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Service Sim Report Week #6

Thomas Liquori

Digitally signed by Thomas Liquori DN: cn=Thomas Liquori, o, ou, email=thomasliquori @aol.com, c=US Date: 2011.04.21 18:48:29 -04'00'

Thomas Liquori Professor Villegas (MGT 425) 8/7/2009


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1) What, in your opinion are the key drivers of the customer satisfaction? What is most important to the client? What did you do in the simulation to address that assessment?

In my opinion the key drivers of customer satisfaction are a few aspects. One of them being, having enough workers employed (such as Tech 1, Tech 2, and Teach 3’s) to keep all of the bays in use and to keep the comeback percentage at a minimum. Another aspect would be having parts readily available when needed to get the work done in a timely manner. Meaning the storage capacity needs to be in the 90% area to ensure all parts are ready when needed. This in turn will keep the customers happy make the company have a good ready when promised percentile. This is most important to the client, they do not want to hear that they have to wait several days for a part; in turn they can just go to one of our competitors to get the work done, costing us to lose money on a service that my company could have performed. What I did in the simulation to address customer satisfaction was sending out advertising promotions for newer and older cars to try to get my workspace at a capacity. It actually took me a while to figure out what needed to be done in order to make a profit and not a loss with my company, but upon finding out this information my losses went down tremendously and customer satisfaction was up.

2) Discuss the keys to profitability. What affects the profitability the most as you have learned from the simulation?

The keys to profitability in my opinion, is definitely customer satisfaction. Keeping the customers happy on a day to day basis throughout the month until where you can see where the company stands by looking at the performance summary gives you a breakdown of everything from your service department to the parts department, and the companies operating costs and profit margins. Having this information is a key to making decisions for the next month to improve on issues in the company that are not up to par. This can be anything from hiring or firing employees to meet customers’ needs, to approximate how much is needed to be purchased for parts to keep inventory, storage space and all bays in use at a capacity. Professor Villegas (MGT 425)


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3) Identify both: variable and fixed costs in your stimulation

In this stimulation, I was the manager and owner of the company making decisions and controlling variable costs which included inventory, advertising, wages, which included overtime pay for the workers, and parts pricing. All of these variable expenses that me the owner of the company can increase or decrease based on the decisions that needed to be made on a month to month basis. In contrast, the fixed costs in the stimulation are those beyond my control to change or negotiate, expenses such as rent expenses, emergency purchases, emergency problems that may arise month to month. For example, in June an air compressor in the shop failed and the emergency expense to get the capacity back to a normal operating unit was $3000 for a new compressor. Another fixed cost in the stimulation is depreciation on the equipment that is being used, it is an uncontrollable fixed cost that is not stable and cannot be changed. 4) Respond to the author’s statement: “You must have the right person to do the job�. How is it true?

The author hit this statement right on the head with this one and I definitely agree with the author. Having the right amount of trained, valuable, qualified, and experienced employees on the right positions at the right time is one of the most important factors in operating your business in a profitable manner, which will link to a stable income, and the successful future of the company. In addition, we as managers have the decisions to make either to hire or fire employees, which means if at any time, we see that we have an employee that needs to be trained, we must make the choice to either spend the money to retrain this worker (which may cost more in the long run to the company) or either to fire him and hire someone who may do the job better. Also, there needs to be a balance with all of the employees that you have working for your company. For example, there needs to be a sufficient amount of tech 1, tech 2 and tech 3 employees working to ensure all bays are in use, and that the comeback percentage is kept to a very low percent. This in turn of course will keep the customers happy and the companies customer satisfaction percentage at a high. Professor Villegas (MGT 425)


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5) Describe two key decisions you have made that either turned the business to the path of success or to decline.

In April of the stimulation a new company (Microflex) opened a new R&D center downtown. The month before they opened I tried to send beef up my advertising to get in as many customers as I could with deals and promotions to ensure that my company keeps all return customers that we had up until that point, making it harder for the new company to compete with us on a level that would make it very difficult for them to operate at a profit and ensure my companies survival. In addition to this, I was always checking to see the market rates to see if my employees were being underpaid and always kept their salary at 100% market rate to ensure their happiness in order for them to do a good job for the company. Also, I was checking and printing the updates every month to ensure that all of the issues with the company, such as employees who quit, were out sick, on vacation, or terminated because they failed a drug test was always filled to ensure the company ran smoothly and customer satisfaction was at a good percentage and all of my bays were at capacity.

6) The goal of this simulation was to obtain the 2 important goals: customer satisfaction and maximized profitability. What would you do different to obtain that goal, should you have more time. How much more time would you need?

I believe that if I had some more time, about three or four months I really could have turned the company around. From August on I was increasing my parts availability, my promised when ready percentage, my fixed on first visit percentage, and customer satisfaction while lowering my comebacks every month. At the end of my stimulation my comebacks were 1.4%, my parts availability was at almost 80%, and throughout the stimulation all 14 bays were in use. There was a problem with my stimulation where I could not start over at all, so I had to use what I had and kept moving forward. From August on I was operating each month at a profit, but it was not enough for me to gain an overall profit from year to date unfortunately. I believe I know where I went wrong; I was spending too much on the tools and equipment input for many months, and that is where most if not all of my profit went to. I did not Professor Villegas (MGT 425)


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figure this out until the July-August period where I lowered the amount to about $500 a month from $50,000. This was based on your advice and helped me out tremendously during the last half of the stimulation. I believe if I had the chance to start over and try this stimulation again, I would have operated at a great profit and my customer satisfaction would be even higher at the end of the stimulation I just did which was almost 90%. Now that I know what needs to be done, and if the Pharma Sim is similar to the Service Sim, I believe that I will not have any problems with the decision making process that the stimulation has to offer. I cannot wait to get my hands on the next stimulation to redeem myself for the loss that my company took from the Service Sim. All in all, it is a great exercise to be able to own and manage a stimulated company, it shows a lot of the trials and tribulations that real companies go through and what I have in store for my once I graduate and become a manager for a company in the real world.

Professor Villegas (MGT 425)


Service Sim Report for Management Stimulation