The Dow Chemical Company, a global manufacturer of processed chemicals and plastics, never made a formal decision to pursue outsourcing. "We more or less evolved into it over time," says Daniel Showalter, the senior customer interface leader based in Midland, Michigan.
Throughout the 1970's and early 1980's, the marketplace perceived Dow as arrogant and aloof, according to Showalter. "We felt that, 'Science was right,' so when we received a call asking us for a further explanation, we tended to be non-responsive. We didn't need to explain ourselves,'" recalls Showalter. Then came the realization that while science may be right, it didn't address people's emotions. "We realized that only by being more open and responsive could we begin to change the way the consuming public perceived Dow and our commitment," the Dow executive continues.
Dow made a conscious decision to change, encouraging the consuming public to call. And they did! "Unfortunately, we didn't have any processes in place to effectively or efficiently answer those calls," recalls Showalter. Since many of these calls were technical in nature, operators began shuttling them to scientists. Management realized that was not an efficient use of a scientist's time. "We wanted our technical people helping strategic customers and developing new products, not answering the phone," notes Showalter.
In 1988 Dow opened its own Customer Information Center, which worked well. Dow hired EDS, a Plano-based IT and BPO outsourcing service provider, to build a data base management tool for the call center. The enterprising EDS sales representative pointed out that EDS runs call centers, too. "At that time we didn't trust our customers to a third party," recalls Showalter. "So we told them, just give us the technology."
Outsourcing Fixes Under-investment
In 1993 business took a downturn. Dow downsized; the call center "took a greater than average hit." Then, the company made a strategic decision to funnel most of its money into core business areas. Showalter says "we were under-investing in the necessary call center technology."
So Dow turned to EDS for help, this time to take over full management of the Customer Information Center. The company produced a proposal that promised to:
- Upgrade the current technology.
- Reduce the capital investment now required while continually refreshing the technology in the future.
- Streamline the work processes employing best practices.
- Manage the process employing best practices.
- Employ the people.
- Provide a stable cost structure.
"EDS proposed they could run our Customer Information Center a lot better and a lot cheaper," says Showalter. "We liked the idea because we expected to get better results for a lower investment." Dow management was comfortable handing over operation of the center to EDS because "the company was already familiar with our processes," according to the executive.
"We bring IT, operating discipline and a customer-centric approach to the process," says Greg Ecker, a client delivery executive within Customer Relationship Management (CRM) for EDS. "Outsourcing brings in competencies that fix the 'pain' factor our customers can't fix themselves." That includes lessons learned working with other CRM customers and alliances with other CRM service providers.
EDS' Assignments Keep Growing
EDS' first assignment was Inquiry Management for what was now called the Customer Information Group. EDS' staff became the first point of contact for customers or prospects looking for information about Dow, its products or services. "Since EDS took over in 1994, inquiry levels have increased, customer satisfaction has improved, and the cost to Dow has remained essentially flat" according to Showalter.
This first foray into outsourcing was so successful, Dow expanded EDS' reach into Europe. EDS now answers Dow calls in Europe from its Customer Information Group located outside Antwerp, Belgium. "Every time they successfully deliver service and value, we tend to give them the opportunity to do something else," explains Showalter.
Operating the retiree employee benefits call center was the next assignment. Dow decided to hand this sensitive project over to EDS because it discovered some of its retirees were "displeased" with the in-house service. Retired executives, who were used to high levels of responsiveness and service, were aggravated that they couldn't get the answers they needed fast enough. They would continually call the benefits manager to complain. After EDS took over this function, the complaints essentially stopped.
Taking Over Administrative Support
Finally, Dow applied EDS' call center knowledge and process expertise to administrative support. Today, EDS provides office professional support to Dow's virtual sales force - 450 people located in virtual offices throughout North America. The EDS employees, located in the call center in Midland, handle scheduling needs, coordinate customer events and, of course, answer the seller's virtual office phone.
Outsourcing reduced Dow's administrative support staff from 38 to 21. "We get a higher level of proficiency by outsourcing," observes Showalter. "EDS increased our productivity by 100 percent and reduced our annual operating expense by $2 million," he reports.
And Outsourcing its administrative function proved invaluable when Dow merged with Union Carbide Corporation. All the processes proved to be scalable.
Reducing Annual Expenses By $1 Million
Finally, consolidation of Dow's North American switchboards allowed the call center in Midland, Michigan to answer essentially every call coming into a Dow location anywhere in North America. Through the consolidation efforts and implementation of voice self-service tools, this activity alone has saved Dow over $1 million in annual operating expense. The total number of people (FTEs) working at the various local switchboards went from 30 to 6. Technologies that varied from location to location were consolidated further reducing costs while increasing reliability. And service levels increased. Today more calls are being handled in less time with higher levels of caller satisfaction.
EDS' Promise To Deliver
EDS has instituted CRM best practices through its Service Excellence dashboard, an online governance tool. It is a real time direct feed so the customer can judge EDS' performance. The service level performance indicators flash green, yellow or red depending on customer satisfaction. "It's a powerful accountability tool," says Ecker, who notes that EDS executives' performance is directly tied to the indicators on the dashboard.
Looking back over the relationship, Showalter says Dow took its Customer Information Group capabilities - "something that's not our core competency" - and handed it over to a service provider "who knew how to make our customers happy. EDS applied the right technology and techniques. More importantly, we are now able to refocus our resources and attention on the processes that are more instrumental to our long term success."
The Dow executive marvels at the chemical reaction. "EDS put the processes and technology in place and voila! We have higher satisfaction rates at a lower cost," Showalter says.
Lessons from the Outsourcing Journal:
- When companies ignore a process and refuse to invest it in, the process suffers in the long term. Outsourcing is one way to add the needed capital to make the technology current.
- Outsourcing allows companies to focus on the processes that are more instrumental to their long term success.
- SLA and governance tools are important components to measure the service provider's performance.