Once Again, Dell is Not TPS


Dell: Facing Up To Past Mistakes

I've written about this before and I think this article highlights some of the key differences between Toyota and Dell. Dell's “Direct Model” has often been compared to Toyota and is sometimes called “lean”.

I think that's a mistake. Sure Dell is “lean” in the sense that they avoid most overproduction by building PC's, laptops, and servers on a build-to-order basis (we'll ignore the overall supply chain and non-customized products, like printers). Their factories are great examples of flow, raw material comes in one side, finished product comes out the other, with minimal WIP in between.

But, lean isn't just about reducing waste. The Toyota Production System is also about “respect for people,” meaning your employees, suppliers, and customers. Dell definitely scores higher on “reducing waste” than they do on “respecting people.”

In the article linked above, Dell (the company, not the CEO) admits past mistakes.

For one, this move (now fixed) shows how much contempt they must have toward customers:

Last year, to discourage people from calling at all, Dell removed the toll-free service number from its Web site, a move that Hunter says “falls into the stupid category.” It put the number back a couple of weeks ago.`

This article mainly quotes Dick Hunter, former head of manufacturing, who is now responsible for customer service.

As a factory guy, Hunter is trying to copy the notion of “andon” signals:

“If he has his way, workers in the company's call centers will soon have a colored flag to raise when they run into trouble helping a customer. When the flag goes up, a supervisor will come running to help out. It's an idea Hunter cribbed from Dell's computer factories, where an assembler can raise a similar alarm. “In the factory, if there's a problem, he flicks on a light and the next-level (builder) comes running,” says Hunter. In the call center, “why not do the same?””

Why not do the same? Let's think about this… in a factory, you have a physical product that requires a person to run over to help. With a call center, the thing that needs help is “virtual”, it's a caller who needs help. If that caller is going to be pawned off on someone else who can actually help, couldn't they just transfer the call without someone having to run? Don't they already do this when they transfer you to “Level 2 support”?

So by having the second level person come physically running over, I have to wonder: Is the first tech going to put the caller “on speaker” so the second tech can help at the same time? Is the second tech going to provide any coaching to the first tech so they won't need help in the future? Maybe Dell should just improve their training and reduce turnover, so there's less need for help?

To me, it sounds like Hunter is just blindly copying something that “worked” in the factory. It seems like having a call center full of people running back and forth might not be effective or safe, even.

To give Dell some credit, they are looking at “cross training” the call center techs so they can actually help with more tech issues and avoid the dreaded call transfer that leads to customer delays (or outright disconnections).

Hunter thinks the solution is to treat the call center like a factory. Now, many call center reps are trained to solve only one type of problem — say, a hardware glitch on a Dimension desktop. That explains why it's so common for the agent who answers a call to have to transfer it in search of a techie with the right expertise. Hunter estimates that almost 45% of calls to Dell require at least one transfer. “That's terrible,” he says. “It's like delivering materials to the wrong factory 45% of the time.”

Just as each Dell factory worker is trained to assemble different types of computer models, Hunter plans to train the phone reps in fixing more types of machines. That's supposed to increase the likelihood that the first person who answers a call will be able to help.

So cross-training should help, if Dell is willing to invest in their people, that sounds like a step forward. That's a TPS concept, investing in your people and helping them grow (while doing right for the customer).

I'll end with a few items that just kill me though. Another TPS concept is the “andon board”, a display that shows status of the line or factory and where help is needed. This isn't a revolutionary idea for call centers, this has been standard practice for a while.

Dell will install large monitors to let workers see the number of callers who are on hold. Hunter will have access to each board from his desk so the centers will know, he says, that “Big Brother is watching.”

Wow. I can't believe Hunter said that. For one, if that's the mentality, that you have to be “Big Brother” to make sure your workers are actually working, your company is a mess. The company certainly seems to subscribe to the notion of “Theory X“, that people will goof off and steal their paycheck from you if not watched. Yikes. The purpose of an andon board isn't to be “Big Brother”, it's to identify places where a Team Leader can offer assistance and continuous improvement. Even if Toyota wanted to act like “Big Brother,” they have the political saavy to NOT say things like that to reporters.

Last thing — Dell's customer service and reputation have taken a sharp fall the past few years. I'm sure part of the “root cause” of this is the Wall Street cost mentality.

The bigger question, though, is whether Dell has the stomach for investing in better service. It plans to spend more than $100 million this year on the effort, far more than it spent last year, when its expenses were 9% of sales, compared with 13% for Apple and Hewlett-Packard. Hunter believes his effort will ultimately pay for itself by boosting sales. But in the meantime, as analyst Maxwell points out, “It sure doesn't help Dell make its quarterly numbers.”

So here you have Wall Street telling Dell that it's bad business (in the short term) to provide good customer service. That explains a lot right there.

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  1. curiouscat says

    Good post.

    But we shouldn’t give management a free pass when they cave in to short term thinking. It seems to me we too qiuckly excuse bad managmeent because that particular management failure (short term thinking, disrespect for people…) has been endemic for decades. Frankly those failures should be less tolorable than making new (or less common) mistakes in my opnion.

    Management should know better and has a responsibility to do better.

  2. Rob G from the UK says

    a couple of points

    1) good spot on the reaction of Wall Street to Dell ‘investing’ in service. If only the analysts looked at things longer term and, more importantly, looked at the costs end-to-end from the customer’s point of view, they would see that good service costs less, not more…

    2) Before trying to apply a manufacturing tool (andon) to a service environment, Dick Hunter should take the time to understand what type of demands his customers are placing on the call centre. How many calls are ‘value demands’ and how many are ‘failure demands’? What do these demands tell him about ‘what matters’ to his customers? What is the predictability of each type of call? He could then train his staff to do 1st-time fix with the most common calls at 1st point of contact without the need for a hand-off. He might even be able to provide some robust information to the factory so that they can work on improving quality, stopping the calls coming in in the future. Before he knows it his costs will be falling not rising.

  3. Mark Graban says

    Good point that “better service” shouldn’t have to drive up costs, at least in the long term. Womack and Jones’ book “Lean Solutions” has a great case study showing how Fujitsu used customer services complaints to really drive root cause problem solving and improvement all the way up the supply chain, thus cutting costs in the long-term by solving problems and reducing the need for as much tech support.

    I read about Dell “throwing money” at the problem, by hiring more people. Those are people that Dell can lay off to cut costs later. Is Dell fixing root cause problems? I don’t know the answer, but that’s a good question.

  4. Tracy Esau says

    i dont know why people find problems with dell…. i have been using dell for a long time and im happy with it

  5. […] as a refresher course, here’s my take on why Dell is not a Toyota Production System company. The article I linked to above blames “Lean” for part shortages in the laptop industry, […]

  6. […] proving he doesn’t get it, he mistakenly ties Lean to Dell: Lean manufacturing, while it is prevalent in the auto industry is still just growing elsewhere. […]

  7. […] As an aside, this is a concept that Dell never understood well when I was there. This is just one reason why I don’t consider Dell a true Toyota “Lean” company. […]

  8. […] on Kevin’s post — as I’ve stated here before, “Dell is not TPS.” I would agree with the comments on Kevin’s blog that Dell’s layoffs […]

  9. […] but Dell shifted production overseas in the chase for cheap labor. That’s another reason I don’t like to consider Dell a “lean” company (in the Toyota sense), although they are working on that […]

  10. […] facility for building desktop computers, it really was a marvel. As I’ve written before, it wasn’t “Toyota Production System” lean, but it had great flow and very very low inventory. “Respect for people” was often […]

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