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    Semi OEMs: Don’t Follow the Money When Building Customer Service Models


    Mike Neunfinger, Senior Director Supply Chain Order Management & Fulfillment, Lumileds

    Leaders in the customer service department of the semiconductor industry will inevitably reach a crossroad when it comes to evaluating or defending the setup of their customer service model. Facing constant pressures for cost reductions while providing the best customer service, many companies choose centralized over regional customer service models. However, a blend of the two may serve customers best in the long run.

    It is not surprising that with intense cost-reduction pressures, most global firms in the semiconductor industry have transitioned to a centralized customer service model. The centralized service model features lower location cost, greater flexibility of workforce and lower training cost. The regional service model provides other advantages including response immediacy and understanding of daily needs that a centralized call center cannot provide. Because customer satisfaction level provides such a strong competitive differentiator, optimization of the model is critical. Every organization should select its model-based factors such as footprint, customer locations, and overall business model.  They must also continually optimize the setup as time goes on. As ingredient suppliers working with OEM partners, we must determine whether the ideal customer service model has a regional or centralized design, or if the ideal model lies at an intersection between the two designs.

    The centralized service model has multiple benefits including lower location cost, greater workforce flexibility, and lower cost of training of personnel. One of the primary advantages to moving to a centralized customer service model is the ability to choose and operate customer service from a primary location.  Some countries are prioritized as a site for a centralized model for their dedication to the finest in customer service.  Indeed, Japan sets the bar extremely high with omotenashi: a spirit of outstanding hospitality. While Japan is not the only country that embodies this sprit, this example of dedication to hospitality can be seen throughout the country’s customer service industry, resulting in an impressive level of service.

    Once the site for customer service has been chosen, it behooves a firm to set up the support services, including IT support, process improvement and documentation, at the same location. This provides for a more streamlined approach when problems arise. And team meetings enable best practice sharing and rapid troubleshooting. In addition, fewer customer service representatives are needed overall in the centralized approach. Contrast this with a regional approach where redundancy is needed. In a regional model, a customer service representative will need a local replacement when taking vacation or sick time off. If only customer service is at a site, middle level managers are needed to guide and support the representatives. The centralized approach minimizes this overhead.

    On the other hand, regional customer service potentially allows a more immediate response to needs. Customers tend to be more comfortable when their service representative speaks the same language, shares a cultural background, and works the same hours they do. Nonetheless, we find that regional proximity is not necessary if relationships are well established and maintained.

    In the end, it is the quality of customer relationships that fuels a company’s business. According to Ruby Newell-Legner’s Understanding Customers,  it takes 12 positive service incidents to make up for one negative incident. The White House Office of Consumer Affairs further informs that a dissatisfied customer will tell nine to 15 people about a negative experience.

    Ultimately, every organization will need to define the customer service model that works best based on their unique footprint, customer locations, and overall business model – there is no one size fits all solution. How have you have dealt with this regional versus central challenge? What has been your experience? Let us know in the comments section below.