Building After Sales Excellence

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Building After Sales

Excellence

Analyzing and Improving After sales to

U.S. Military Customers of Company

ABC Group in Germany

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Building After Sales Excellence

Analyzing and Improving After sales to U.S. Military

Customers of Company ABC Group in Germany

University of Groningen

Faculty Management and Organisation

Business Development

Financial Value Management

The author is responsible for the content of this thesis . All rights regarding this

thesis are reserved for the author

Author:

J.S. van de Ridder S1150618

Supervisors RuG:

Dr. J.F.J. Vos Dr. E.P. Jansen

Supervisor Company ABC:

Dr. R. Arts

Company:

Company ABC Stuttgart;

Western European Services and Parts Department Putten, August 11th₂₀₀₇

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Executive summery

This research has been conducted for the Western European Services and Parts Department (WEU/S) of Company ABC in Stuttgart. The WEU/S organization supports the European national

Company ABC market organizations for the Company ABC, Dodge and Jeep (CDJ) brands in achieving their national targets in the field of service and parts, and focuses on after sales. One of the markets that WEU/S supports is the U.S. Military customers that buy CDJ vehicles for private use. This U.S. Military market is the focus of this research. The central question in this research is:

Which opportunities can be identified for the selected after sales processes for U.S. military Company ABC group vehicle owners in Germany and how can they best be implemented.

In order set the scene, the U.S. Military delivered vehicles in Europe are quantified. It became

apparent that Germany accounts for over 80% of the European delivered vehicles and therefore serves as the focal point. Furthermore the most important entities evolved within the after sales processes, and their current relations were mapped. These entities or stakeholders were: The WEU/S department, the Overseas Military Sales Company (COMPANY DEF) GmbH, the U.S. military customer, the independent sales people, the official Company ABC, Jeep, Dodge dealer, the independent service garages and the specialized towing companies.

An analysis of various after sales definitions and a discussion of the various after sales activities in the automotive industry led to the decision to choose the work-flow method in order to create the

transparency needed in these processes and to describe them in a simple straightforward manner. Also three layers of business improvements opportunities were presented: quick hits, incremental

improvement and reengineering. These layers provide insight in the amount of work that has to be done to implement them as well as the state of the current after sales processes.

Selection of processes

The following processes for analysis were selected, being: Accessories sales-, Parts ordering-, Recall&RRT-, Rental vehicle-, Towing-, and the Warranty Claim process. These processes only take place under the presumption of warranty. Therefore, the warranty situation concerning the U.S. Military is described as well.

Located opportunities

Based on the processes maps, interviews, observing and documents, the after sales processes were analyzed for possible business opportunities.

• Several quick hit opportunities were identified: These were mostly related to the warranty

claim system. These issues are fairly small, but cause a lot of extra work for COMPANY DEF and WEU/S.

• Also some incremental improvement opportunities were identified: There was no structured

sale of accessories yet, even though this is very profitable in general .Furthermore, there was not a process in place of parts ordering tracking when ordered by the official dealers.

• No reengineering opportunities were found. The main reasons being: the highly regulated

environment and legal situation of the after sales processes and the maturity of the U.S. military market.

• Finally, some other opportunities came to light during the research, which are not directly

related to a specific process, but are opportunities relating to the selected processes in general: The identification of U.S. military at official CDJ Dealers is difficult due to unclear

guidelines. Communication between COMPANY DEF and WEU/S is sub-optimal, mostly due

to using the wrong kind of communication channels. There is a lack of diagnostic tools for U.S. specified vehicles. This causes extra waiting time

before the diagnoses can take place. Independent dealers are being used in favor of official Company ABC dealers. This is not according to Company ABC guidelines and therefore causes money to leave the COMPANY

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Results are implemented

Before finishing the research, based on the identified opportunities all the quick hits that were identified were implemented after discussion with IT personnel of Company ABC.

Also two other recommendations were made:

• In order to create more transparency in the parts ordering of the official dealers a way of

tracking these orders has to be developed. This creates more insight in the parts order that the dealers make and drives down the error rate in the parts ordering process.

• Dealers near U.S. bases should be equipped with diagnostic tools for U.S. vehicles to provide

better and faster support for U.S. Military.

The Up-Fit Kit opportunity is currently being implemented.

Prologue

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office in Stuttgart. It has been a nine month adventure that I will never forget. This research took me to U.S. Military bases and other locations which I never knew existed; I was overwhelmed by the sheer size of these American bases, where even traffic lights are imported form the U.S.

The whole experience has taught me valuable lessons about the research subject and (business) life itself.. This research would not have been possible without the help and guidance of several people. I would like to thank Dr. Rudi Arts for making it possible for me to take on this great nine month adventure. Everything was open for discussion and there was always time and room for humor and a “bekske koffie”. I especially appreciate the time and effort that Dr Arts took for my personal

development.

Furthermore I would like to thank the rest of the WEU/S department, with special thank to Michiel Verheij, Hans Kelder and Dr. Daina Pakusic. The relaxed, no nonsense atmosphere made me feel right at home. You made me feel part of the team from day one and I really had a great time.

Special thanks also goes out to the people at COMPANY DEF Kronberg. Ralph, (thanks for showing us around the bases!), Horst (for all your time and good moods), Richard, Scotty, Barry, thank you for all your valuable information and time. It was always fun to make the trips to beatiful Kronberg these 9 months!

Furthermore I would like to thank Dr Janita Vos and Dr. Pieter Jansen from the University of Groningen for assisting me, and providing valuable feedback. Without them, this research would not have been possible.

And last but not least, I would like to thank my mother and two sisters for supporting me during my thesis, and my whole student life for that matter. Thank you for letting me make my mistakes and being there when I needed it. Without your support I would not have come so far!

Justin van de Ridder Putten, August 2007

List of Figures, Maps, Tables and Work-flow diagrams

Figures

Figure 1.1 Research focus chapter one Figure 1.2 WEU/S management question Figure 1.3 Research framework

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Figure 1.4 Research focus

Figure 2.1 Research focus chapter two Figure 3.1 Research focus chapter three

Figure 3.2 Relations between the relevant parties Figure 3.3General structure of a service map

Figure 4.1 Research focus chapter four

Figure 4.2 Information flow in a product creation process Figure 4.3 Product support

Figure 4.4 Management question compared with the Wennhong and Tung model Figure 4.5 Business Process Improvement steps

Figure 5.1 Research focus chapter five Figure 5.2 Chapter outline

Figure 5.3 Simplified Sales and delivery process Figure 5.4 Warranty timeline

Figure 6.1 Research focus chapter six

Figure 6.2 Simplified Sales and delivery process including up fit opportunity Figure 6.3 Relations stakeholders new situation

Figure 7.1 Research focus chapter seven

Maps

Map 3.1 Delivered Company ABC vehicles in Europe for 2004, 2005 and 2006

Tables

Table 1.1 The nine performance variables according to Rummler and Bache Table 2.1 Sub questions and data collection

Table 6.1Categories of process improvement

Work-flow diagrams

Work-flow 5.1Vehicle failure process Work-flow 5.2Vehicle malfunction process Work-flow 5.3 Parts ordering process Work-flow 5.4 Recall and RRT process Work-flow 5.5 Rental vehicle process Work-flow 5.6 Towing process

Work-flow 5.7 Warranty claim process

List of Abbreviations and Glossary

ADAC - Allgemeiner Deutscher Automobil-Club (German road assistance)

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BPM - Business Process Mapping

CSI - Customer Satisfaction Index

COMPANY ABC - Company ABC Corporation

ERM - Exchange Relation Manager

Dealer Connect - IT system for warranty claims input

Domestic delivery - U.S. military vehicle bought in Europe and delivered in U.S.

ENCS - Exchange New Car Sales

KBA - Kraftfahrt Bundesamt (German inspection service)

KPI - Key Performance indicator

Local delivery - U.S. military vehicle bought in Europe and delivered in Europe

LOP - Labour Operation Number (code for a specific labour action) MPC - Market Performance Center (a national sales organization)

MCS - Military Car Sales

OEM - Original Equipment Manufacturer

OMSO - Overseas Military Sales Organization

OPP - Owners Protection Plan (COMPANY DEF service contract)

RRT - Rapid Response Transmission

U.S. Military Vehicle - Company ABC Group vehicle operated by a U.S. military person for private use.

VAT - Value Added Tax

VIN - Vehicle Identification Number

VOR - Vehicle of Road Time

WEU/S - Western European Services and Parts Department

Chapter 1 Introduction and research problem

This research was conducted for the Western European Services and Parts department (WEU/S) of Company ABC located in Stuttgart Germany. The WEU/S department supports the European National Company ABC Group market organizations, Company ABC, Dodge and Jeep brands in the field of

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Service and Parts, with an emphasis on after sales. After sales support of U.S. military (Army, Air force and Navy) customers that privately drive Company ABC Group vehicles, and are stationed in Europe are part of the responsibilities of the WEU/S. This research addresses the after sales processes for the U.S. military customers with the purpose of improving the U.S. Military market.

This chapter explains the central motivators that drive the research. The initial identification of the problem leads to a definitive statement, supported by a real-life example from Italy. Using this example, the consequences of not resolving a current suite of circumstances in the U.S. Military market and all parties affected is explored.

The second part of this chapter focuses on the project itself, including the deliverables and the central and sub-questions identified in this research.

Figure 1.1: Research Focus Chapter one

1.1 Research opportunity

In August 2006, the new Market Manager responsible for France, Germany, Italy and the Overseas Military Sales Corporation (COMPANY DEF) took control of his markets. After a few months, he felt operations in France, Germany and Italy were under control, but he believed this not to be the case for

COMPANY DEF. He had very little information about the military market, virtually no

documentation, and no transparency concerning the most important after sales processes for this specific group were evident. Communication with COMPANY DEF was scarce and difficult. The Market Manager experienced several situations where he felt the after sales service was not optimal for U.S. military customers, COMPANY DEF and Company ABC. This perceived sub-optimization is best illustrated using an example from the Sigonella Military base in Sicily, Italy. The Sigonella Military base was chosen because it typifies the circumstances after sales for the U.S. military. This example, amongst others, led the WEU/S department to believe that there were opportunities for improvement within the after sales services to U.S. military customers.

Sigonella example

Most U.S. Military Company ABC customers used a small independent garage close to the Sigonella Military base to service their vehicles. This independent one-man-garage had been established for over 15 years, and the community was well familiar with the owner. He was more expensive but took out more time, and had a lower thorough-put than the official CJD service provider, who had been in business for just a few years.

The local COMPANY DEF sales person located on the Sigonella base did not know an official CJD service garage was located near the base and in his working area. Consequently, he did not engaged in any marketing efforts to promote the official Company ABC service garage to the U.S. military customers. Furthermore, unlike the independent garage, the official service garage did not possess adequate knowledge over the U.S. military customers. Due to the special culture of the U.S. military customer base, the official dealer could use the support of the COMPANY DEF sales person to better understand and serve the market.

Initially, the official service garage was not pro-active in changing this situation. However, the garage had the capacity, ability and ambition to take on more U.S. military customers. The director of the dealership informed the market manager of WEU/S of their intentions to better serve the area during a visit to the CJD service provider.

The following statements can be made using the Sigonella base example.

The after sales opportunities for the U.S. military customer had not been explored largely due to a lack of communication, transparency between parties and involvement in the U.S. military value chain. These issues had the following consequences:

• Money was leaving the COMPANY ABC value chain through the independent service

Research

Methods Framework Analysis mapping Process

Problem statement

Locating

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• Customers had to wait longer for repairs than was necessary due to an environment where

it is difficult to assess and control customer treatment. It is likely this would have a negative impact on customer satisfaction, which a main focus points of the WEU/S department.

• An official Company ABC service provider (with all its advantages) had not been

exploiting the market capacity and capabilities to the fullest.

• Another result of the circumstances was warranty waste. Repair claims from an

independent garage are usually more expensive. This is because a small independent business does not use the COMPANY ABC standard repair rate, usually have less experience and subsequently take more time for repairs or service.

Based on this and similar examples, WEU/S felt it was justified to analyze, document and explore opportunities to improve the after sales processes of U.S. military vehicle customers. The WEU/S department could contribute to its own and Company ABC goals to attain sustainable profitable growth and, where possible, intensify and improve their relationship with the U.S. military customer base as well.

1.2 Problem identification

This section provides the rationale put forth by the WEU/S department as core to the current undesirable situation.

There are four main reasons for this research:

1. In general, suboptimal Company ABC financial results have a negative influence on the WEU/S budget. This creates a situation where additional activities must be completed with

fewer resources. (see §1.2.1)

2. The volume of U.S. military personnel and delivered vehicles in Europe is slowly, but

steadily decreasing. (see §1.2.2)

3. Communication between the different relevant parties involved in the U.S. military

vehicle after sales processes is suboptimal. (see §1.2.3)

4. There is not enough transparency in current after sales processes involving U.S. military

vehicles. (see §1.2.4)

These drivers are described here in more detail, because they are seen as the main support for this research, but they also provide insight and information about the environment in which the selected after sales processes take place.

1.2.1 Decreased budget and increased targets

For Company ABC as a whole, 2006 was a record breaking year. Almost every division of the Company ABC organization showed excellent figures, contributing to record sales and revenues. Unfortunately, this was not the case for the Company ABC division of Company ABC AG. With losses adding up to €1.2 billion, business is not “hosanna” everywhere in the Company ABC

Corporation. Amongst others, high oil prizes and ecological concerns of the consumers had a negative effect on the company’s results. Also, overproduction caused excessive unsold vehicle stocks. As a result, prices had to drop while at the same time, costs for maintenance of an unsold care park were incurred.

The WEU/S department is affected by budget reductions in combination with higher targets.

Therefore, more demands were placed on the department with fewer resources to fulfill the necessary departmental functions. This can best be clarified using an example tied to the targets (mentioned in §2.2.3) set for the WEU/S. department and subsequently affecting U.S. military after sales.

Additional activities with fewer resources for the WEU/S department

A successful service training rating is an important target for WEU/S, but it is also a high cost post for Company ABC. Training people costs time and therefore money. Due to recent negative results,

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budgets for service training were reduced to save money. This meant that either a reduction in training time was necessary or fewer people could take part in training.

Success rate for the First Fixed Visit (FFV) is another important goal for WEU/S. Company ABC management has set higher targets for the FFV metric and the increase in the FFV rate is targeted for two main reasons. First, to cut down on costs associated with unnecessary second time repairs. Second, a customer will be more satisfied if the vehicle is fixed the first time.

This should increase the Customer Satisfaction Index (CSI), another important target for WEU/S. Reducing training time or sending fewer people to training will cut costs, but it will not contribute to creating a more skilled crew. The same crew is responsible for the target increase in CSI and FFV therefore, the consequence will be that the two goals for higher targets (FFV and CSI rate must go up) with fewer resources (training time or people trained down) do not reinforce each other.

This creates a situation in which WEU/S feels it is justified to look at the processes contributing to both the internal WEU/S and Company ABC goals in creating a sustainable growth position, and to look for opportunities to improve the after sales processes.

1.2.2 Declining number of soldiers and reduced vehicles volumes in Europe

The U.S. military vehicle volumes for Europe are important because a vehicle can be purchased in Europe and delivered in either Europe (a so-called local delivery) or in the U.S. (a domestic delivery). When looking at the number of deliveries of U.S. military vehicles in Europe, a slowly decreasing trend can be discerned. The reason for this decrease in deliveries is that there are simply fewer U.S. military troops stationed in Europe than in the past. Due to security reasons, exact numbers are not available. However, U.S. military bases in Europe are closing and a move toward fewer, bigger bases is observed. This trend has an effect on other brands that sell to the U.S. military, like Ford and GM, as well. This is partly the reason General Motors no longer takes part in the U.S. military car sales business through COMPANY DEF. Normally a vehicle sold in a country or MPC contributes to the after sales market potential. Clearly, sales volumes are important, because there can be no after sales without a sale first. The market for the U.S. military is described in more detail in chapter three.

1.2.3 Suboptimal communication

Normally, WEU/S support is focused on national Market Performance Centers (MPC), which sell and service far greater volumes of cars. However, this is not so for U.S. military sales and after sales support, which is multi-national by nature. Most MPC’s provide a much higher turnover than the U.S. military vehicle after sales market in Europe. The U.S. Military after sales processes are considered small in volume and revenue compared to MPC’s and other countries and there is no evidence of any previous initiative to look at the issues surrounding this observation. The focus used to be placed exclusively on the bigger markets that the WEU/S manager was obligated to support. As a

consequence, in the last few years, contact between the COMPANY ABC manager responsible for the U.S. military after sales market and their main contacts at COMPANY DEF GmbH gradually became more strained and less frequent. After a former responsible manager relocated from Kronberg, Germany to Auburn Hills in the U.S. some 20 years ago, there was virtually no face-to-face contact between COMPANY ABC and COMPANY DEF GmbH. In 2006, when the WEU/S department moved to Stuttgart, the new manager responsible for the U.S. military found himself with the legacy of his predecessors. During initial interviews at COMPANY DEF and COMPANY ABC, respondents from both parties indicated that communication had become a time-consuming process causing growing irritation at both sides.

Confronted with this situation, the market manager of WEU/S felt a need to analyze the current U.S. after sales processes and improve it. Communication was consuming far more time than anticipated and caused the fourth main driver behind this research, the lack of transparency in the current after sales processes.

1.2.4 Lack of transparency of current after sales processes

Whereas information about countries, distributors or MPC’s is available through internal as well as external documents, information about the U.S. military vehicle after sales service processes was not

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abundant when this research was initiated. The WEU/S manager was provided no internal documents describing the existing processes and their functionality or past developments. Consequently, the manager was in a position of not knowing what was expected of him from COMPANY DEF GmbH and he was confronted with a situation where it was not clear how the U.S. Military after sales was performing.

When WEU/S support was needed for U.S. military after sales, most contact was by email. The situation was not formally addressed and ad hoc communication created somewhat of a vicious circle. Therefore, due to a lack of transparency and responsibility, each time a new WEU/S manager would be appointed for the U.S. military, the same communication and expectancy problems would occur, with a resulting loss of knowledge.

This is not to say, however, that the U.S. military was totally ignored. A few years ago, an external audit evaluated the dollar amount of warranty claims that were submitted by COMPANY DEF and reimbursed by COMPANY ABC. The conclusion was positive in that the difference in dollar amount was virtually zero. However, this audit did not include the processes themselves.

1.3 Problem diagnosis

A problem exists when there is a discrepancy between a current situation and desired outcome (De Leeuw 1997). Three different problems can be identified: perception-, goal- and reality problems. Perception problems can be solved by changing the perception (in the view of the researcher) of the problem owner. Goal problems occur when unrealistic and unachievable targets are set. These

problems can only be resolved by refining the problem. Reality problems are those where the solution does not lie in changing the targets or the perception of the problem owner, but in changing reality itself (De Leeuw 1997:217).

The problem faced by the WEU/S department and the manager responsible for the U.S. military after sales is one of reality. The challenge to meet the increased targets in a slowly decreasing market gave rise to this research by assessing the current after sales processes of the U.S. military. There is a level of uncertainty in how these processes are currently carried out and if they are conducted efficiently. This leads to uncertainty in determining if these military after sales processes are able to achieve the challenging targets set forth by senior WEU/S department management.

1.4 Management question

Based on the diagnosis and the drivers, this section presents research goals, methodology and relevant questions. Based on the main drivers presented in the preceding paragraph, the following diagnostic goals or basic management questions were set up by the WEU/S department.

To provide a judgment on selected after sales processes for U.S. military (CG) vehicle owners stationed in Germany and to identify opportunities for improvement.

This implies that this research provides the WEU/S department with the following:

• A description of how the selected current after sales processes for U.S. military work and

which parties are involved;

• An analysis of the selected current after sales processes;

• An explanation of the opportunities for selected current after sales processes; • Suggestions how to implement the opportunities for current after sales processes.

The effect of answering the management question is twofoldand is illustrated Figure 1.2.

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Figure 1.2: WEU/S management question

The first and primary goal of this research is to look for improvement opportunities in the U.S.

military after sales process. Before this primary goal can be addressed, the roles of relevant parties and processes must be clearly established. By looking at the after sales processes in a systematic way, a framework can be built to solve communication and information problems that the WEU/S manager identified. Furthermore, this work should provide a basis for further research and due to its integrative nature, it will function as an COMPANY DEF information source for current and future WEU/S managers.

1.5 Main research question and sub questions

1.5.1 Research question

The previous paragraphs explained the main objective of this research. The central question following this main objective considers what knowledge is required to achieve the objectives (Verschuren 1986:65) and is formulated as followed:

Which opportunities can be identified for selected after sales processes for U.S. military Company ABC group vehicle owners in Germany and how can they best be

implemented? 1.5.2 Sub questions

The purpose of each sub question is to answer the main question by providing structure via different steps (Verschuren 1986: 65).

This research is structured from the following sub questions:

1. What does the U.S. Military market look like and who are the relevant entities

involved in the after sales processes in Germany for U.S. Military Company ABC customers?

2. How can the selected after sales processes for U.S. military Company ABC vehicle customers be described?

3. Which improvement opportunities can be identified for the selected after sales processes for U.S. military in Germany

To increase the readability of this research, the selected after sales processes and the relevant entities will be provided here. They will be discussed later in this thesis.

The following after sales processes were selected for analysis; Accessories sales-, Parts ordering-, Recall&RRT-, Rental vehicle-, Towing-, and the Warranty Claim process. Further information about these processes is provided from chapter six on.

The following relevant entities were found; The WEU/S department, the Overseas Military Sales Company (COMPANY DEF) GmbH, the U.S. military customer, the independent sales people, the official Company ABC, Jeep, Dodge dealer, the independent service garages, the market performance centers and the specialized towing companies. Further information can be found from chapter three on.

Identify improvement opportunities for U.S. military after sales

processes

Filling the information gap on the U.S. military after sales processes and improving communication

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1.6 Research framework

Answering the sub questions together serves to provide an answer to the main question. In this case the Diagnose Design and Change model is used (De Leeuw 1996).

Figure 1.3: Research framework

Definition and understanding

of the after sales processes

Current situation for selected

after sales processes for

U.S. military

Problem statement

Process mapping of the after

sales processes

Identification and analysis of

improvement opportunities

Selection and categorization

of opportunities

Suggestions for improvement

Change

Research question and sub questions

Theoretical

framework

Methodology

Diagnose

Design

Introduction

Conclusion

Implementation

Research Boundary Time

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1.7 Research focus: Setting boundaries

1.7.1 The research process boundary

The research framework from section 1.7 provided a research boundary. This section delimits further structure and focus by explaining what is and is not included, with support for the choices.

The focus of this research is illustrated in table 1.1. Rummler and Bache (1995) present a model that consists of nine process performance variables. This model combines three levels of performance with three levels of performance needs. The criteria necessary to enhance performance are represented by specific goals, design and management needs. The levels of performance include the organization, process and job level.

Table 1.1: The nine performance variables (Rummler and Bache)

Table 1 provides a set of improvement levels that can be used by managers at any level. The model also demonstrates that every level and performance need influence one another. The implications of this model for this research are that the model provides a framework for the level of focus on the after sales processes. Furthermore, it guides the most appropriate techniques to analyze the after sales processes; different methods are better suited for the various levels of analysis. These techniques will be defined and discussed in chapter four.

In the Rummler and Bach model, there are three levels at which these processes can be analyzed: organization, process and job. It is, however, impossible to look at all nine variables so a specific direction is needed. This line of research works at the process level, meaning the processes will be described and analyzed in order to reveal opportunities. Within the process level, the focus will be on process design. Because the Rummler and Bache model is quite general, modifications of the model have been made to best suit this study. The level of aggregation is the level of detail employed in a given study. The lesser details, the higher the aggregation level (De Leeuw 1996).

Figure 1.4 Research focus for this research

Job

Design

Organization

Goals

Organization

Design

Organization

Management

Job

Goals

Process

Design

Job

Management

Goals

Design

Management

Organization Level Process Level

Job Level

Three

Levels of

Performanc

e

The Three Performance Needs

Process

Goals

Process

Management

After sales Organization

(Structures)

After sales

services offering U.S. Military Customer

Processes

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1.7.2 The U.S. military after sales market-boundary

It is impossible to research all U.S. military personnel across Europe. U.S. military customers include Air Force, Navy and Army personnel and are considered a homogenous group with similar norms and values. This generalization is made to keep the scope of the research under control and achievable within the time frame given by the WEU/S department. Furthermore, the U.S. military bases and personnel are scattered across Europe; it would be impossible to survey them all due to cost and time restrictions.

The fact that the bases are scattered across Europe introduces the second set of boundaries.

One of the transparency issues inherent in the WEU/S organization is that it had little insight into the number and location of U.S. military customer vehicles in Europe, a required prerequisite for after sales support. Therefore, this gap had to be closed.

To fill this gap, information was gathered throughout Company ABC and COMPANY DEF GmbH. Mapping of the U.S. Military market was important for two reasons.

1. Since U.S. army bases and Company ABC Group garages that service military customers are

located throughout Europe, it is impossible to look at all countries individually. This would be too time consuming and far too expensive. Therefore, the market volume per country serves as a selection criterion on where to lay the foundation of this research.

2. By mapping the U.S. military market, WEU/S subsequently gains insight into where it should

put its efforts to capitalize on the provided opportunities. It does not make sense to put time and money in a country that has, for example, only four U.S. military vehicles sold per year. The U.S. Military market and a description of the difficulties in assessing the market will be mapped and quantified in chapter 3: Setting the scene.

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Chapter 2 Methods

This chapter presents the main methodological considerations in this research. The purpose of the following section is to present the approach and provide explanations for the methodological design and data selection.

Figure 2.1: Chapter focus

• First, the research approach is presented (§2.1), the research methods are discussed (§2.1.1)

and applied to the research sub questions (§2.1.2).

• Second, the validity and reliability of the results will be discussed (§2.2)

2.1 Research approach

Practical research can be broken down into two main variants (De Leeuw 1996): 1. Problem solving research

2. Policy supporting research

This research can primarily be viewed as policy supporting research, which is described by De Leeuw (1996) as ”Research of which the results increase the rationality of the policy process in terms of effectiveness, efficiency and role of the actors”. Extrapolated to this study, it means to find improvement opportunities in the U.S. military after sales processes. The results of this research should be opportunities that contribute to the improvement of the current after sales processes for U.S. military.

Another point of policy supporting research is that it only provides a part of the total contribution of knowledge. In this case, it means that only the selected U.S. military after sales processes are addressed in Germany, which holds the largest European military market. The expectation is that an assessment and possible improvement can contribute in a positive way to the goals of the WEU/S manager responsible for the U.S. military and subsequently to the WEU/S department.

An important issue in policy supporting research is that the rational policy can be misinterpreted. A rational policy is based on normative views and insights concerning facts and causal connections. However, such insights can be wrong, (De Leeuw 1996:376). Thus, the selected after sales processes were analyzed with the overall aim to improve the outcome.

2.1.1 Data collection

Quantitative and qualitative research is based on sources of data. According to De Leeuw (1996: 97-103) there are six different sources of available data:

1. Documents

2. Databases

3. Imitated reality

4. Reality

5. Media

6. Experiences of the researcher

It is possible to divide the data collection for this research into two categories or phases. In the first category, generic knowledge about the working environment and some themes related to the research topic were gathered, while in the second, a more focused approach to the problem statement was taken.

Research

Methods Framework Analysis mapping Process Problem

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In the first phase, qualitative information was collected by through informal discussions with various employees of COMPANY DEF GmbH and Company ABC. This was conducted to target the most interesting processes for analysis, but also to detect the right people to elicit for further discussion. Knowledge about the U.S. military is scattered throughout Company ABC (COMPANY DEF GmbH is a small organization) and trying to locate suitable participants required effort. Through discussion in the initial phase, identifying participants suitable for the interview process was more selective.

Throughout the investigations, access was allowed to the Company ABC resources, internal databases and the intranet. Furthermore, the possibility to contact key people at short notice was granted. These initial information sources provided valuable information for setting the scope and boundaries for this research (See also 1.7).

In the second phase, the purpose was more specifically aimed at obtaining detailed information to specify the scope and achieve the target of the study. In this phase, and after careful considerations, the decision was made to look into possible opportunities in the after sales processes for the U.S. military from a “Trigger” point of view. The WEU/S department only has structural contact with COMPANY

DEF GmbH and only in cases of breakdown or other events that are in some way triggered and require

action. This approach was also chosen based on first phase COMPANY DEF GmbH information when the contact drivers between COMPANY DEF GmbH and COMPANY ABC were requested.

Overall, the information and insights were gained through primary data, which were in the form of interviews. Interviews were held to obtain an in-depth view of the knowledge transfer process and also allow study participants to express their views and provide comments that could not be obtained from other sources.

When conducting interviews, two types of interview strategies were used:

• Open ended interview style • Focused interview style

According to Yin (1994), open-ended interviews allow the researcher to ask for key factors as well as opinions about events. Therefore, the open-ended interview strategy was employed in the first phase of informal conversations and interviews, as mentioned earlier in this section.

Focused style interviews can still be somewhat open ended, but the interviewer usually adheres to a specific set of questions (Yin 1994). This interview strategy was used in the second phase of the research, to focus on areas of possible opportunities and information gathering, and second to place the results in relationship to the theoretical considerations.

Interviewees

The study participants were selected based on their personal positions and insights regarding the after sales processes for Company ABC related to the U.S. military market in general. Most of these people were identified through informal interviews.(see references for an interview list)

Following the informal interviews, visits were made to COMPANY DEF GmbH, U.S. military sales locations and COMPANY ABC dealers throughout Germany to gather information and to speak with relevant actors.

The interviews were held until a reliable depiction of the potential opportunities was made. This was determined when the same topics and initial opportunities surfaced frequently during the interviews. Usually discussion summaries were sent to the respondents for approval. This ensured the respondents had been correctly understood and also increased the accuracy of the results. Sometimes, it also gave rise to additional comments and information. When necessary, follow-up interviews were held to clarify issues or gather additional information.

2.1.2 Data collection and sub questions

In this paragraph, different sources of data are applied to the different sub questions delimited in chapter one. An advantage of dividing the research into different sub questions is that the research is guided toward diverse aspects, inherent in a knowledge problem. Sub questions are a very useful tool for the collection of material (Verschuren 1986: 65).

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The following table clarifies which methods and data sources were used to answer each sub question and phase of this research. It provides a general view, which will be described in more detail in the remainder of this section.

Table 2.1: Sub questions and data collection

Not provided in the above figure, but contributing to the framework and basis for this research is the problem and background. The methods and sources for the initial problem statement and verification were already provided in chapter one and are therefore not stated in this section.

Sub question 1: What does the U.S. Military market look like, and who are the relevant parties involved in the after sales processes in Germany for U.S. military Company ABC customers?

The second sub question is focused on creating an understanding of who is involved in the processes and in what capacity. Furthermore, the U.S. Military delivered vehicles was quantified to provide direction and subsequently opportunities. Interviews were held with most of the parties to obtain information regarding their roles. These outcomes were supported by internal documents and experiences of the researcher during the interviews.

Sub question 2: How can the selected after sales processes for U.S. military Company ABC vehicle customers be described?

First of all, the most important after sales processes were selected. For making the selection, initial unstructured interviews were held within WEU/S and COMPANY DEF GmbH to create a context and the current application of the processes. The after sales process selection was based on cost and time assessment. This was the criteria adopted by COMPANY DEF GmbH and the WEU/S, the two focus organizations of this research. COMPANY DEF was selected because it is the most important player in the after sales processes for the U.S. Military and remains in contact with almost all other parties involved in the after sales processes. The after sales process selection was supported with internal documents specifying historical developments, where available, for example the historical

development of the amount of warranty claims per year. This was accomplished by looking at the past email contact between COMPANY DEF and WEU/S and by analyzing the contract made between these parties. Where numerical data was not available, further interviews were held to identify the perceived most important processes. Furthermore, initial literature reviews were performed to look at the most important processes typical for the automotive industry.

After the selection, the literature was reviewed on how to best describe and analyze the after sales processes.

Sub question Method Source

1. What does the U.S. Military market

look like and who are the relevant entities involved in the after sales processes in Germany for U.S. Military Company ABC customers?

Desk research Field research

Literature: databases, documents Interviews, observations, experiences of the researcher

2. How can the selected after sales processes for U.S. military Company ABC vehicle customers be described?

Literature on after sales, process mapping, documents, databases, emails Interviews COMPANY DEF and WEU/S, observations, experience of researcher

3. Which improvement opportunities can be identified for the selected after sales processes for U.S. military in Germany

Integration of sub questions Literature: databases, documents Interviews COMPANY DEF and WEU/S, experiences of the researcher, observations.

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Sub question 3: What opportunities can be identified for the selected after sales processes for the U.S. military in Germany?

In order to identify opportunities for improvement, three different sources were employed in the study. Interviews were held with relevant parties asking where they felt opportunities for improvement were present in the current after sales processes. Sales locations on U.S. Bases, Dealers, COMPANY DEF GmbH and WEU/S were contacted and interviews were held with study participants either by phone or during on-site visits. Contacting parties was sometimes difficult due to general safety issues on U.S. Military bases.

Furthermore, literature concerning process mapping was studied. Literature offers different

perspectives of where to look for opportunities, what improvement opportunities are most common and finally the classification of different opportunities.

Finally, experiences of the researcher formed a basis for locating opportunities. After focusing on a subject for months, visiting locations, and doing interviews, knowledge and insight are gained on the topic, which reveals different opportunities not presented in the other two sources of data. An example of this is the observed difference in culture between the Dealers and the U.S. customers.

2.2 Validity and Reliability of findings

Initially, the study focus was on Europe as a whole, but due to time and cost constraints, visits throughout Europe were not an option. Following quantification of the European market, Germany was made the focal point of this study. Germany accounts for over 80% of the European after sales market for the U.S. Military and the results for Germany can be generalized for Europe as a whole. It is possible specific opportunities in other countries were missed, but the trade-off between efforts involved in chasing these opportunities and the gain achieved by capitalization of these opportunities is a negative one. These points were discussed with COMPANY DEF GmbH and WEU/S, and it was agreed that the customer base in Germany would be representative.

In order to answer the problem statement, existing theories were chosen to give structure to the empirical findings, and a deductive approach was taken. This approach might have affected the conclusions, since the theories guided data collection and might not necessarily include all factors. Realizing this, theories were chosen that complemented each other, where ever possible.

With regards to the interviewees (the main source of information in this research). Although it was clarified that all information would be treated confidential and would remain internal, the possibility exists that not all information was uncovered or all interviewees were forthcoming. The reason is that the subject of seeking opportunities in the after sales processes for U.S. Military is a sensitive one due to the nature of U.S. Military bases and the military in general. Furthermore, opportunities could lead to process changes and subsequent changes in the responsibilities of the people involved with these processes.

Additionally, the interpretation of interviews has often been said to be viable for superficiality and bias.(van der Molen et.al) The information is colored firstly by the interviewer himself and secondly by the interviewee. However, this bias can be diminished through the line of questioning and the questions themselves.

When interviews are used as the main source of data, only the people engaged in the process can give a confirmation that a process model corresponds with what happens in reality. Therefore, the process descriptions should be understood by the majority of the people who are engaged in the process. This is important because confirmation from the management only is not enough, as the management may not know all the details of the process. As far as operational manuals are concerned, they can be out of date, and thus they cannot be considered a reliable source of confirmation. (Bilder 2003:9). The process modeling decisions to tackle these problems are found in section 4.4.2.

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Chapter 3 Characteristics of the modeling environment

It is important to know who is involved when describing and analyzing processes, including the responsibilities and professional backgrounds of the research participants (Bilder 2003:9).

Furthermore, the after sales processes for the U.S. military include external actors (customers, parts, suppliers, towing companies, etc.), which makes the processes non autonomous. This means that the order of activities not only depends on the internal logic of the process but also on the external, not always predictable events. As the U.S. military after sales processes are non autonomous, it is

important to understand if the environment in which they operate has a friendly collaborative nature or a less friendly nature. (Bilder 2003:7). Currently, no big picture of the modeling environment exists. From initial interviews it became clear that the processes take place in a relatively collaborative environment, but a lack of insight in stakeholders roles still exists. Clarifying these roles could improve the collaboration in this environment through an increased transparency. A collaborative environment can behave like an autonomous process, i.e., the order of activities performed will follow the internal logic of the process (Bilder 2003:7). This could make the process maps more complete and applicable to a higher percentage of after sales processes.

To gain insight in this modeling environment, the following sections are provided in this chapter to set the scene.

Figure 3.1: Chapter focus

• First, the European U.S. after sales market will be quantified by providing the European U.S.

military delivered vehicles. (§3.1) This was conducted previously and also served as input for the research focus (§1.7.2)

• Second, the relevant parties will be introduced (§3.2) by providing the communication

channels between these parties (§3.2.1) and the roles and responsibilities of these parties (§3.3.2)

• Third, the U.S. military customer itself is introduced to provide insight and background

information (§3.3)

3.1 The U.S. military after sales market in Europe

At this juncture, it is important to identify how the European delivered vehicles market or potential U.S. military after sales market. The efforts that have to be done to capitalize on the improvement opportunities, have to made where the effect is greatest.. In most cases, results can be maximized in the market or potential market based on sales size. Simply put; without vehicles there are no after sales so efforts must be placed where the most vehicles are available.

One of the questions raised was that insufficient knowledge exists as to which countries hold the biggest markets and what the developments within these countries were; This information was not directly accessible within the Company ABC cooperation. The Company ABC sales department was consulted but specific information was lacking, including where the U.S. Military vehicles were delivered in Europe. In order to fill this knowledge gap, information was gathered from various parties within the Company ABC cooperation and COMPANY DEF GmbH.

The WEU/S is dependant on U.S. military vehicles present in Europe for achieving its target in the after sales market. It is important to review the potential in this market, which is not totally dependent on the sales alone, or at least not in a conventional sense, This will be described below. When looking at the potential of U.S. military vehicles than can be serviced (without going into detail if this is done with a service contract, warranty or neither) by Company ABC, it is important to asses the number of

CDJ vehicles at U.S. bases, the reasons of which were mentioned in the first paragraph of this section

Looking at the potential CDJ vehicles at U.S. bases, there are basically two options Research

Methods _FrameworkAnalysis mapping Process Problem

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1. The first option is that a U.S. military person brings his or her CDJ vehicle from the U.S. to

Europe. The car could be sold in the U.S. but still provides a source for after sales, if the vehicle is left at a U.S. military base in Europe.

2. The second option is that an authorized U.S. military customer buys a CDJ vehicle through COMPANY DEF and has is delivered in Europe, for personal use there.

Trying to assess this potential after sales market near a U.S. base is a difficult process. The amount of cars provided by the first option is classified information due to security reasons. There is always certain logic (bigger base, and subsequently more vehicles), but it is still very difficult to estimate how many CDJ vehicles exist on U.S. Military bases due security issues and the sheer size of U.S. bases. The second option however, does provide some insight on the number of cars present at a base. When an authorized U.S. military customer buys a car, he or she can have it either delivered in Europe, this is done in about 30% of the cases or delivered in the U.S. and this occurs in about 70% of the cases. The result of this second option is summarized in Map 4.1. Incidental U.S. military vehicles that were delivered are not considered, because of the small quantity. This list represents the countries were U.S. Military vehicles were delivered over the last three years.

Map 3.1 Delivered Company ABC vehicles in Europe for 2004, 2005 and 2006

In assessing the European market, the quantitative information gleaned from the second option was supported by the interviews and used to estimate the vehicles via the first option. During the interviews with sales people and Exchange Relation Managers on different bases, most people interviewed expected the amount of vehicles provided by the second option to be nearly equal to the European delivered cars. However, as mentioned earlier, a quantitative analysis is not feasible due to security reasons. But based on the available information and the experience of the sales people, the numbers of total CDJ vehicles located per country should be double the size indicated in the figure. Now that a U.S. Military market assessment has been conducted, what does this means for this research? Mapping the delivered vehicles and the interview information had an important impact on the scope of this work (1.7). Map 3.1 reveals that Germany accounts for 80% of the European U.S military delivered vehicles. And is therefore by far the biggest market in Europe. This information was new to the WEU/S department and provides important direction for efforts in and outside the scope of this research. The geographic area delimited by this work was narrowed from all of Europe to

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Demarcation

• Normally, a customer purchases a vehicle from a dealer close to where the buyer resides.

However, in the case of the U.S. military, personnel must be ready for action twenty four hours a day and could subsequently be re-located on a day’s notice. Typically, the relocation is to a classified site. This means that a vehicle could be relocated to the same classified location, might remain at the same location or shipped to the U.S. It is impossible to track all these changes but this research found the U.S. military after sales market changes and that the transparency of these changes is low.

• Not all vehicles have to be serviced as often as others. The following paragraph will provide a

short introduction to the main drivers for service and repairs. Furthermore, WEU/S indicated that repairs and service have to be done with the official Company ABC dealer were possible, thus keeping the customer in the Company ABC value chain.

3.2 Entities involved with U.S. Military after sales

This section provides some insight into the relations between the most important entities involved in the after sales processes for the U.S. military, known as the modeling environment. Based on internal

WEU/S interviews the following most important stakeholders were identified and selected; Company

ABC represented by the WEU/S department, the OMSO group, represented by COMPANY DEF GmbH, the U.S. military customer, the independent sales people, the official Company ABC, Jeep, Dodge dealer or/and service provider, the independent service garages, specialized towing companies and the Market performance centers.

First, section §3.2.1 will describe the interactions between these stakeholders.

Second, section §3.2.2 will describe the process roles and responsibilities of these stakeholders

3.2.1 Current relationships between the stakeholders

Figure 3.2: Relations between the relevant entities

Market Performance Center Official Company ABC, Jeep, Dodge dealer/service Specialized towing company Independent European sales agents U.S military vehicle customer C,D,J Independent Garage, Service point OMSO GROUP (COMPANY DEF GmbH Kronberg) 4 1 2 9 7 5 10 8 11 6 COMPANY ABCCompany ABC WEU/S Market

Focus

12 3 13

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1. Normally, dealer contact goes through the MPC’s to the WEU/S department. It is unrealistic

for WEU/S to stay in contact with all the dealers in Europe, therefore the MPC’s play an important role. Contact is based on cases where the MPC’s do not know answers to specific U.S military issues or questions requested by dealers and WEU/S is approached for their expertise.

2. Contact is mainly driven by warranty claims. (About 20 per month). This is only in cases

when these claims are ‘’bounced’’ by the claim system or claims above a certain set dollar amount. So contact is ‘’triggered’’ by problems or questions that arise either through

exceptions, or cost. There is also some contact between the WEU/S and the COMPANY DEF management concerning strategic issues. Most of these issues concern U.S. bases that are being established or disabled and the affects these changes have on Company ABC support in the area.

3. The European sales agents work for and are paid by COMPANY DEF, which is the base for

their relationship. They have contact with COMPANY DEF when a vehicle is financed, sold, delivered, and when U.S. military customers have questions that the sales people can not answer.

4. The U.S. military vehicles are sold to customer’s through the independent sales people located

on U.S. bases. Sales complete financial arrangements (almost al vehicles are paid through loans) for customers and keep in contact with customers until the vehicle is delivered. Incidentally, they also serve to answer customer questions.

5. If Military customers have questions, they can contact COMPANY DEF customer service for

information. Furthermore, COMPANY DEF cares for vehicles in case of recalls, damage during transport, etc. COMPANY DEF provides service and assistance to customers or refers them to the right channels for assistance.

6. When a vehicle breaks down, it may need to be towed for service or repair. In this case, either

the customer contacts the COMPANY DEF (during office hours) or the towing company directly to provide the towing service. Contact is only available when picking up the vehicle and delivering it for service.

7. If a U.S. military vehicle needs service, repairs or other services may go to an independent

garage or service provider. This happens in about 20% of all cases and in cases where an official dealership is not available or acceptable.

8. In the other 80% of the cases, the customer will go to an official dealer for service or repairs.

The work that is completed at either the independent or the official garages is essentially the same. However, the official CDJ garages are preferred.

9. When a vehicle is repaired through an independent service provider, certain authorization

forms (see appendix V) are required in order to proceed with the repair or service. COMPANY

DEF will send and verify these authorizations, and service will be granted but according to set

criteria and price limitations.

10. When a vehicle is towed to either an official dealer or an independent dealer, COMPANY DEF

will usually approve (via the authorization form) and pay the initial if the service falls under warranty or a service contract. Afterwards, COMPANY DEF will submit requests through the IT systems to divide the costs, which are set on well-defined criteria.

11. Dealers have direct contact with COMPANY DEF concerning repairs, particularly when it

falls under the service contract of COMPANY DEF and sometimes for obtaining parts through

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12. The MPC is the responsible party for maintaining warranty budgets and other financial

commitments. Therefore, MPC checks the warranty claims requested by dealers. Furthermore,

MPC implements new ideas generated by COMPANY ABC international and are available to

assist dealers with questions or issues that arise.

13. The MPC processes al warranty claims that COMPANY DEF processes through the system.

There is also some routine communication concerning questions and rules for claims processing.

3.2.2 Roles and responsibilities of the stakeholders

In order to provide an overview of the after sales services for U.S. Military customers, a general service process picture is provided.(De Vries et. al 2001:314) This service map depicts entity involvement, roles and responsibilities in the process. In this map the initial sales components employed by the independent sales agents is included because the steps taken in the initial sales influences the after sales process. It also provides more insight in the whole process and context of serving the U.S. military customer.

Figure 3.3: General structure of a service map

Area 1

In Area 1, there is direct contact between the customer and the parties providing services for the Company ABC U.S. military customer all occurring at the operational level. This level includes the sale of the car (through independent sales people and occasionally through the internet) and the after sales entities that have direct customer contact.

Independent sales people

The independent sales people are usually the first person with whom a potential customer comes in contact with Company ABC. For the European market, these independent sales people are recruited by and work for COMPANY DEF GmbH and are paid by COMPANY DEF Ltd. Independent means that they are under contract with COMPANY DEF but have a certain amount of latitude in their work, but within set limitations mandated by the COMPANY DEF group. The sales people are paid on a commission basis for each vehicle or motor sold from Company ABC, Ford, Harley Davidson and Buell.

Their office locations are generally on U.S. army bases. The OMSO group has a license from AAFES which allows them to operate on these U.S. bases. This is an advantage over ‘European made’ vehicles because AAFES only allows USA manufactured vehicles to be sold on the base.

The number of sales people on each Military base is dependent on the volume of past sales and possible future developments, and the geographic distance between locations, among many other

Area of external Interaction (1)

Supportive staff/Back Office

Top Management Organizational structure of a Service - Company Contact personnel Top Management

Customer Sequence of activities which the customer goes through

Line between front and back office

Area of internal Interaction (2)

Area of decisions and Implementations (3)

Building After Sales Excellence

Building After Sales

Excellence

Analyzing and Improving After sales to

U.S. Military Customers of Company

ABC Group in Germany

Building After Sales Excellence

Analyzing and Improving After sales to U.S. Military

Customers of Company ABC Group in Germany

University of Groningen

Faculty Management and Organisation

Business Development

Financial Value Management

The author is responsible for the content of this thesis . All rights regarding this

thesis are reserved for the author

Author:

Supervisors RuG:

Supervisor Company ABC:

Company:

Executive summery

Prologue

Table of contents

List of Figures, Maps, Tables and Work-flow diagrams

List of Abbreviations and Glossary

Chapter 1 Introduction and research problem

1.1 Research opportunity

1.2 Problem identification

1.2.1 Decreased budget and increased targets

1.2.2 Declining number of soldiers and reduced vehicles volumes in Europe

1.2.3 Suboptimal communication

1.2.4 Lack of transparency of current after sales processes

1.3 Problem diagnosis

1.4 Management question

1.5 Main research question and sub questions

1.6 Research framework

Definition and understanding

of the after sales processes

Current situation for selected

after sales processes for

U.S. military

Problem statement

Process mapping of the after

sales processes

Identification and analysis of

improvement opportunities

Selection and categorization

of opportunities

Suggestions for improvement

Change

Research question and sub questions

Theoretical

framework

Methodology

Diagnose

Design

Introduction

Conclusion

Implementation

1.7 Research focus: Setting boundaries

1.7.1 The research process boundary

Job

Design

Organization

Goals

Organization

Design

Organization

Management

Job

Goals

Process

Design

Job

Management

Three

Levels of

Performanc

e

The Three Performance Needs

Process