERVICE

A Thesis

Presented

to the Faculty of California State University Dominguez Hills

In Partial Fulfillment

of the Requirements for the Degree

Master of Science

in Quality Assurance

by Peter K Yu

Fall 2003

Copyright 2004 by

Yu, Peter Kwok-Wai

All rights reserved

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PAGE

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1 INTRODUCTION TO THE STUDY,,,, cscs cc ececeeececeeeeeseeeeecteeneeeenees 1

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Statement of the Problem -.QQSnSnn ng nh Hs va 7 Purpose of the S†Udy .- HH HH nh nh kh 9

Theoretical Bases and Organizafion - c.-cs.e 17

Limitation of the Sfud|y - nh HH HH HH nh nu 19 Definition N9 K- ›y daaaaaaaiaadaaaiidŸÝ 21

2 REVIEW OF RELATED LITERATURE - -22. -22 24

Design of the lnvesfigafion -ccnn nn nnnnHn HH ng nh kh 28 Service Customer History Data cào à nà 30

Data Analysis Procedures - ch nhe 60

4 RESULTS AND DISCUSSION 2 G7

5 SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS 69

Continuous lImprovemert lnitiaftives - 70

REFERENCES Q Q.0 0Q Q00 n HH HH HH HH HH HH HH HH nu nen 72

PAGE

1 Toyota Production System HH “HH nh nh nh kh kg 6

3 Reception Process Job FOW - ung ng nà nướ 33

4 Monthly Service Unit Hisfory -. nọ HH nh HH kh se 35

6 Weekly Appointment Charf -.-. - SH» nh ren 37

7 Reception Tracking Summary -.-. - nàng 38

8 Reception Lead Time Charf -.-.-.- SH nen hy 39

9 Reception Average & Longest Wait Time Chatt -.-.-. 40

11 Hourly Parking Capacity Charf nen 42

12 Delivery Tracking Summary -.- nha 43

14 Delivery Average & Longest Wait Time -.-.- cà nen neằ 45

15 Process Control Board - c1 HS SH nà vi 48

16 Vehicle Status Control Data Summary - ààcằŸsằ 52

17 Lead Time Survey Charf cọ Q ng nh se 54

18 Daily Periodic Maintenance Lead Time Tracking Summary 55

21 Gentani (Motion Study) Results Chart cccceeee eee eee eee eter eee eeees 59

22 Daily PM Tracking - . Ăn nh kh eee nh ho khi th 61

23 Daily Periodic Maintenance Unifs by Group -nàằ nàn 62

24 Number of Daily General Repair Order -. - << hen 63

26 Repair Stalls Allocation Table -. - sàn nhe 65

This paper explores the issues facing automotive dealership service

departments in improving customer service It examines conducting service

process Kaizen to improve customer service by adopting process stabilization

methods to control workflow In designing the time aspect of service, customers’ viewpoints of elapsed time or service lead-time were taken into consideration Time compression is identified as a way to squeeze out waste from the supply

chain by process integration and statistical data approach is employed to identify workflow interruptions and confirming root cause interruptions Methodologies

applied include examining Toyota Production System concepts applications in

stabilizing service demand through establishing lead-time standards and

managing and controlling customer service appointments to synchronize with

workshop production capacity Based on results from pilot model projects

implementation, the conclusion validates that an integrated statistical data

approach in deploying visual control and process management methods can stabilize demand and improve customer satisfaction.

INTRODUCTION TO THE STUDY Customer satisfaction is an ever-changing process The market evolves,

demographics shift, and customers are getting more informed and educated

because of the availability of mass communication mediums such as the Internet

Service customers are more demanding and expect more out of the service providers such as providing shorter waiting time for their service

In carrying out its mission, the automotive service department caters

directly to the customer These direct sales bring the service department into numerous contacts with great numbers of customers One excellent feature of

these direct contacts with the customer is the opportunity for better feedback

Bob Hayes (1997, p 2) wrote that organizations with accurate information

about customer's perceptions about the quality of the services and products

could make better decisions to better serve their customers

The extensive personal contact also sets up certain situations that are apparently unacceptable for the customer For example, a customer brings the car to the dealer for services and leaves it in the care of the service advisor with

a promised delivery time The service department holds the vehicle, and a delay

in returning it at the promised time can greatly inconvenience the customer The customer may also perceived the delay as a negative service quality experience

According to J M Juran (1973), one of the most important features of the service industries is the time required to provide service is regarded as an

element of quality Also of importance is action time This is commonly defined as

the interval between taking the customer's order and providing him or her with

the service requested

In designing the time aspect of service, it is important to stress the

customer's viewpoint of elapsed time or service lead-time To an automotive

service department, the emphasis on service lead-time is from the moment the customer drives into the service reception until he or she takes delivery and drives off the service lot The customer will make his or her decisions whether to wait or drop off for service based on how soon the vehicle can be repaired and ready for delivery

A second major reason for the critical importance of service time is the

cumulative effect of delays A byproduct of organizing the different job processes

needed to repair the vehicle is that when one of these processes fails, many

other service related activities are disrupted or thrown out of sequence

Toyota's service process Kaizen pilot activities in Thailand, Indonesia, and Australia to promote continuous improvement have yielded some significant findings in service process stabilization Service appointment scheduling and production dispatching areas improved noticeably after they have implemented production based visual control methods The most challenging areas are those

of stabilization of service demands and identification of localization needs.

manufacturing However, customer expectations of a shorter service time

influence the way most service organizations design the process

Daniel Jones (2001) wrote about getting closer to customers and cutting out non-value adding activities and the net results becoming radically changed for the better He pointed out that every part of the way the product is produced,

handled, stored, delivered and displayed should be observed to eliminate non-

value creating steps and to compress lead-time Time compression is the only way to squeeze out waste from the supply chain for good The more integrated it

is, the more obvious are any interruptions to the flow The root causes of

interruptions can then be investigated and dealt with so they do not recur

In the case of automotive service, shorter lead-time can only be obtained

through setting up demand standards to control appointment scheduling At an

assembly plant, production demands are scheduled ahead of time based on orders submitted through the sales branches Consequently, the key factor in stabilizing service demand is through setting up lead-time standards and

managing and controlling customer service appointments to synchronize with the

production capacity of the service workshop

J.M Juran (1973) wrote that as a corollary of the critical nature of service time, the service industries should:

e Establish standards for the various components of service time, and set up controls to enforce these standards.

find out just where the time is being consumed

Thus, changing or meeting the customers’ repair time expectations is the major factor in stabilizing service processes It is up to the service department to develop methodologies from analyzing statistical data, to predicting customer service demand patterns as well as influencing their habits and lead-time

expectations

Background

In a production environment, the Toyota Production System is “pulled” by controllable leveraged demands based on Takt time and Cycle time calculations Takt time is the theoretical time it takes to produce a piece of product ordered by the customer However, in a retail environment, customer demands or

appointments are usually unreliable and sometimes seem uncontrollable Toyota Motor Corporation’s Kaizen Promotion Department reported that the Kaizen pilot

dealer customer surveys in Thailand in 2001 indicated that only 17% of their

service customers are appointment customers In addition, over 24% of the

appointment customers showed up at least an hour late for their scheduled

appointments This result was confirmed by another survey conducted in

Indonesia in 2002 with only 21% appointment customers and over 50% showing

up at least an hour late

In Gemba Kaizen, Masaaki Imai (1997) pointed out that abnormalities of

all sorts arise every day Only two possible situations exist in Gemba

(workplace) Either the process is under control, or it is out of control The former situation means smooth operation; the latter spells trouble The practice of visual

management involves the clear display of gembutsu, charts lists, and records of

performance, so that both management and workers are continuously reminded

of all the elements that make quality, cost and delivery (QCD) successful Thus, visual management constitutes an integral part of the foundation of the house of Gemba

In a service environment, customers are only exposed to the visible

control areas of a business The customer is rarely exposed to the behind the

scene activities In the automotive service business, customers view the dealer's

quality service experience by the completed repair, cleanliness of their car after service, and how they are treated during the service reception and delivery

process However, the efficiency of how the technicians repaired their vehicles is

usually invisible to them

Patrick Townsend (1990) wrote about quality in perception It is the

subjective quality as the customer sees it A product or service achieves quality

in perception when it meets the customer's expectations The repair work is as good as, or better than the customer expects Since the customer expected the car to be repaired right the first time, any extra value points such as a shorter repair time, on time delivery, and a cleaned car will be perceived as exceeding their expectations.

Before moving on to discussing the challenges of leveling demand, a short

review of the Toyota Production System is warranted to illustrate how

manufacturing concepts can be adapted to service operations

Toyota Production System

The Toyota Production System emphasizes the rationalization of

production and is based on the concept of the complete elimination of waste According to the Toyota Motor Corporation’s Toyota Production System Manual

(2000), lean production comprises of two principle ideas: Sakichi Toyoda’s

concept of jidoka for producing quality products at lower cost, and Kiichiro

Toyoda’s just-in-time system

Highest Quality Lowest Cost / Shortest Lead Time

*Pull System work

Figure 1 Toyota Production System Foundation from Toyota Motor Corporation’s

Toyota Production System Manual (2000)

Principles supporting Human Development It is designed to reduce costs by

eliminating waste The objectives are:

e Reduce waste and cut costs

e Reduce lead-time

e Improve quality

e Reduce inventory

e Create a “visual” workplace

e Easier to manage shop floor

e More able to identify waste

According to the Toyota Production System Manual (2000), Kaizen or

continuous improvement is the most important guiding principle for improving the

job process flow by discovering and eliminating waste, and empowering team

members to take part in managing and improving their own jobs The philosophy

of there is always more to improve approach promotes the proactive versus

reactive approach to improve processes and to prevent problems

Statement of the Problem

Most automotive dealerships currently do not have a standardized process based on statistical approach to stabilize the demand and to provide visual

control and management of the customer service process.

In a poorly managed automotive service department, customers have no

confidence in making appointments because when they arrive for their

appointments, they have to wait for the service advisors to handle drive-in

customers When a customer brings a car in for services, the car is whisked away until the delivery process In between, the customer can only guess what is taking place After dispatching the car to the service workshop, the service

advisor can only hope that the car will be completed on time for customer

delivery Any customer inquiry on the status of the service process will require the service advisor to contact the technician If the repair is completed, the

service advisor may have to contact the car wash and the porter to inquire about

the progress of the car

As in the airline industry, the customer only sees the visible check in

counter, the departure gate, the flight cabin and the luggage pick up area The behind the scene flight operations of ground support, luggage handling, in flight service support are all invisible components that support a pleasant and on time

arrival of the customer However, the airlines have implemented management and control systems to provide customers with real time information of their flight

Status They also use statistical data to schedule the best flight time to

accommodate most customers During flight, customers are now provided with

monitors to show current flight status and estimated arrival time Friends and relatives can retrieve arrival information online before going to the airport This is meeting and exceeding customers’ number one expectation to know if they will

arrive at their destination on time For automotive repair customers, the number

one expectation is delivery on time

The approach to the above challenge is to implement a service Kaizen process to improve the entire customer experience, and the required support

elements: process flow, customer service and shop productivity

Dr W Edwards Deming (1993, p 37) addressed the importance of

businesses to improve quality in all areas by saying "Somehow the theory for

transformation has been applied mostly on the shop floor This is important, but

the shop floor is only a small part of the total Anyone could be 100 percent

successful with the 3 per cent, and find himself out of business."

Purpose of the Study

The objective is to design and document a standardized customer service

improvement process for automotive dealerships worldwide to improve efficiency and customer satisfaction by adopting proven process methodologies from

manufacturing The project's key objective is to improve the following areas:

e Service Lead Time

e Productivity Improvement

e Shop Flow

The standardized service process gathers customer demand statistical

data to map out process flows and to create gentani charts (accumulation of

work) to identify motion waste The results are then used to develop a Kaizen

action plan for the individual dealer to follow Furthermore, the improvement

project includes the application of control boards to provide visual process control for workers and managers to help manage the workflow

Making Problems Visible

Problems should be made visible under the Toyota Production System A

visible problem will be detected and controlled more easily Therefore, the first principle of visual management is to identify problems (Imai, 1997) In a service

workshop, dispatching work with no knowledge of the scheduled lead-time, for example, 5K maintenance services may create disruption and confusion at the next workstations, which are the car wash and the staging area for customer pick

up However, if the service advisor or dispatcher uses a visual process control

board to post the jobs by using visible cycle time (production) indicators, he or she can easily see the number of cars that will be completed at a given time and

will require a car wash The dispatcher can re-dispatch jobs with different cycle time (shop production) like balancing 5K services with 30K and 40K services,

which have different lead-times (reception to delivery) to reduce the number of cars requiring car wash at the same time This visual lead-time indicator

functions like Jidoka devices, helping to reveal potential production problems

The Toyota Production System Manual (2000) states that in work place visual management, the Five M factors must be managed They are as follows:

° Materials

° Methods

Any abnormalities related to these Five M factors must be displayed

visually However, applying these manufacturing based principles to service operation require modification, where most productivity improvement articles and researches are written In manufacturing, the environment is usually controlled

and stable, where workers and supervisors can easily visualize the progress

through checking real time status on the lighted signal board in the assembly line

and the flow of kanban cards to control raw material inventories Conversely, the

automotive service industry environment is a conglomerate of repair stalls,

workstations and reception desks scattered in different locations with no direct

visual workflow For example, a car scheduled for a 15K maintenance service

was moved from the reception area to the waiting area for repair staging The workflow was interrupted when the porter could not locate a parking space The car ended up parked in a customer parking area The key was not recorded and tagged in the service vehicle staging area key control box because there is no

provision for controlling customer-parking area The porter went to lunch without

making a notation on the key control log The technician wasted half an hour matching the key and locating the car The repair was delayed and resulted in a late delivery The customer happened to be a waiting customer and was quite upset with the delay What occurred was a typical example of workers not being

able to visually control the Five M factors The fundamentals and the impact of

visual control in the service work place are as follows:

Visual Management of Manpower - Operations

Do we know the workers’ schedules? What is the staffing level? Do we know if there are enough service advisors assisting customers at the reception area? Do we know their skill level? Are the technicians certified? Are we

dispatching work to the right people with the right skills? Do we know who needs

additional training?

How would we know the people assigned to the job are doing their job well? Are there any visual measurement worksheets to track their progress? Are

there any standards developed and displayed?

Visual Management of Machines - Facilities

Do we know if the facilities are sufficient to service all repair orders at a

given day? Do we know if we have enough service stalls to handle the service

volume? How would we know if the workshop has the proper equipment? Are

there visual devices (poka-yoke) to signal the operators of equipment failure? Visual Management of Materials

How would we know if we have enough fluid? How would we know if we have the right parts for the job? Do we have enough parts in stock? Are we

overstocked? Are the parts stored efficiently for easy visual picking? Are special service tools displayed visually using shadowgraphs for easily identification?

Visual Management of Methods

Does the service manager know if the service advisors, team leaders and

technicians are performing their jobs right? Are there standard process

worksheets developed for each work cycle?

Visual Management of Measurements

How do we check if a car is on schedule to meet promised delivery time?

Do we know the status of the repair? Do we know if we are meeting planned targets? How would we know if we have enough appointments to fill the service workshop?

In addition to the Five M factors in visual management, good house

keeping is setting a basic standard in the way we operate and make

abnormalities visible, so problems can be corrected According to the Toyota Production System Manual (2000), the Five S disciplines should be followed Visual Management of Seiri (sorting)

This method makes certain that only needed equipment is available for the

job Any unnecessary equipment should not be present This allows the worker

and the supervisor to concentrate on what needs to be monitored Any extra piece of equipment is a distraction to the process, the worker is engaged in

Visual Management of Seito (sifting)

Every piece of equipment needed for the job should be in place and

organized for the worker There should be a place for every piece of equipment with a clearly marked spot This provides great visibility to the workers The oil

drainer is placed next to the oil drum; the tire rack is located next to the tire

changer If any piece of equipment is missing or out of place, it will be easily noticed and spotted

Visual Management of Sieso (sanitized)

All equipment should be clean and orderly If the work place is clean,

equipment that leaks or misplaced items will be visible In service operation, this

may mean an organized key control stand, a clean and dry driveway, and clean

hand tools If the driveway has oil spots under a car, the service advisor can visually spot the oil leaks and notify the customer

Visual Management of Seiketsu (safety)

Workers must wear required safety equipment to perform their work in the workshop Unsafe working condition may prevent workers from safely visualizing the work dangers around them By not wearing safety glasses, workers may not

have full visibility of the moving lifts and hanging equipment around the work stall

Visual Management of Shitsuke (self-discipline)

All workers must be trained on the Five S disciplines Standards must be developed, posted and followed Following these five disciplines in workshop

operations means that as long as the equipment is operating, the dealership is fixing customers’ cars right and on time

Posting Standards

Unless workers know what the standards are, the processes will not be in place Each workstation should display the standards Any deviations from the standards will be visible since the posted standards provide visual management

of the process Service workshop standard examples are as follows:

e Number of appointments per day

e Average shop production time

e Average lead-time from reception to delivery

service environment, a 10K maintenance service may involve manual inspection

of the brakes, fluids, tires etc Granted, some of the items in the service

environment may be more apparent to the customer, like a defective tire, but most other parts like fluid conditions, or worn brake pads are not easily visible Therefore, having standard working procedures with cycle time in placed to perform these visual checks are crucial to visually warn of possible missing

steps For example, an apprentice may be skipping steps when completing an

eight-minute safety standard check operation in just five minutes

Setting Targets and Visual Monitoring

Meeting targets consistently is raising the standards If the workers are

meeting standards but frequently missed achieving the targets, then the process will have to be reevaluated Keeping track of key performance indicators will

provide visual monitoring of the improvements The key performance indicator

board should be displayed prominently for all workers to see Production level indicators displayed in every station of a Toyota assembly line inform workers the real time status of the entire line’s current production level against the day’s

planned production units At any time of the day, workers are aware if the line is achieving the day’s planned production If the production falls below 95% (vary

by plant and line), supervisors will initiate immediate actions to identify the

causes and deploy resources to the needed sections to bring production back to the acceptable range Without this real time visual information tool, supervisors and workers will be unaware about their production level against the daily

production target.

Theoretical Bases and Organization

In order to support the hypothesis that adopting statistical approach and deploying of visual control and management methods can stabilize demand and improve customer satisfaction, the Masaki Imai (1997) case study documenting the Kaizen process at Infotec Corporation in Italy is used as a reference Data

collection plays a key role at Infotec in managing the behaviors of employees in

the business of distributing copier and fax equipment, and supplying consumable technical services While the company already had measures in place to check

the performance of its service representatives before 1993, it was not until that

year that management became serious about collecting and analyzing data on

the company’s servicing activities as a basis for improvement

As part of their Kaizen action plan, Infotec headquarters in Milan

developed several control points as major criteria to check the quality of its

After implementing the Kaizen process, Infotec was able to obtain various

data to establish a clear vision for better resource allocation and decision

making Moreover, they converted numerical data into visual form like trend

graphs and bar graphs to help improve workers’ understanding of the business conditions

One of the lessons learned from the Kaizen activities within Infotec was

the value of collecting and making good use of data They learned that merely

storing and computing data were not enough, and that they had to analyze and

put data to use However, data must be converted into visual forms; other wise,

not everyone can understand them by merely looking at the numbers The

challenge was to make the data as visible as possible Their solution was to request their Electronic Data Processing people to submit data in graphs as much as possible

Since implementing the kaizen approach, Infotec obtained the ISO 9000 certification in July 1995 Now, Infotec management believes that they need the three elements — the Kaizen way of thinking, the statistical approach and the constant external pressure — to review the standards The above case study supports the hypothesis that statistical approach and visual control and

management in a service environment will provide workers and managers with user friendly data to help stabilize demand and improve customer service in the following areas:

e Service Lead Time

e Productivity Improvement

e Shop Flow

Limitations of the Study

This investigation is restricted by many human factors and local market

conditions To successfully implement global Kaizen activities, local customs and

cultural factors must be taken in consideration For instance, in Thailand,

customers expect a warm welcome and relaxed conversation during the

reception process They do not like to be rushed into making decisions nor being

high-pressured for additional work For that reason, considerations must be taken

to ensure the human factors are included in service process Kaizen

implementation planning The success of Toyota in implementing Toyota

Production System globally is through localization of the concept to meet local market conditions

Human factors are key considerations for localization Different cultures and markets have their own way of interpreting job responsibilities In Japan, for

instance, the technician also acts in the capacity of a customer relation specialist

It is normal practice for a technician to personally pick up and deliver a

customer’s car for routine periodic maintenance In other markets, this may be considered a waste of productivity, but in Japan, this practice is considered a customer retention activity For that reason, the Toyota Motor Corporation’s Toyota Service Marketing Manual (2000) conveys that job responsibilities within

the seven-step service process must be weighted carefully to fit the local

market's customer expectation and the business culture.

The methodology of the investigation of this study is limited to automotive dealer service environments However, the Kaizen concept may be applicable to

other service industries The concept of applying statistical data to stabilizing demands and adopting visual control to manage the service process in

automotive dealerships is widely practiced by the Toyota dealers in Japan

James P Womack, Daniel T Jones, & Daniel Roos, (1990 p.169) wrote

that the last stop in the lean logistics journey takes us to the real reason for the production effort: the consumer They emphasized to look at how the production

system knows what the customer wants, and how he or she goes about buying and maintaining an automobile

Taking the Toyota Production System to the consumer completes the Kaizen journey of the total supply chain The customer is the one that initiates the pull for the demand that triggers the entire production process.

and discipline in the workplace It is derived from the Japanese words

Seiri, Seiton, Seiso, Seiketsu and Shituke and adapted to the English equivalents of sort, straighten, scrub, systematize and standardize

Five M’s: A method for managing resources in gemba — specifically those known

as “5M” — manpower, machine, material, method, and measurement

Flow production: One of the basic pillars of just-in-time production system In the

flow production, machines are arranged in the order of processing so that

the work piece flows between processes without interruptions and

stagnation

Gembutsu: The tangible objects found at gemba such as work pieces, rejects,

jigs, and tools, and machines In automotive dealer service workshops, it refers to shop supplies, stalls, equipments and tools

Gentani: Japanese word meaning unit ratio in the “accumulation of work.” It is

used to record the time and steps within a cycle time

ISO 9000 Series Standards: A set of international standards on quality

management and quality assurance developed to help companies

document the quality system elements to be implemented to ensure the conformance of a product to specification

Jidoka: A device that stops a machine whenever a defective product is produced

This device is essential in introducing JIT

JIT: Just in time A system designed to achieve the best possibly quality, cost,

and delivery of products and services by eliminating all kinds of muda in a

company’s internal processes and deliver products just in time to meet customer’s requirements Originally developed by Toyota, it is also called

by such names as Toyota Production System, lean production system and kanban system

Kaizen: Continuous improvement

Kanban: A communication tool in the just-in-time system whenever a batch of

Muda:

production is involved A kanban, which means a signboard in Japanese,

is attached to a given number of parts or products in the production line,

instructing the delivery of a given quantity When the parts have all been

used, the kanban is returned to its origin when it becomes an order to produce more

The Japanese word meaning, “waste” which, when applied to

management of the workplace, refers to a wide range of non-value adding

activities Elimination of waste in the following areas can contribute to significant improvements in QCD: overproduction, inventory, rejects,

motion, processing, waiting transport, and time Muda elimination

epitomizes the low-cost commonsense approach to improvement

Poka-yoke: A fail-safe device in quality assurance

Pull production: One of the basic requirements of a just-in-time production

system The previous process produces only as many products as are consumed by the following process In service, this may mean express maintenance service

QCD: Quality, Cost & Delivery

Takt time: The theoretical time it takes to produce a piece of product ordered by

the customer — as determined by dividing the production time by the

number of units to be produced In service, it is referred as the average

lead-time

TPS: Toyota Production System

VIN: Vehicle identification number

Visual Management: An effective management method to provide information

and gembutsu in a clearly visible manner to both workers and managers

so that everybody understands the current state of operations and the

target for kaizen It also helps people to identify abnormality promptly.

CHAPTER 2 REVIEW OF THE LITERATURE

The following are articles providing evidence supporting the historical, theoretical and research background for the study

Automotive News reported that American Honda Motor Co Inc and

Toyota Motor Sales, U.S.A are rolling out dealer customer service improvement programs While rank highly in J.D Power and Associates and the NADA polls

on dealer attitude toward the factory, both are challenged with improving

customer satisfaction at the dealership level As a response, Honda is rolling out

the Excell initiative, a training program for managers at Honda dealerships

Charlton Holmes, chairman of the Honda dealer council said that the initiative aims to improve dealership communications and other areas that affect

customers: Improving those processes means greater customer satisfaction and greater customer loyalty and it is a very important program for Honda and the dealers He further stressed that unlike programs tried by the Big 3, the Excell initiative lets dealers dictate how their dealerships are run and Honda is not looking to mandate certain processes in dealerships so much as it is trying to identify the best processes Holmes’ own dealership, Holmes Honda of

Shreveport LA, was part of a pilot program The pilot program involves a two-day seminar for the entire staff of a Honda store The program was conducted last summer at 36 Honda and Acura dealerships.

The Honda process improvement program focuses on customer

expectations area, while this investigation also focuses on productivity

improvement and shop flow

Kristin Anderson and Rom Zemke (1998) talked about organizational commitments and how organizations make direct promises to customers through advertising and marketing materials, in company correspondence and contracts,

and in service guarantees and policies published for everyone to see In addition

to these, customers will hold the company to indirect commitments — promises

that customers believe are implied in the way the company talks about itself, its products and its services Alternatively, customers may hold organizations to commitments they believe are standard for the industry

To substantiate the above, most automotive customers purchase their

vehicles based on brand loyalty and perceived quality The latter is particularly

pertinent for Japanese and German makes Customers have built in expectations

that these vehicles are better defect free and any repair required during the

warranty period apart from periodic maintenance is a disappointment to their

brand expectations For that reason, it is crucial for these automotive

manufacturers and dealers to meet or exceed customers’ expectations during the warranty service period and especially during service deliveries Data would have

to be collected and analyzed to confirm if dealers are indeed meeting or

exceeding customers’ expectations.

In similar investigation, the May 14, 1997 J.D Powers report showed, how

the on time delivery issue is important in the airline industry for customer

satisfaction Respondents evaluated a comprehensive list of attributes that

encompassed virtually every aspect of the air travel experience As in past

studies, on-time performance continues to be the most important factor

(contributing 22%) in achieving the highest levels of customer satisfaction Other

factors driving satisfaction, based on their percent contribution to overall

passenger satisfaction with the flight are: schedule and flight accommodations (15%), airport check-in (15%), seating comfort (12%), gate location (9%), aircraft interior (7%), flight attendants (6%), food service (5%), post-flight services (5%), and frequent flyer programs (4%)

Most of the automotive customer service process improvement programs

initiated by major automotive manufacturers are mainly designed for process

improvement and customer satisfaction in the customer expectations area This investigation differs from other studies in the field by investigating how to apply

demand stabilization methods from manufacturing environment to the automotive service industry After all, the consumer is the one that initiates the demand for the entire supply chain The automotive industry currently depends on customer research companies such as J.D Power & Associates to provide statistical data

results on customer satisfaction The data provides a good snap shot of the perceived experience from the consumer and reinforces the importance of

customer perception in designing future customer service programs However,

this does not provide the dealership with sufficient data to stabilize the demand such as improving stall capacity, extending work hours and adjusting work

schedule What the dealers need is a 360 degree assessment of the current

performance and capability This investigation together with customer surveys

such as J.D Powers, customer interviews and employee interviews, will form the basis for the statistical approach to implement the service Kaizen process

Stewart Anderson (2002) wrote in the ASQ Publication that few quality managers examine the problems with data vs information, and how Information Technology systems are not being used properly to obtain information for

ISO9000 certification requirements Anderson also presents an approach to

move from raw data toward intelligence information, and be able to foresee the impact of potential actions and to make effective business decisions

Edward C Johnson Ill (1997), Chairman and CEO of Fidelity Investments

wrote in the foreword of Gemba Kaizen that Kaizen, which had worked so well in

manufacturing environment, might have applications for assisting mutual fund shareholders He brought the concept back to the office and started introducing it

to some of the senior management personnel in the company The timing was right, because on October 1987, the United States stock market took a severe downturn, and they began to focus instead on improving their service to build customer loyalty Kaizen laid the foundation, they needed to work as a team in

setting and reaching service standards It also helped them successfully weather

a rough period in the investment business.

CHAPTER 3 METHODOLOGY

Design of the Investigation The statistical data approach investigation is a dealership survey process covering the following areas:

e Shop Flow

e Customer Expectations

e Productivity Improvement

In the Shop Flow, the following area is surveyed:

e Customer Impact Step One: Seven-Step Service Process Mapping

In Customer Expectation, the following areas are surveyed:

e Customer Impact Step Two: Leveling Appointment Demand

e Customer impact Step Three: Leveling Reception Demand

e Customer Impact Step Four: Improving On Time Delivery

In productivity improvement, the following areas are surveyed:

e Process Control Methodology

e Process Control Electronic Monitoring

e Process Control Manual Process Control Board Process Control - Electronic Sensors & LCD Display Screen

e Control Standards

e Productivity Improvement — Lead Time Reduction.

Gentani — Accumulation of Work Standard Working Procedure

Training is the number one challenge in implementing this Kaizen survey The following implementation steps are based on results from early pilot dealer

Kaizen projects

The “How to Conduct Pre-Kaizen Survey’ training should consist of two

days of classroom training with all key dealer Kaizen team members All areas of

the survey should be covered and the following steps should be implemented:

Why data is needed?

In the “Why the data is needed area”, the followings should be explained:

To conduct a gap analysis of what customers want and what we currently provide

To get a clear 360 degree assessment of the current performance

processes Furthermore, the Kaizen leader should also guide the dealer on the Kaizen team to design a management system to visually control and manage the

new process

Service Customer History Data The data should cover all service customers within a specific period for the particular survey Customer unit data must come from actual data taken from

repair order history Time and motion study survey must be recorded and

reported by the average, the shortest or longest duration, depending on the survey requirement

The customer expectation area sample should consist of data from at least the three busiest days of the week Shop capacity surveys are taken from the highest sales volume month of the year Care should be given to identify

special events that may skew the data The data requirement and survey forms

to be used are detailed in the Treatment section to follow

Treatment Customer Impact Step One: Seven-Step Service Process Mapping

Excellent customer service in an automotive dealership service

department depends on how the staff can orchestrate the many steps and

processes required to repair the customers’ car right the first time, deliver it at the

promised time and at the agreed price This complex web of tasks and processes

can be summarized as the seven-step service process It is very much like a flex

production line capable of assembling various different models on the same production line Except in this case, different models require different types of service Following is a matrix depicting the seven-step service process, the people involved, and their areas of responsibilities This is the blue print for the design of the service control processes in an automobile dealership The seven- step process is as follows:

1

2

7

Appointment (visible to the customer)

Reception (visible to the customer)

Dispatch (invisible to the customer)

Production (invisible to the customer)

Quality Control (invisible to the customer)

Delivery (visible to the customer)

Follow Up (visible to the customer)

When workers can visually see where they belong in the process, the invisible service assembly line becomes visible and manageable for the service

workers.

The following is a job responsibility matrix example showing the key duties

of the workers in the seven-step process:

nu | Dispatch — - | Production’ | Inspection’ °.|- Delivery Follow-Up

Prepare RO Notify Close ticket for | Call customer : and forward to | customer of delivery for follow-up

Appointment for dispatcher status

24 Customers

Move car to Move car to service parking drive for

delivery Process RO

and dispatch work/notify parts Locate car for Complete Complete processing repair inspection

_ 4 Order Special Pre-pull parts Deliver

Order Parts parts/pull &

Figure 2 Seven-Step Process Responsibility Matrix

The next step is to map out the individual process such as Appointment

All the key members involved in the Appointment process must know why

appointments are needed, what the appointment process is and how to schedule

an appointment for a customer The key element is workers’ understanding of

their role in the entire service process and the ability for them to visualize how

they fit into the big picture The workers acceptance of the seven-step process is the beginning journey for the dealership to adopt TPS concepts in their operation

Harber, Burgess and Barclay (1993, p.10) wrote, “Integrating TQM

philosophy into an organization is a very complex process with a wide range of

effects Besides, quality improvement programs without a linkage to cultural

changes are doomed to failure.”

The following is an example of a simple work flow chart with

corresponding job responsibilities for each team members

Enter information into} Confirm appointment computer system availalibiity

Check EPC for part

Order special order parts

Figure 3 Reception Process Job Flow

Customer Impact Step Two: Leveling Appointment Demand