Evaluate the competitive position of RAC Motoring Service in terms of its operations-based strengths and weaknesses.

Q1. Evaluate the competitive position of RAC Motoring Service in terms of its operations-based strengths and weaknesses.

A1. RAC Motoring Service had been established in the vehicle breakdown and recovery industry for over hundred years and had owned patrol force, which was developed to rescue and fix customers vehicles at the roadside. RAC has a long history and experience of providing roadside assistance to its customers. However, the change in the dynamics of the industry has a great impact on its operations. The case analysis showed that RAC has certain strengths and weaknesses that are simultaneously effecting upon efficient operations. They are discussed as follow

Strengths

RAC has a strong brand name and a large customer base, which gives them a good profitability.
They are known to provide a high quality services at a premium price.
Investment in state of the art technologies to improve efficiency, i.e., call receiving and patrols.
Construction of eye-catching signs of the control centres at highly visible points at the motorways system, signalling their presence as a modern service provider.
RAC employee 1350 patrols that are highly professional and capable to repair the broken down vehicles.
The biggest asset and strength for RAC is their experience and able patrols having capabilities to understand and to solve roadside problems. They have wide experience of mechanics and state of art technology to provide solutions.
The patrol turnover is remarkably very low, at around three percent.
Each of the patrols has its own car and they are not worried about handing it in even after finishing their shift. Patrol can carry out its repair work without any pressure and give them opportunity to earn over time.
RAC has divided its operations in geographic cells that have helped them in allocating number of patrols according to the demand of that particular “cell”. This helps them to decrease the dispatch time, attend to the broken down vehicle and fixed it in time by transferring the task to patrol of that particular “cell.”
RAC has fifty service managers to look after the patrol performances and keeps a close watch on them in support with the call receiving department. They insure the smooth running of operations.

These are the notable strengths possess by RAC and they are sharing a major market share with AA on the basis of the above-mentioned strengths. It is obvious from the case that RAC has certain weaknesses in their operations as well. These are as follows:

Weaknesses

RAC’s patrol staff is earning more and more, their productivity is going down. The main problem is with the employee wage contracts and their overtime earning patterns.
The patrols are lacking the training of handling distressed customers and in harsh roadside conditions.
The average age of patrol was becoming fairly high and close to contemplates retirement. It is difficult for them to keep up with the fast moving industry and the motivation levels are decreasing as well with the passage of time.
The service managers involved more spending their time in circumventing or supplementing poor process, rather then getting involved with the detailed operations management of their teams.
RAC focused on reliability of their patrols, rather then on meeting lead-time promises that had a major effect on customer satisfaction level.
RAC used contractors to supplement the capacity during weekends and nights. These contractors lack the full capabilities of the patrol and customers were less satisfied from their services.
Patrols were given liberty to choose to be “standby” in their employee contract and during this time enjoy the over time as well. This was really no incentive to work fast and productively.
RAC was facing inconsistent service of level because 50-55 percent jobs were done with in the duty roster and the remainder was covered by overtime, standby and contractors. (This was a main reason of decrease in RAC’s productivity).

Q2. What are the advantages and disadvantages of the current cell-focused service management structure? What alternatives might give better results in terms of increasing quality and productivity?

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Q2. What are the advantages and disadvantages of the current cell-focused service management structure? What alternatives might give better results in terms of increasing quality and productivity?

A.2. RAC is using the “geographical cell” approach to provide its services to the customers. These “cells” varied in size from about eight to fifteen patrols, covering an area that allowed a patrol to travel to reach a motorist within twenty minutes. RAC has fifty service managers to look after the operations of the designated cells. Normally, each manger is responsible for teams of up to twenty-eight patrols covering two or three cells. Their job was to ensure that service standards were achieved in their areas, within target productivity levels. At present, RAC has the following managerial flow chart for operations:

Operations Director

SM SM SM SM SM SM SM

1 2 3 4 5 6 50

Cell Cell Cell

1 2 3

Figure “a”

The above mentioned managerial flow chart clearly depicts the clear identification of job design, cell allocation and through put of information from the top through the service mangers to the patrols that are responsible for providing the services to the customers. The main essence of successful services providing is in the timely transformation of information to the product i.e., service, because the production and consumption of a service tends to be simultaneous. RAC design has these advantages and is quite suitable for the type of service they are providing to their customers.

RAC is also facing some disadvantages in terms of huge costs in expansion and rearranging of existing layout, lower utilization of their patrols and they need more equipment to full fill the demand. As the demand is fluctuating, they are relying heavily on the contractors to full fill this gap and contractors are not very well equipped to full fill the customer’s requirement in terms of technology and professional know-how.

At present, RAC is using the cell design to carry out their operations and provide service to their customers. The process initiates after receiving the call from the customer by the call receiving unit, then it is transferred to the service manger of the particular cell from “where” the call has originated earlier and the respective service manger transfer the call to the available patrol to full fill the customer’s requirement and if, all the patrols are busy in their jobs or log out then the call transfers to the

Contractors. It can be shown in the following figure

CUSTOMER

EACH CELL SHOWING 50 SERVICE MANGERS

FIGURE “B”

RAC, definitely needed to improve in its call taking and dispatch process. In order to improve these two key areas, RAC has to rely on the most advance and easily available satellite technology. The use of this technology is not very complex and expensive. However, they need to improve their call centres and patrol’s communication systems. The system works on simple routing of calls during peak hours directly to the patrols of the relative geographic cell. It can be done through the GPS and GIS (geographic information system). How it works? It works on the simple principle of call placing through routers or gateways. RAC already has a call centre and modern call taking facilities. What they have to do? RAC has to issue their customers with a plastic card having their customer number, vehicle number and the cell number in which they are located (house location). When the customer call at the call centre and gives the vehicle number and customer number, system will locate the vehicle on the GPS and prompt to the available patrol on its screen in the closest locality, with the help of this call transferring, it saves time of the call transfer from the call canter to the service manager then to the patrols. The respective service manager is monitoring all this GPS and GIS and if the patrol is not available, call can be transferred to the contractor.

SATELLITE

CUSTOMER

EACH CELL SHOWING 50 SERVICE MANGERS

FIGURE “C”

This helps RAC to reduce the call waiting time, improve the dispatch and they can also monitor the exact movements of their patrols and contractors. This system can be implemented by minor adjustments in their call centres, patrol’s communication tools and increasing participation from the service managers in controlling the available and upgraded recourses.

Q3. How could the employment contracts, payment system and working practices be redesigned to help to increase the patrol productivity, to increase PAR and to reduce waiting times? What resistance is likely to be faced, and how should this be best be countered?

A.3. In 1999, RAC was employing 1350 patrols, which were equipped with state-of-the-art vehicles and professional know-how to solve the mechanical problems. These patrols were working in three shifts, which work as follows

Earlies 7:00 to 15:00
Mids 11:00 to 19:00
Lates 15:00 to 23:00

Each patrol is provided with fully equipped vehicle to provide the service to their customers and they are responsible for the look after of these vehicles. They are not bound by the management to return their vehicles after the end of their shift. This is an important factor in the employment contract because patrols are not pressurised to return to the head office to hand in the vehicles to the next patrol and they can continue to work beyond the end of their shift. This has given patrols the chance to earn the overtime and they exploited this opportunity to earn more money while doing fewer jobs. Patrols can wilfully “log off” from the system if some difficult job been asked to do and service manager has to transfer that job to the contractors. This is the main weakness in the RAC’s employee contractors. The patrols are deciding their own operations and service mangers are only performing large number of odd jobs that patrols are kept on road. This is not the operations mangers duty to ensure the patrol performance; his duty is to make sure that patrols are meeting the set targets, are they productive? If not. How to improve the design to get productivity? Etc.

RAC has a good design to run the service they are providing because the main reason is that they have clearly defined the areas to target, assigned resources to each “cell” and have well trained front line staff to meet the challenges. The front desk (patrols) is equipped with state of the art technologies and professional training. The main problem with the design is the “lack of planning and control” of the patrols by the service mangers. However, service mangers are toys in hands of the patrols. They are using them to replenish consumable items, provide them uniforms and make sure the cleaning of cars done properly. On the other hand, service mangers should be sitting in their offices and controlling the operations from their, like proper operations manger. The most important thing is to be done is the re-scheduling of the shift roaster. The new roaster should look like as follows

7:00 to 15:00
15:00 to 23:00
23:00 to 7:00

Patrols should report thirty minutes before the start of their shift to their respective service mangers and take a briefing about the present trends of jobs in their respective cell i.e., types of jobs in progress, the waiting time at present or frequency of calls received. Sending massages to their communication devices can also be considered as an option. The shifts would be assigned on the rotation basis amongst the patrols depending upon their past trend lines of shift taking. The peak time for the services is between 8:00 am to 18:00 pm and as there is no over lap of the shifts, patrols joining the second shift can take over from on duty patrol easily. If the patrols like to go for the overtime and select the “stand by,” this would help the service mangers to compensate any gap created during the shift changes.

The second important factor to look into is the way patrols earn their overtime. The present pay system at RAC has made the patrols and contractors make more in return of decreasing productive. This system is not performance driven and the figures from the case clearly show that this system is encouraging more social time to patrols rather then service time. In 1999, only about 50-55 percent of jobs were done with in duty roaster. The rest was covered by overtime, stand by and contractors. This has given birth to inconsistent service levels, negative impact on customer perceived service quality (because the decline of taking jobs from the patrols, were given to contractors who were not properly equipped) and this resulted in a strong negative correlation between overall satisfaction level of customers and the time they waited for the patrol to arrive.

This is a very critical issue and the solution may not be welcomed by the patrols because it will heart them a lot but there are always “trade offs” of every decision. For instance, the present pay agreement is good for the patrols but has effected negatively on the productivity, efficiency and profitability of RAC. The main improvement in the pay structure focuses on the way patrols makes overtime and stand by. I am not opposing the overtime option for the patrols because this is an incentive to work more for the company. I oppose the way the overtime is given. Introducing minor adjustments to pay system can be fruitful. These adjustments are done to the flat rate, stand by and will full log off.

Patrols would be encouraged to do major jobs at the flat rate of GBP10 per vehicle because RAC has adopted the strategy to educate their customers to handle small problems like flat batteries in winter and this has resulted in the reduction of 150,000 incident of this type. This will encourage them to take major jobs and these jobs would not be referred to contractors. The second proposal is to the stand by option. At present, patrols have to “log on” to the communication system to avail this option and when a difficult job asked to be done, patrol “log off” the system and contractors were asked to do that job. My idea of minor adjustment to this system is if a patrol choose for the stand by, it is good because patrol is willingly offering their services that are good for the company and in return company ask them to do a job and they refused it, is quite un-professional. If they refused and log off the system, they should not be allowed to log on to the system till the end of the week.

These will be a harsh decision but RAC has to take such actions in order to improve their productivity and profitability. Patrols will resist these minor adjustments because a considerable number of them are approaching retirement age and the present working environment is not very challenging for them. They are basically enjoying their time in socialising, doing odd jobs during shift hours and rest in overtime.

Q4. What are your overall recommendations for an implementation plan?

A4. My over all recommendations for implementation of the plan focuses on the following main areas:

Service mangers should be given more authorities to plan, implement and control the operations. Their expertise should be used in monitoring, coordinating and controlling the operations of patrol on the field with help of GPS, GIS and communication system in patrol vehicles.
Rescheduling of the shifts for the patrols. At present, the shifts are over lapping with each other and giving the opportunity to the patrols to go on stand by, earn overtime and will full “log off”. This will help the cell managers to rotate their available resources according to the seasonal demand of the services and if the demand exceeds the available patrols then the jobs would be transferred to contractors.
Payment contracts, overtime and stand by are the third main recommendation for RAC. The details to improve the present system are discussed in detail in question three, so, will not be repeated again.
Training of the patrols. This is a vital step towards the improvement of the patrol’s professionalism, attitudes and productivity. This training programme emphasis on the service improvements, simulations to work on the response side of the patrols and involve them in the constant improvement process. Patrol’s participation is very important in the implementation plan because they are the front desk personnel and vital organ in RAC’s service providing body.
The other important recommendation is related to the contractors. These contractors can also be involved in the training programmes with the patrols. This will improve their technical skills, know-how about the new technology and they can learn a lot from their fellow patrols. This will help the contractors to improve their efficiency, skills and knowledge about services they tend to provide to customers.
Another option for RAC related to the contractors can be is to brand them under RAC. This will improve two things, first, the perceived service level of the customer will increase and, second, this will help the RAC to increase the efficiency of the system. This offer can be linked with the performance level of the contractors and give them an opportunity to improve their over all technology and efficiency.

The most encouraging aspect of RAC is that they are willing to invest in the improvement of the system, which is an encouraging sign but they cannot go for acquisition because of huge spending. They want to improve PAR, productivity and efficiency of the existing design.

Overall, there are always trade offs in the above-mentioned recommendations but they have to change their present set up of payments and contractors. The union will challenge this because the new plan will cut down the fun time for the patrols and will full log off option. The top management should be ready for a tough resistance from the union but the new wage system of increasing the fixed job rate from GBP6 per job to GBP10 per job for major jobs will some what act as diluter of situation. The rest of the overtime rates for Saturdays and Sundays are fine.