Oh (d)Hell, here we go again…

So, prompt and efficient, Dell Post-Sales Customer Support shipped me the graphics card for my laptop -the one they should have put in while it was still in the factory. It arrived this morning at 11:00am as promised. It was shipped from their factory in Limerick – a city and County I know well. About 20 minutes before the courier arrived I’d had a call from my support team contact in Dell to set up the technician appointment to come out and finish building my laptop.

The sun was shining. My dentist hadn’t come over all Marathon Man on me. I am starting a short holiday with my wife… all was well with the world.

Until I opened the package. To find that it included a graphics card, which I assume is a 256MB card. So far so good…

… it is a card for a Desktop machine not a laptop. It will not fit the computer I have. It is as useful to me as a chocolate fireguard, an ice teapot or a kosher sausage roll. I expect a technician to call me soon to confirm their appointment. I will only be able to confirm my disappointment.

So what information might Dell in Limerick have had available to them to ship the correct thing?

  1. They might have had the asset tag of the laptop, from which the model and configuration details could be determined.
  2. They should have had the model of the laptop
  3. Perhaps they had details of the complaint, including the original order number and my customer number

Any of those items of data would have enabled someone picking the components out of the storage bin to say “We want a graphics card (check) for an Inspiron Laptop (oh… wrong thing)”.

If that information was not available to the people in Limerick, then it is inevitable that a mix up would happen. In this Information Age almost all processes that we run in business or that we encounter in life require complete, consistent, accurate and timely information to run as we expect. At assembly, there was information available that my laptop should have had 256MB video RAM. The quality failure in that instance was that that information was not referred to to make sure that the real world thing that it described met that expectation.

Once the support people understood the problem, a graphics card was dispatched to fix the issue. However, due either to unavailable information (did the request to ship the replacement card specify the model of the card and that it was for a laptop?) inaccurate or inconsistent information (does the pick-list master data show that the desktop card I’ve received is the correct card for my laptop?), or inaccurate interpretation of the information, I wound up with the wrong card – a solution to my problem that does not solve the problem.

This is a significant cost issue for Dell. It has to be. So far, to get my laptop to the specification I actually ordered it, they’ve incurred the cost of an additional graphics card (estimate €100) plus the cost of the courier (estimate €30 for overnight delivery) plus the cost of the support call center person (estimate €10 so far) plus the cost of the technician (estimate €120 based on ex-warranty call out charges) and so far it has cost Dell an additional €260 (my estimate) to perpetuate a screw up. If Dell can ship me the correct graphics card before the technician arrives then their cost will only be around €390.

To put that in perspective… that is 25.2% of the cost of the laptop I purchased so unless Dell are operating at 30% margins on their business (in which case they have some leg room their competitors don’t or their machines are over-priced) they have lost money on my purchase. A fortnight in and already I’m a below-zero customer in terms of my lifetime value to Dell (and that’s before you factor in that I might not buy another Dell given the difficulties I’m having).

Even with the cost of finance over 3 years to me (god bless the never-never finance), Dell are just about breaking even on me as a customer. Based on my estimates of course. And assuming they get it right before the technician arrives to try and fit a square peg (desktop graphics card) in a round hole (laptop). If Dell’s costs for hardware are 50% of retail, they are still looking at around 20% ‘evaporation’ of their margins… that is an unsustainable business overhead that seems to be accepted as the ‘cost of doing business’.

Assuming Dell shipped 1000 laptops last week and 10% of them were mis-assembled and have had similar issues with replacement components, Dell could be burning 100 X €390 = €39,000 a week in avoidable scrap and rework. That equates, in my industry, to around 40 to 45 full-time-equivalent staff in ‘clerical’ roles. The cost of non-quality is easy to measure. That’s a direct cost to the Business that is avoidable. It’s just harder to measure than headcount and not as easy to cut. You can’t fire your data.

The root cause of all of this cost is the quality of information and the quality of the culture in which that information is used… if the metric for assembly teams is how fast something is shipped versus how quickly the right thing is shipped then corners will get cut at 16:45 on a Friday to get that product boxed and out to shipping before the shift ends. If the customer complaint follow ups don’t have sufficient information about the product that is being complained about then screw ups are perpetuated.

Dell are feeling the analysts pinch on the short term numbers (quarter on quarter growth and profits). In my opinion, it is time to bite the bullet and look at the root causes of their information supply chain problems before they cut head count – because who knows what other information ills headcount might be masking. They need to build quality in, both in terms of the product and in terms of their information management. They need to do it now. Cutting headcount will fix the bottom line. For now. Fixing these fundamentals fixes the bottom line for ever – while increasing efficiency and (perhaps) avoiding the need to prune back headcount as aggressively as currently forecast.

The management approaches needed aren’t rocket science and they aren’t an unproven quantity. Neither is the failure of a business because it costs them their profit margin to inspect defects out of a product after it has shipped. Hopefully some Dell manager will happen across this blog post and might put the simple Excel spreadsheet together that shows the true cost to Dell of non-quality information and poor management of information. Perhaps that might prompt some thinking about how best to meet market analyst expectations in a sustainable way.

Failing that, Dell will inevitably enter a head-count reduction death-spiral of managing by the easy numbers which is difficult – if not impossible – to pull out of.