Application of SWOT analysis for after-sales service operations

Transcription

1 Proceedings of Second International Conference on Advances in Industrial Engineering Applications (ICAIEA 2014) Anna University, Chennai, January 6-8, 2014 Application of SWOT analysis for after-sales service operations S.Murali 1, S.Pugazhendhi 2, C. Muralidharan 3 and B.V.Malarkannan 4 1 Research Scholar, Department of Manufacturing Engineering, Annamalai University, Chidambaram, Tamil Nadu, India. 2&3 Professor, Department of Manufacturing Engineering, Annamalai University, Chidambaram, Tamilnadu, India. 4 PG Scholar, Department of Manufacturing Engineering, Annamalai University, Chidambaram, Tamilnadu, India s.murale@rediffmail.com Abstract The last few decades have seen a growing trend toward aggressive global competition, increased marketplace demands, and accelerated technological changes. These developments are forcing organizations to take a closer look at their marketing channel strategy including addressing the issue of how to distribute their products and offer associated after-sales service support. A SWOT analysis, standing for analyzing company strengths, weaknesses, opportunities and threats, helps small businesses optimize their after sales service performance. SWOT analysis is a most widely used tool for analyzing external and internal environment factors simultaneously in order to acquire a systematic approach and support for a decision situation. The goals of an after sales service SWOT analysis are achieving improvements in customer satisfaction, reducing customer complaints and offering better service than the competition. In this study, SWOT matrix is used to devise a set of initial strategies of after sales operations in a consumer durables manufacturing industries and the SWOT factors are identified through personal interviews with company executives and service technicians. By matching the internal factors with the external factors, the SWOT analysis yields a list of outcomes as the basis for after sales service strategies. The aim of employing this method is to improve the qualitative side of after sales service strategic planning.. Keywords: After sales service strategy, SWOT, Strategic management 1.0 INTRODUCTION End-user of many types of product, ranging from computer systems to domestic appliances, requires customer support and assistance to help them gain maximum value from their purchase. In fact customer support entails all activities to ensure that a product is available for troublefree use to consumers over its useful life span [1]. An increasing number of product-oriented companies are investing in the extension of the service business linked to their products. This trend can be traced back to the late 80s when the term servitization was first coined by Vandermerwe et.al.,[2] to refer to the process of creating value by adding services to products. In other terms, servitization is defined as the process of innovation of an organization s capabilities and processes to shift from selling products to selling integrated products and services that deliver value in use [3] or as the process of change of strategy where manufacturing companies opt for an orientation to services and/or develop more and better services with the goal of satisfying customer needs, obtaining competitive advantages and improving the company s performance Strongly related to the concept of servitization is the concept of Product Service System (PSS) defined by [3] as a special case of servitization that values the performance or utilization of products instead of their properties and obtains differentiation through the integration

2 Application of SWOT analysis for after-sales service operations of products and services that provide use value for the customer. Relevant changes that are needed to move along the servitization process are related to service design, organizational strategy and organizational transformation [4]. Currently, service programs are gaining importance in the manufacturing sector. Manufacturing firms make an effort to sell their goods, keep customer loyalty and create growth opportunities in markets. Accordingly, servitization has become prevalent in the manufacturing industry [5]. As regards durable goods, in past years, many companies had only been concerned with selling their goods in the market place. But now, after sales (A/S) has become increasingly important in doing business. A/S not only helps to differentiate the product but is also important in the sales of the product. Excellent service affects the retention of existing customers and inducement of new customers. As a result, it brings high customer retention and satisfaction [6]. If manufacturing firms concentrate on A/S, they can get four times greater product sales and more than three times the turnover rate of the original purchase during a given product s life-cycle. In other words, A/S is a profit source and also a key differentiator between many manufacturing companies [7]. Manufacturing firms can obtain considerable income and profit via A/S through strategic feedback about the design and quality of products and services, sales, and marketing activity. With a high quality of A/S system, manufacturing firms can convince potential customers to purchase their new products by improving customer satisfaction, loyalty, and company/brand image for the longterm [7]. According to Eppientte et al. [8], customer service has been emerging as a competitive weapon for business firms. He mentioned it is becoming harder and harder to compete on manufacturing excellence alone. Manufacturers who thrive will compete by bundling services with products. Obviously, customer service is a part of all facets of our economy and is especially important to the long-term survival of companies. After sales service refers to the various processes which make sure customers are satisfied with the products and services of the organization, and hence plays an important role in customer satisfaction and customer retention. Arvinder et al. [9] stated that an after-sales support strategy associated with a product may include elements such as warranty provision, extended service contract provision, availability of repair service, loan availability, toll-free phone support, etc. But Goffin et.al.,[10] explanation may be more complete, that states seven elements of after- sales support such as installation, user training, documentation, maintenance and repair, online support, warranty, upgrades which must be provided to customers over the working lifetime of products. After selecting the after-sales service method it is important that company choose the right strategy for aftersales service too. Both of these elements are essential for any company to have the most effective and efficient afterservice center. For implementing a top quality after sales service plan it is necessary to select the proper strategy too. SWOT analysis provides the basic outline of developing after sales service strategy. The aim of the SWOT analysis is to develop after sales service strategy to apply company s strengths to the identified opportunities while using them to avoid or nullify threats. At the same time, the company has to address weaknesses and make sure that threats do not exploit them and that they don't get in the way of opportunities. In this study, SWOT matrix is used to devise a set of initial strategies of after sales operations in a consumer durables manufacturing industry and the SWOT factors are identified through personal interviews with company executives, service technicians and customer satisfaction survey questionnaire.. By matching the internal factors with the external factors, the SWOT analysis yields a list of outcomes as the basis for development of after sales service strategies. The aim of employing this method is to improve the qualitative side of after sales service strategic planning. 2.0 SWOT ANALYSIS A SWOT analysis, standing for analyzing company s strengths (S), weaknesses (W), opportunities (O) and threats (T) helps businesses optimize their after sales service performance. The origin of SWOT was SOFT (Satisfactory (good in the present), Opportunity (good in the future), Fault (bad in the present), Threat (bad in the future)) which came from the research work on corporate planning conducted at the Stanford Research Institute from by a research team comprising Marion Dosher, Otis Benepe, Albert Humphrey, Robert Stewart, and Birger Lie. The goals of an after sales service SWOT analysis are achieving improvements in customer satisfaction, reducing customer complaints and offering better service than the competition. In SWOT, the external and internal factors are grouped into four parts called SWOT groups: strengths, weaknesses, opportunities, and threats. By applying SWOT in strategic decisions, the purpose is to select or constitute and implement a strategy resulting in a good fit between the internal and external factors. Weihrich et al.,[11] modified SWOT (or TOWS) into the format of a matrix, matching the internal factors 41

3 Proceedings of Second International Conference on Advances in Industrial Engineering Applications (ICAIEA 2014) (i.e., the strengths and weaknesses) of an organisation with its external factors (i.e., opportunities and threats) to systematically generate long-term strategies and/or shortterm tactics and/or one-off action plans that ought to be undertaken by the organisation. Internal factors refer to those factors that can be controlled or manipulated by the organisation. These internal factors or Key Success Factors can be determined by way of brain-storming or Nominal Group Technique (NGT). SWOT analysis involves systematic thinking and comprehensive diagnosis of factors relating to a new product, technology, management, or planning. Figure 1 shows how SWOT analysis is performed. [12] The wizardry of SWOT is the matching of specific internal and external factors, which creates a strategic matrix, which makes sense. The four combinations are called the Maxi-Maxi (Strengths/ Opportunities), Maxi- Mini (Strengths/ Threats), Mini-Maxi (Weakness/ Opportunities), and Mini-Mini (Weaknesses/ Threats) are explained below. Industrial Characteristics Literature Review Company Indicators 3.0 METHODOLOGY Anna University, Chennai, January 6-8, 2014 Internal and external factors are identified through brain storming, and personal interviews with company executives and service technicians. Then these internal and external factors are prioritized into strengths, weaknesses, opportunities and threats. With the short listed external opportunities and threats and internal strengths and weaknesses the SWOT matrix can be constructed. And then by matching the internal factors with the external factors, the SWOT analysis yields a list of outcome action items from which the after sales service strategies are formulated. 4.0 CASE STUDY In this study, we applied the SWOT analysis to after sales operations of one of the leading home appliances manufacturing company which produces kitchen appliances for domestic purpose. Customers purchased their products receive the after sale service in the form of home visit. The case company under consideration is one of India s leading kitchen appliances makers, offering a wide range of models. The goal of the after sales service of the company is to attain higher level of customer satisfaction. 5.0 CONSTRUCTION OF SWOT MATRIX Internal Factors External Factors Strengths Weaknesses Opportunities Threats SWOT Matrix S O Fig.1 SWOT Analysis 1.Maxi-Maxi (S/O): An organization should strive to maximise its strengths to capitalise on new opportunities [11]. 2.Maxi-Mini(S/T): An organization should strive to use its strengths to parry or minimise threats [11]. 3.Mini-Maxi(W/O): It is an exertion to conquer the organization's weaknesses by making the most out of any new opportunities[11]. 4.Mini-Mini(W/T): This is most definitely defensive strategy, to minimise an organization's internal weaknesses and avoid external threats [11]. W T Table 1 shows the company s strengths, weaknesses, opportunities and threats. Thirty SWOT variables are identified through brain storming and Nominal Group technique, personal interviews with company executives and interaction with service technicians. The SWOT matrix of company is formed by matching the external factors with the internal factors. The positive impacts from favourable factors (strengths and opportunities) are maximised and the negative influences from unfavourable factors (weaknesses and threats) are minimised. These are illustrated in Table 2 as: maxi-maxi (SO); mini-maxi (WO); maxi-mini (ST); and mini-mini (WT). For easy writing each strength, weakness, opportunity, and threat are labeled as S1, S2, S3 for different strengths; O1, O2, O3 for the various opportunities and so on. For instant, in the maxi-maxi (SO) quadrant, S1S3S5S7S8O1O2O3O4 represents the outcome as geographical coverage from matching strengths S1, S3, S5, S7, S8 and opportunities O1, O2, O3 and O4. This kind of matching continues for the remaining of all internal and external factors, with similar possible outcomes as shown in Table 2. 42

4 Application of SWOT analysis for after-sales service operations Table-1. SWOT Variables SWOT Factors Strengths Weaknesses Opportunities Threats SWOT Variables Description Good image in the marketplace and ability to charge higher S1. Brand name prices for their products because consumers place additional value in the brand Products having additional features that the competitor doesn t S2.Competitive products/unique products have and unique products help distinguish after sales business from competitors. S3. Consistency of service quality Achieving uniformity and fairness in the service quality. S4. Service equipments//physical facilities Use of appropriate, adequate and modern service tools, equipments and technology. S5.Compliant registration facilities Facility for registration of complaints through online, phone and in person. S6.Reasonable warranty policy Warranty for maximum number of parts of the product for a reasonable period. S7.Providing service as promised Attending and resolving compliant then and there as promised. S8. Accessibility of service people Easiness to access or approach the service staff. S9. Choice and Range of Service Offer of variety of services. S10.Employee Training Service technicians are given periodical class room, field and W1. Poor spare parts inventory refresher training as and when required. Non availability of spare parts at the time of repairing due to poor inventory system. W2. Difficulties in recruiting skilled staff Non availability of skilled staff. W3. Understanding the needs of customer Customer s needs are not properly understood and attended to. W4. Higher Turnaround time Time taken for resolving the compliant is more. W5. Technical competence of service people W6. Providing service during a holiday Ability of service technicians to explain the problem and clarify the customer s doubt technically. Company is not providing service during the regular and festival holidays. W7. Poor staff retention Staffs are not working more than one or two years. O1. Improvement in customer base Potential to enhance the number of customers. O2. Improving the post-service clients activity Potential to improve the variety and quality of service. O3. Scope for expansion of service Network Introduction of service centers in potential areas from where more number of complaints are received. O4. Further decrease in turnaround time Possibility of reducing turn around time to a preset target level. O5. Changing needs of customers O6. Use of Information Technology Tools O7. Consumer education regarding the similar products of competition Customers are becoming more value conscious and are increasingly willing to adopt new technology. Use of information technology tools for effective communication. Conduct of sales and service camps frequently. O8. Toll free phone support Offering compliant registration through Toll-free phone facility. T1.Lower prices or higher standards of local Presence of local quality service provider at nominal cost. service agents T2.Inflation Rise in the general level of prices of goods and services over a period of time that results in an increase in cost. T3.Growing costs with the service activity Increase in cost of attractive warranty policy, service tools, logistics and employee salary. T4.Increase in cost of service parts Increase in cost of critical service parts. T5.Abnormal compliant during warranty Abnormal breakdown or failure of product with in warranty period period. 43

5 Proceedings of Second International Conference on Advances in Industrial Engineering Applications (ICAIEA 2014) Anna University, Chennai, January 6-8, 2014 Table-2. SWOT Matrix of After Sales Operations Source: Literature Review, brain storming and interview with executives Strengths Weaknesses S1. Brand name W1.Poor spare parts inventory S2.Competitive products/unique products W2.Difficulties in recruiting skilled staff S3. Consistency of service quality W3.Understanding the needs of customer S4. Service equipments//physical facilities W4.Higher Turnaround time S5.Compliant registration facilities W5.Technical competence of service people S6.Reasonable warranty policy W6.Providing service during a holiday S7.Providing service as promised W7.Poor staff retention S8. Accessibility of service people S9. Choice and Range of Service S10.Employee Training Opportunities Threats O1.Improvement in customer base T1.Lower prices or higher standards of local service agents O2. Improving the post-service clients activity T2.Inflation O3.Scope for expansion of service Network T3.Growing costs with the service activity O4.Further decrease in turnaround time T4.Increase in cost of service parts O5. Changing needs of customers T5. Abnormal compliant during warranty period O6.Use of Information Technology Tools O7. Consumer education regarding the similar products of competition O8. Toll free phone support Results of matching Internal and External factors Maxi-Maxi (S-O) S1S3S5S7S8O1O2O3O4 - Geographical targeting for new service centers S3S7O2O6O7 - Improvement in service quality S6O1O2 - Introduction of more attractive Warranty Policy S1S2O5 - Enhancement in customer satisfaction S5O6O8 - Provision of toll-free phone compliant service Maxi-Mini (S-T) S6S9T2T3 - Financial Focus S3S10T1T3 - Up gradation of service technology S3S4S9T1T3 - Improvement in standard of Service S6S9T2T3 - Development of pricing policy Mini-Maxi (W-O) W1O1O3O4O6 - Modification of ASS organization structure W4W6W7O1O4O5O6 - Recruitment of adequate skilled staff W1O2O3O6 - Improvement in spare parts inventory W3O7 - Educate the customer Mini-Mini (W-T) W2W4W6W7T1T3 - Outsourcing the service activities in some locations 44

6 Application of SWOT analysis for after-sales service operations From the outcomes of matching the SWOT factors, the strategies such as employ adequate and quality man power, reduction of turnaround time, tollfree phone facility for compliant registration, develop an optimum network design of service territory, launch large-scale promotions to make consumers aware of range of service, employ economical methods of servicing with quality, develop an optimum spare parts logistics network design and implement service cost reduction techniques are formulated. 6.0 CONCLUSION Companies should continuously take the responsibility to provide customer s requirements. Selecting after sales service strategy is essential factor for providing better service. Therefore strategy and policy should be considered in after sales service. This study will help company s top management and operational managers to form their strategic planning process of after sales operations. The case example of household durables manufacturing company has been used to illustrated how the after sales service strategies are formulated by using one of the strategic planning tool, namely SWOT analysis. From the SWOT analysis of after sales operations of the above company it is revealed that the company has to give priority for the strategies such as reduction of turnaround time (TAT), provision of service as promised, toll-free phone facility, recruiting adequate and quality service people, improve the spare parts inventory management, introduction of attractive warranty policy, develop an optimum service network and development of information management system. Hence the managers have to concentrate on the above mentioned strategies for improving the performance of after sales service. The SWOT analysis should be conducted at least annually and as and when major events which would affect the organisation, have occurred. Also, formulation of after sales operations strategies are often complicated and difficult by numerous criteria, it may be that utilization of SWOT is insufficient to assess the appropriateness of decision alternatives based on these factors. Therefore, SWOT analysis alone cannot comprehensively assess the strategic decision-making process. In the future work the management should focus on developing after sales service strategies more practical, comprehensive and systematic approach by integrating BSC, SWOT analysis and the Quality Function Deployment (QFD) instead of adopting a single strategic tool. REFERENCES [1] Goffin, K. and New, C. Customer support during new product development an exploratory study, International Journal of Operations & Production Management, Vol. 21, No. 3, 2001, pp [2] Vandermerwe, S. and Rada, J. Servitization of Business: Adding Value by Adding Services, European Management Journal, Vol. 6, 1988, pp [3] Baines, T.S., Lightfoot, H.W., Benedettini O., Kay, J.M. "The servitization of manufacturing: A review of literature and reflection on future challenges", Journal of Manufacturing Technology Management, Vol. 20, No. 5, 2008, pp [4] Baines, T.S., Lightfoot, H.., Evans, S., Neely, A., Greenough,R., Peppard, J., Roy, R., Shehab, E., Braganza, A., Tiwari, A., Alcock, J., Angus, J., Bastl, M., Cousens, A., Irving, P., Johnson, M., Kingston, J., Walton I.M. and Wilson, H., State-of-the-art in productservice systems, Proceedings of the Institution of Mechanical Engineers Part B-Journal of Engineering Manufacture,Vol.221,No.10,2007,pp [5] Brax, S. A manufacturer becoming service provider - challenges and a paradox, Managing Service Quality, Vol. 15, No. 2, 2005, pp [6] Anderson, E. W., Fornell, C. & Lehmann, D. R. Customer satisfaction, market share and profitability: find ings from Sweden, Journal of Marketing, Vol. 58, No. 2, 1994, pp [7] Saccani, N.; Songini, L.; Gaiardelli, P. The role and performance measurement of after sales in the durable consumer goods industries: an empirical study. In: International Journal of Productivity and Performance Measurement, Vol. 55, No. 3/4, 2006, pp [8] Matt Eppinette, R. Anthony Inman, Roger Alan Pick,"Expert systems and the implementation of quality customer service", Industrial Management & Data Systems, Vol. 97, No.2, 1997, pp [9] Arvinder P.S.Loomba. Linkage between product distribution and service support functions, International Journal of Physical Distribution & Logistics Management. Vol 26, No , pp [10] Goffin, K., Customer support: A cross industry study of distribution channels and strategies, International Journal of Physical Distribution and Logistics Management, Vol. 29, No.6, 1999, pp [11] Weihrich, H., The TOWS matrix a tool for situational analysis, Journal of Long Range Planning, Vol. 15, No. 2, 1982, pp [12] S.F. Lee and Andrew Sai On Ko, Building balanced scorecard with SWOT analysis, and implementing Sun Tzu's The Art of Business Management Strategies on QFD methodology, Managerial Auditing Journal, Vol. 15, No. 1/2, 2000, pp