pros and cons for question #6

Chapter 7 . Demand Management, Order Mang e Service CASE 7.1 HANDY ANDY, INC ed residential trash compactor i and sold them through % of Handy Andy's sales b e rash-collection costs were tadi Inc, produr ay in St. Louis, Mis the United States Om lage urban areas wher e The standard model compar 2 feet deep, and 1 1/3 the same dimensions greater capacity and greater the compactors would be wide variety of colors an digters that w The sandard model was different trims, for a for ke the deluxe model was a Eur different trims, for Bus Retail prices were ser the standard model ranging for the deluxe model ber area were usually slow pided up Jos Ortega worked in Handy Ander's distribution department in the St. Louis head on a project to determine whether the compactor's war e rs. He was working ranty should be extended from one year to units were well built, and there had been almost no w years. The al compactor was about 3 feet ty work requested in the first year of each mode's life, Be- a feet wide. The deluxe model cause Handy Andy would have no records of repair work hut had better features, such performed after the one-year period had expired, Ortega er horsepower. Because most was randomly contacting buyers via their mobile phones wld be placed in home kitchens, a to learn about their experience to date. Handy Andy's bury and trims were manufactured, pro- er database, which included customer names and mobile would match many kitchen decors. phone numbers, was generated when buyers activated their swis available in five colors with three product warranty online (see Exhibit 7.A). is for a total of 15 different combinations. Ortega was in the process of contacting 500 parchas- del was available in eight colors and ers who had owned the compactors for between one year for a total of 32 different combina and four years (when they had first been introduced to de es were set by the dealer, with prices for termine whether the compactors had required repairs and, if del ranging between $600 and $725 and so, the extent and cost of the repairs. In talking to purchasers, modd between $950 and $1,100. Sales in Ortega was impressed by the fact that there were remarkably usually slow until trash collectors, faced with few complaints involving the durability of the compactors. landfill costs, raised their rates per can of refuse Another type of complaint did arise, however, one that Ortega had difficulty understanding until he heard w one suthorized Handy Andy factory many buyers, usually from the same few cities, tell an al- in each large urban area. The distributor was most identical story. It appeared that in these cities the for filling orders from licensed Handy Andy factory distributor would contact individuals who had purchased a standard model compactor from licensed re- ailers The The factory distributors were also allowed to sell actors to the final consumer. Each factory distributor tailers. The factory distributor would tell these buyers that and a complete stock of all styles and trims of the the model originally requested was out of stock but that Hendy Andy compactors. These distributors were required they could purchase a deluxe model for only $100 more stod at least five units each of the 47 different styles than they originally paid for the standard model. The foc alable tory distributors also indicated that buyers would receive Because of the sporadic sales patterns and the large better after-sale service because higher-priced purchases umber of colors and trims available, the licensed retailers would receive priority over lower priced purchases if ally stocked only a display unit or two. Each retailer car something malfunctioned. In addition, the factory dis- ned design your dream compactor" software package tributors in these few cities indicated that thes, not Handy Andy. Inc., stood behind the one-year warranty hatalowed prospective buyers to choose the model, col Ortega realized that he was uncovering a much and trim they wanted. When the retailer completed the Tareer and more serious problem than he had been the order would be transmitted to the nearest Handy Andy factory distributor signed to explore. He chatted briefly with his supervisor, Sheryl Booher, who told Ortega to revise the format of his The general agreement between the factory distribu- interview to include several questions concerning the instal mandy Andy was that the distributors would de lation. Booher also told Ortega to begin calling individuals all the compactor within 5 days after receivine who had owned compactors for less than a year. Ortega did rom a licensed retailer. For the delivery and in this, and he discovered marked differences in the installa factory distributor received 9 percent of the tion process based upon whether the customer purchase price, half paid by the licensed retailer that ad made the sale and half paid by Handy Andy. from a factory distributor or from a licensed retailer. ho had owned com a rked differences in within 5 days after recens an order from a licensed retailer. For , the factory distribu unit's wholesale price, half pas thr2020 January 19, 2020 to sell Bixbe Orgu, Bi- all markets TAGIT A Warranty Artition BUYER DETAILS Jackson San Die leans ME politan sample QUES Email Mobile Phone Mailing Address 1. Is 2. It City State Zip Code PRODUCT DETAILS Product Name Unit Number Transaction Number ADDITIONAL DETAILS Retailer Name Purchase Date Installation Date I wish to be informed of new Handy Andy products Mandatory Field SEND delivery windows that buyers were promised. Even As a general rule, compactors purchased from fac disturbing was that in some cases the compactor was tory distributors exhibited fast delivery in terms of clapsed in the middle of the kitchen floor in its shipping.com time since sale. Importantly, over 90% of the deliveries curred within the two-hour delivery windows that buyerserie, uninstalled! Customers of the licensed to were promised. Moreover, the installation personnel care also indicated that installation personnel would not fully explained how the compactor worked, and follow-up how the compactor worked and that some m m contacts were made to the customer 3 days and 10 days rude and disrespectful. As an example, in respo after installation to make certain that the customer had no customer's question an installer stated, Assum additional questions concerning the compactor's operation read the answer can be found in the owners On the other hand, Ortega learned of troubling Ortega had another meeting schedule inconsistencies in the delivery times of compactors pur- pervisor. As Ortega entered Boober's ott de from licensed retailers More specifically, fewer than 27 of the deliveries occurred within the two-hour prised to see Handy Andy's vice Bob Bixby, also sitting in the other or worked and that some installers vest In example, in response to er stated, "Assuming you te owner's manual." eting scheduled with his loher's office, he was se president of markets e office. Booher asked Org General Outlina Chapter 7 - Demand Management Order Man and Customer Service 12 by the Baby results of his interviews. After listening to w asked, "Do you think this pattern exists in el Oras mark Nawas On lacsova, Bali San Diega Irma Is My sample Ortega reply. "I'd say it is a problem in Baltimore, Cleveland, Louisville, Denver, and It may be a problem in Dallas and New Or mple wasn't very well structured in a metro- det senses you will recall that it was a nationwide marker sense, you ale that was trying to look at repairs 4. In the case is the statement. The factory distributos in these few cities indicated that thes, nor Handy Andy, Inc., stood behind the one year warranty. Is this a problem for Handy Andy? Why or why not? 5. Bixby, Booher, and Ortega recognize that Handy Andy needs a better way to learn about the buyer's installation experience. One alternative is to add an open-ended ques tion, dealing with the installation experience to the warranty activation form. Another alternative is to email a brief sur vey about the installation experience within three to 5 days of receiving awa y activation form. Which of these alternatives should Handy Andy choose? Why? Discuss the pros and cons of allowing Handy Andy trash compactors to be sold only through licensed retailers .e., factory distributors would no longer be able to sell to consumers) 7. Is it too late for Handy Andy to attempt service recovery with customers who reported a less than-satisfactory instal- lation experience? Why or why not? QUESTIONS I. is a customer appears that the factory customer service problem? Why or why was that the factory distributors are exploiting the and retailers. Yet from what we can tell, Handy Andy in Les has heard no complaints from the licensed retail etail. es Why wouldn't they complain? what should Handy Andy's marketing vice president de Why? Chapter 7 . Demand Management, Order Management, and Customer Service 127 CASE CASE 7.1 HANDY ANDY, INC at a factory in St. Le out the United were in large urbana high had the same dimens as greater capacity and greater horsson Anche Inc., produced residential trash compacto Handy s Louis, Missouri, and sold them through Jos Ortega worked in Handy Andy's distribution department in the St. Louis headquarters. He was working ed States. Over 90% of Handy Andy's sales on a project to determine whether the compactor's war ban areas where trash-collection costs were shoald be extended from one year to wo years. The units were well built, and there had been almost no warran- The standard model compactor was about 3 feet ty work requested in the first year of each model's life. Be- 2 fest deep, and 11/3 feet wide. The deluxe model cause Handy Andy would have no records of repair work come dimensions but had better features, such performed after the one-year period had expired, Ortega capacity and greater horsepower. Because most was randomly contacting buyers via their mobile phones Compactors would be placed in home kitchens, a to learn about their experience to date. Handy Andy's buy variety of colors and trims were manufactured, pro- er database, which included customer names and mobile exteriors that would match many kitchen decors, phone numbers, was generated when buyers activated their standard model was available in five colors with three product warranty online (see Exhibit 7-A). trims, for a total of 15 different combinations, Ora was in the process of contacting 500 purchas- ile the deluxe model was available in eight colors and ers who had owned the compactors for between one year e different trims, for a total of 32 different combina- and four years when they had first been introduced) to de ons Retail prices were set by the dealer, with prices for termine whether the compactors had required repairs and, if he standard model ranging between $600 and $725 and the extent and cost of the repairs. In talking to purchasers, for the deluxe model between $950 and $1,100. Sales in Ortega was impressed by the fact that there were remarkably area were usually slow until trash collectors, faced with few complaints involving the durability of the compactors. rising landfill costs, raised their rates per can of refuse Another type of complaint did arise, however, one picked up that Ortega had difficulty understanding until he heard There was one authorized Handy Andy factory many buyers, usually from the same few cities, tell an al- distributor in each large urban area. The distributor was most identical story. It appeared that in these cities the responsible for filling orders from licensed Handy Andy factory distributor would contact individuals who had retailers. The factory distributors were also allowed to sell purchased a standard model compactor from licensed re- compactors to the final consumer. Each factory distributor tailers. The factory distributor would tell these buyers that maintained a complete stock of all styles and trims of the the model originally requested was out of stock but that Handy Andy compactors. These distributors were required they could purchase a deluxe model for only $100 more to stock at least five units each of the 47 different styles than the originally paid for the standard model. The fac available. tory distributors also indicated that buyers would receive Because of the sporadic sales patterns and the large better after-sale service because higher-priced purchases number of colors and trims available, the licensed retailers would receive priority over lower-priced purchases if usually stocked only a display unit or two. Each retailer car- something malfunctioned. In addition, the factory dis- ned a design your dream compactor" software package tributors in these few cities indicated that they, not Handy that allowed prospective buyers to choose the model, col- Ands, Inc., stood behind the one-year warranty , and trim they wanted. When the retailer completed the Ortega realized that he was uncovering a much the order would be transmitted to the nearest Handy larger and more serious problem than he had been as Andy factory distributor signed to explore. He chatted briefly with his supervisor, The general agreement between the factory distribu- Sheryl Booher, who told Ortega to revise the format of his on and Handy Andy was that the distributors would de interview to include several questions concerning the instal er and install the compactor within 5 days after receiving lation Booher also told Ortega to begin calling individuals order from a licensed retailer. For the delivery and in- who had owned compactors for less than a year. Ortega did on the factory distributor received 9 percent of the this, and he discovered marked differences in the installa Wholesale price, half paid by the licensed retailer that tion process based upon whether the customer purchased had made the sale and half paid by Handy Andy. from a factory distributor or from a licensed retailer. (continued 128 Part II. Elements of Lagistics Systems DHIBIT 7.A Warranty Activation Form BUYER DETAILS First Name* Last Name Email Mobile Phone Mailing Address City State Zip Code PRODUCT DETAILS Product Name Unit Number Transaction Number ADDITIONAL DETAILS Retailer Name* Purchase Date Installation Date I wish to be informed of new Handy Andy products Mandatory Field SEND As a general rule, compactors purchased from fac delivery windows that buyers were promised. Even more tory distributors exhibited fast delivery in terms of elapsed disturbing was that in some cases the compactor was iet time since sale. Importantly, over % of the deliveries or in the middle of the kitchen floor in its shipping contain curred within the two-hour delivery windows that buyerser-ie., uninstalled! Customers of the licensed reach were promised. Moreover, the installation personnel care also indicated that installation personnel would not explam fully explained how the compactor worked, and follow-up how the compactor worked and that some installers contacts were made to the customer 3 days and 10 days rude and disrespectful. As an example, in response after installation to make certain that the customer had no customer's question an installer stated, "Assuming you additional questions concerning the compactor's operation. read, the answer can be found in the owner's manual On the other hand, Ortega learned of troubling Ortega had another meeting scheduled with inconsistencies in the delivery times of compactors pur- pervisor. As Ortega entered Booher's office, he chased from licensed retailers. More specifically, fewer prised to see Handy Andy's vice president of me than 20% of the deliveries occurred within the two-hour Bob Bixby, also sitting in the office. Boohet asked to tell Bixby the results of his interviews. After listening to Ortega, Bixby asked, "Do you think this pattern exists in all markets?" "No," was Ortega's reply. "I'd say it is a problem in Jacksonville, Baltimore, Cleveland, Louisville, Denver, and San Diego. It may be a problem in Dallas and New Or- leans. My sample wasn't very well structured in a metro- politan market sense; you will recall that it was a nationwide sample that was trying to look at repairs." 4. In the case is the statement, "The factory distributors in these few cities indicated that they, not Handy Andy, Inc., stood behind the one-year warranty." Is this a problem for Handy Andy? Why or why not? 5. Bixby, Booher, and Ortega recognize that Handy Andy needs a better way to learn about the buyer's installation experience. One alternative is to add an open-ended ques tion, dealing with the installation experience, to the warranty activation form. Another alternative is to email a brief sur- vey about the installation experience within three to 5 days of receiving a warranty activation form. Which of these alternatives should Handy Andy choose? Why? 6. Discuss the pros and cons of allowing Handy Andy trash compactors to be sold only through licensed retailers (i.e., factory distributors would no longer be able to sell to consumers). 7. Is it too late for Handy Andy to attempt service recovery with customers who reported a less-than-satisfactory instal- lation experience? Why or why not? QUESTIONS 1. Is this a customer service problem? Why or why not? 2. It appears that the factory distributors are exploiting the licensed retailers. Yet from what we can tell, Handy Andy in St. Louis has heard no complaints from the licensed retail ers. Why wouldn't they complain? 3. What should Handy Andy's marketing vice president do? Why