How can you find the balance between cost and customer loyalty during complaint handling processes? In this article, we focus on the complaint handling process at SAPA Group and how they implement the five criteria for successful complaint handling.
I invited Per Kongsbak, Quality Manager at SAPA Precision Tubing, to a talk about how SAPA handles complaints from customers. Headquartered in Oslo, Norway, SAPA is the world leader in aluminium solutions. They are a 50/50 joint venture owned equally by Orkla ASA and Hydro ASA. They have 23,000 employees in more than 40 countries.
I asked Per Kongsbak how they as a big production ensure that these five success criteria are met for every complaint they receive:
- Make sure your customer service reps have the right attitude.
- Understand the problem before trying to solve it.
- Be informal and result-oriented.
- Learn from every complaint.
- Use a common process to handle complaints.
Have the right attitude
Per Kongsbak explained that it is important that SAPA’s complaint handling department has the right attitude and the right understanding to meet customers on equal terms, or “eye to eye”. It is important that any employee who handles complaints knows SAPA’s processes and the types of mistakes and errors that he or she may encounter. Furthermore, a good combination of great communication skills and the approach to production is an important requisite for handling complaints at SAPA. There is no training programme for this but is build based on each employees’ own experience.
Per Kongsbak explains that this approach and the practical experience of each employee is applied when a complaint is received:
Understand the problem before you try to solve it
Per Kongsbak explained that they focus on the typical errors and mistakes that provide the root causes for complaints. SAPA’s products are often used as part of the customer’s own process and the products can, therefore, have been damaged or modified by the customer. It is therefore important to know the circumstances and gain knowledge about the use of the product.
Per Kongsbak emphasises that SAPA, in general, has the responsibility when a complaint is received. When handling a complaint each SAPA employee has to follow a so-called “Customer Claims process” – also referred to as SAPA’s 8D process. This is accessible via a shared system. The 8D process is used as a tool when handling and receiving complaints. When the problem behind a complaint is understood – based on input from both the customer and the Product Service team – then the process of solving it begins.
Standard complaint handling processes help in solving problems
Per Kongsbak explains the process for problem-solving and complaint handling:
“The 8D process involves a description of the error – including the problem. Then we have a description from the customer and one from us – how we look at the error. Then there is Quick Response, Root Cause Analysis and from there we look at corrective actions. This entails temporary corrective actions and permanent ones. By using this process we can ensure that the error will not be repeated.”
Per Kongsbak explains that they want to solve their customer’s problems quickly. Therefore the first activity in the 8D process is “Quick Response”. He describes it as follows:
“We have 24 hours from the report of the problem to ensure that our customer’s production capability isn’t reduced. We focus on how containing the consequences of the error to minimize its impact. Is it something that will cause a production shutdown at the customer and if it does, what should we do next? Moreover, we must ensure that we have understood the error, controlled inventories and secured if there are enough materials. This is called Containment Action – where you identify the conditions as much as possible to ensure that the customer’s production doesn’t stop.”
Per Kongsbak explains that the next step in the complaint handling processes is Plan Do – also called Root Cause analysis – where the objective is to find the cause of the error. They have five days to complete this activity. In this phase, Production gets involved to analyse how the error occurred, because it is normally in Production where the error arises and where it must be solved. The right attitude to acknowledging problems and finding a solution is crucial among all employees involved. Per Kongsbak puts it this way:
How the process works in practice
I asked Per Kongsbak about what kind of challenges they experience when the complaint handling processes is applied in practice:
“There are some situations where it can be difficult to be 100% sure that the problem can be eliminated, since it may depend on the machine operator. You can tell the operator: “you can’t do that again”, but that is not the right way. You have to look at why he did it.”
Per Kongsbak says that in such situations different tools have helped them to solve the problem. Among others, they use a specific analysis method, which examines where the error occurred and whether it can be registered and controlled. Furthermore, they use the famous “5 Why” technique to find problem root causes. Per Kongsbak explains that these tools mainly are used in more complex cases, as most of the errors are recognisable:
“You may say, that then there are some problems we haven’t solved well enough. However it may also be something we cannot solve properly in our processes. Despite that Production must work with continuous improvement and minimize errors to a minimum. In these cases Production is aware of the problem and says: we know what it is and we will see if we can come up with a better solution, but we cannot fulfil it 100%. In these cases we do have some tools to create breakthroughs. But we need to balance the error quantity and complaint severity in relation to our effort.”
Finding the balance between reimbursements and problem solving
I asked Per Kongsbak about how they decide whether to simply reimburse the customer or solving their problem. To this, he answered, that they reimburse the customer if there is an agreement to do this. Furthermore, they use surveillance tools for some of the machines on the manufacturing floor to catch mistakes and prevent complaints. Furthermore, they have concrete references to locate where the error occurred in their process, since the customer may have damaged the product in their own process afterwards. Per Kongsbak explains:
“We get many demands from our customers. Most customers have a manual where they demand that we shall be accountable for all or any costs associated with the complaint. Here we need to put our foot down and say no.”
Per Kongsbak explains that paid compensation depends on the extent of the error and the arrangement with the customer. With many customers, there is made a concrete arrangement about the responsibility for the costs associated with the complaint. In this way, they can gain rights to exchange or recall goods and manage the customers’ requirements and the process. Per Kongsbak concludes:
How is SAPA’s position in the balance between costs and loyalty?
To sum up, it seems that SAPA takes the customers’ problems seriously and sees the complaints as an opportunity to learn. Costs due to solving the actual problem are seen as investments in continuous improvement, rather than something that affects short-term profitability negatively. This approach is very sensible in a company where “Cost of Non-Quality” can be very high (since raw materials make up a large part of total production costs).
A great example from Per Kongsbak and SAPA Group. We appreciate their involvement.
If you’d like to read more about complaint handling, give our five tips to establishing loyalty.
Edit: We have another case study based on complaint handling if you’re interested too, check that out here.