Dell Aims High On Customer Service
Anita Devasahayam , 1-Nov-2000

At Dell Computer’s Asia Pacific Customer Centre (APCC) in Malaysia’s silicon island of Penang, lip service is serious business. In techno-speak, lip service translates to the hip term of customer relationship management (CRM). But at the offices of the industry’s most successful direct marketing company, it is certainly more than a buzzword.

Laying the foundation was important to build such a culture and the company did right when it hired its first employee, Tan Aun Gim in 1994. Tan, who is now the director of human resources and administration, told Intelligent Enterprise Asia that each employee is given ownership of their task that effectively creates a tight-knit loyalty.

Backed by 22 years of experience in dealing with people, Tan chose the egalitarian model of administration at the workplace. “The hierarchical style of top-down management is not as effective. By trusting our employees and giving them a part of the company - each employee receives shares from day one - gives them a sense of ownership and responsibility.”

The strategy worked well, even in the most stressed sections of the company such as the call centre or in Dell’s words “customer advocacy” department, where staff is often subjected to gruelling questions and long hours by frustrated customers.

The PC maker that had its beginnings in Silicon Valley, had realised from the onset of its online foray that customer’s priority lies in quality of customer service and speedy online delivery. Providing customers with a unique online shopping experience is the heart of its ‘Net strategy.

Technical Support Director Loh Gim Huat pointed out that the attrition rate at the call centre is low, with only six resignations in the last three years. The call centre, staffed by about 100 people per shift, fields an average of 2000 calls a day.

“We cover 40 countries with each agent spending an average of seven to eight minutes answering queries,” he said, adding that customer queue time was under 45 seconds.

Between 80% and 85% of the phone calls tackled are technology-related. Among the common questions that crop up in a day’s work range from how to use common software applications to how to set up an efficient local area network (LAN).

Loh added that all agents, mainly from the engineering background, undergo a four-week intensive course in soft skills, software and network systems management before fielding phone calls.

“We provide on-going training as our agents move from level one after one or two years to level two where they can seek professional accreditation for their work,” he said.

Agents are encouraged to hold regular open discussions to trash out common problems and track feedback on better ways to handle queries. They share their experience with call centre colleagues located in New Zealand, China and Korea.

Work is made easier as simpler questions from corporate customers from all across the region are screened out at the front-line at the customer’s site, leaving the agents to handle the tougher ones. Fielding phone calls give rise to valuable data on customer preferences and needs.

Loh said that the team is given opportunities to take part in local and regional projects to create value for its CRM network. “It is like an added support group where one person who has gone through a problem can share his solution with the rest.”

He added that the most important variable in the value chain are the “reward and award scheme” incentives offered to employees to spur them ahead. “Everyone is well aware that the customer is number one in that value chain.”

Negative Inventory

While CRM is not widely accepted as the panacea to building online relationships, it is surely making its mark as a tool to improve customer service. The success of the call centre is firmly meshed with its online sales force. Its supply chain management (SCM) strategy is validated by the increasing
number in sales made online.

Today, over 50% of the total customer orders are made over the ‘Net. Online customer support is continually growing with one half of all technical support requests and over 70% of order status enquiries are handled online. Corporate customers make up 60% of the orders.

Dell APCC is the 238,000 sq ft manufacturing facility set by up by Dell to serve the Asia-Pacific region. Since November 1995, Dell has shipped its range of OptiPlex, Precision, Inspiron, Lattitude and PowerEdge line of computer systems, to 13 countries. India was added to the list in August this year.

In anticipation of bigger demand from the direct channel, a feasibility study is being carried out at the APCC to expand its premises. To date, it has shipped over two million units.

Complementing its CRM and SCM initiatives is 100-person strong sales team at Dell APCC who walk the customers through their requirements before pinning down orders. Each configured order is confirmed via telephone and a fax generated serves as a purchase order. Corporate customers can access Premier Pages, customised Web pages designed for regular clients, online via a password. Discounts are given based on volume of purchase.

Dell’s global revenues grew 28% this quarter from the same period a year ago, registering 1.5 times the industry growth rate. Global online sales stood at US$50 million a day compared to US$30 million daily a year ago.
Online sales generated at APCC stands at US$1.8 million daily of 900 units shipped daily from APCC. Orders have grown from under 3% in 1996 to a whopping 53% in Asia alone, said vice-president of Information Technology Ooi-Wong Wai Kin.

He added it was a far cry from the day Dell made its Asian debut on the Web in 1996. “We received four orders and wondered where we went wrong. Within days we worked our pages for the Japan market and received over 250,000 orders on day one which we were unprepared for,” Ooi-Wong recalled, adding that the initial experiments served an important lessons in Dell’s approach in Asia.

Dell’s two major achievements in the quarter ending Jul 28, 2000 was a record return-on-invested capital of 294% as well as a seven-day inventory cycle.

“The supply chain game is all to do with the Internet. Our model is not to pull inventory until we get an actual order and when we download the order and pull the inventory, we execute to the day we deliver. Customising products for a customer it predetermined by how well you execute and manage your supply chain. That’s the name of the game.

“By going direct, we have eliminated the number of steps needed to deliver products to the doorstep. Our products are assembled here and shipped direct,” said Ooi-Wong.

A prime example is monitors, which do not enter Dell’s plant but are shipped directly from suppliers and merged with mother systems by logistics partner before reaching the customer’s doorstep.

He added that a typical manufacturer’s inventory cycle is between 60 and 90 days between the time when the product is ordered and shipped to the customer. The cycle includes the movement of the products stored at the regional warehouse to the local warehouse, then onwards to the dealer before being shipped to the customer.

Ooi-Wong pointed out that through “clicks rather than bricks”, intermediaries in the supply chain are rapidly disappearing and the value of inventory is gaining as companies realise the high cost of maintaining a middle layer.

“We are embarking towards negative inventory that means the product will reach the customers in less than a week. It will leave our doors 24 hours upon confirming the order.”

Most of Dell’s APCC suppliers are within driving distance with 30% of the suppliers including Solectron, Jabil, Quantum and Intel providing 85% of the components needed for assembly.

The next level also includes paperless invoice, customer commerce integration and several e-services initiatives at the front-end. The back-end will include tighter integration with suppliers by trading inventory details for information.

“By sharing inventory details with our suppliers instead of policing them, we believe it creates peer pressure among themselves to deliver faster. A daily forecast accuracy will steer demand based available inventory,” Ooi-Wong said, adding that all partners’ work are audited.

Currently the plant works on a weekly operating plan and is generating a similar plan on a daily basis that is expected to turn inventory into real-time information.

Ooi-Wong said that by converting a fraction of the online revenue “frictionlessly” into the chain, Dell expects to make huge productivity gains owing to less paper movement. “The moment we have this frictionless, we will [then] vouch for the the human touch point of the customer experience provided, he added.