Running Head: Managing Quality: Eccotemp 1

A Study in Managing Quality in the Business Environment: Eccotemp

Xxxxxx Xxxxxxxx

Xxxxxxx Xxxx Xxxxxxx University

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Abstract

The purpose of this paper is to discuss Quality Management in the business environment. More

specifically, a particular experience that the writer had involving a water heater purchased from

an energy efficiency company that specializes in tankless water heaters. In discussing this

experience, the writer will touch on all the critical elements put forth by the course rubric while

suggesting change implementation.

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Company Background and History

Eccotemp is a manufacturer of tankless water heaters and other energy efficient products for home use. They are mainly powered by electricity, liquid petroleum, or natural gas. Eccotemp is located outside of Charleston, in Summerville, South Carolina, and was founded by Mike Elrod in 2004 with the intent of bringing small, affordable tankless water heaters into regular homes that cost about the same as a standard heater. Today, their products can be found in over 2,000 retailers around the world, including the US and Canada, South America, Australia and the Middle East. (Eccotemp, 2015, para. 1-4)

Description of Quality Issue

After owning an Eccotemp tankless water heater, we experienced a design flaw where the internal pipe heater was placed too close to the plastic motherboard housing. In normal conditions the use was minimal enough that it didn’t become an issue, but this winter was particularly hard, and the flaw ended up becoming a fire hazard. Luckily, an error code came up before we had an actual fire. However, upon removing the front cover of the equipment, we discovered the heating element had already melted a corner of the motherboard as well as the housing case that the motherboard resides in, making the quick clips for motherboard removal nearly impossible to use.

Quality Culture

There are seven major elements to an effective quality culture; consistency, usefulness, learning, truthfulness, utilitarianism, respect, and empowerment. (Powell, 2011, para. 4) I cannot speak for all of these in regards to the physical product. It is indeed a highly useful product, but where the company is lacking is in the customer service of some of its managerial staff, (see below) and in its refusal to be even slightly flexible in policies. This rigidity of protocol is quite ineffective when building the customer relationship, consequently damaging valuable word of mouth advertisement. Still, the company maintains a B+ average with the Better Business Bureau. (BBB, 2015, para. 1)

Voice of the Customer

We worked with a customer service representative who was as friendly and helpful as she could be, followed by an extremely unfriendly and unhelpful manager. After a lot of headache-inducing conversation with this manager, they were only willing to inspect the heater if we paid our technician to uninstall the heater and paid to ship it to them. They would then spend one to two days to have the product evaluated by an in-house technician. If they agreed it was a warranty related item, they would repair or replace the product and mail it back to us via ground

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mail- at which time we would have to pay our technician again to re-install the product. This is not acceptable business practice. If, however, they felt that it was not a warranty issue, they would contact us regarding payment of repair and inspection. With all out of pocket expenses added in, the repair job would cost over 155% of a new product. Again, this is not acceptable business practice.

Change Management Proposal

While we as customers definitely felt trivialized and insulted by the company manager, we feel some remedial customer service training would be best suited for the situation. To fix the product itself we strongly and politely suggest separating the heat pipe from the plastic motherboard casing a bit better, and securing it in place better as well. Lastly, for the warranty process, we feel it would be infinitely more effective, not to mention satisfying to customers if the company maintained a database of technicians local to at least the major American metros that would be authorized to come on site, diagnose, and repair without removal or mailing of such a heavy and important product for the home. They could be independent contractors that are paid a “per-use” fee by the company, or the company could align with a national organization that would allow them national technician usage of some sort. Some of Deming’s 14 points for management would apply here; for example, Constantly Improve the System, Institute Training on the Job, and Improve Leadership. (Foster, 2013, pg. 30) These three points would incorporate the changes I have discussed above quite effectively.

Quality Theories

Implementing a registry of localized technicians for servicing would require considerable initial setup and in the long term could potentially cost slightly more than in-house specialist technicians, but would lead to a much shorter repair turnaround time and much more satisfied customers. Retraining rude and insulting managers to be more effective in customer service (as compared to terminating employment) would show the employees that the company cares and wants to see employees do their absolute best; that they’re not only interested in the profit margin. We don’t know the events that led up to our incident with the manager; perhaps he was feeling angry and even resentful at the company and didn’t mean to direct his frustrations at the customer.

Quality Tools and Techniques

As discussed above, training and customer relationship management would benefit some of the management team at this company. In addition, benchmarking would allow the company to network and find dynamic ways to have local technicians make house calls on their equipment. The company could use a Histogram to track when customers reported being dissatisfied with their service experience when interacting with management and call center representatives. That would enable the company to detect trends; whether the unhappy callers all spoke with the same member of management or if there was another unknown factor they shared. In addition, a Check Sheet could be used not only to determine the most frequently reported

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faults, but they could even use a Pareto chart to show the surrounding factors pertaining to the reported faults. (7 Quality Tools, Para. 1-3)

Implementing Change

The registry of localized technicians I discussed above would take considerable time, money and effort to initially set up. Regardless, this would cut their work order turnaround time exponentially and raise customer opinion of the company considerably as well. This would in turn have a strong benefit for word of mouth advertisement. Moving the heating element away from the motherboard slightly would only require a small modification to the design of the product. A brief study into the effects of the change followed by structured implementation of the change would see a considerable drop in maintenance calls, and as a result, more satisfied customers.

Expected Outcomes

While I don’t expect much of anything to happen to the manager, I do hope that the company can at least look into alternatives instead of the customer mailing the heavy (and therefore expensive) product and the customer paying a technician to install and uninstall it as well. Also, a simple modification to the product design as discussed earlier would reduce maintenance calls considerably as well- further saving the bottom line. Flexibility and ability to change and grow is critical for any business that wants to compete in today’s fast paced, digitally connected marketplace.

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Research

American Society for Quality (ASQ) (2012). The 7 Basic Quality Tools for Process Improvement. Retrieved from http://asq.org/learn-about-quality/seven-basic-quality-tools/overview/overview.html

Better Business Bureau. (2015). BBC Business Review for: Eccotemp Systems LLC. http://www.bbb.org/columbia/business-reviews/water-heater-tankless/eccotemp-systems-in-summerville-sc-34013018 (material will be added on final)

Eccotemp. (2015). About Us. Retrieved fromhttp://www.eccotemp.com/about

Foster, S. Thomas. (2013). Managing Quality, Integrating The Supply Chain, 30-33.

Powell, W. (2015). 7 Essentials For A Quality Culture. Retrieved from http://www.theleadershipadvisor.com/blog/2011/08/16/7-essentials-for-a-quality-culture/