De Mar, a plumbing, heating, and air-conditioning company located in Fresno, Cal

Question

De Mar, a plumbing, heating, and air-conditioning company located in Fresno, California, has a simple but powerful product strategy: Solve the customer’s problem no matter what, solve the problem when the customer needs it solved, and make sure the customer feels good when you leave. De Mar offers guaranteed, same-day service for customers requiring it. The company provides 24-hour-a-day, 7-day-a-week service at no extra charge for customers whose air conditioning dies on a hot summer Sunday or whose toilet overflows at 2:30 A.M. As assistant service coordinator Janie Walter puts it: “We will be there to fix your A/C on the fourth of July, and it’s not a penny extra. When our competitors won’t get out of bed, we’ll be there!” De Mar guarantees the price of a job to the penny before the work begins. Whereas most competitors guarantee their work for 30 days, De Mar guarantees all parts and labor for one year. The company assesses no travel charge because “it’s not fair to charge customers for driving out.” Owner Larry Harmon says: “We are in an industry that doesn’t have the best reputation. If we start making money our main goal, we are in trouble. So I stress customer satisfaction; money is the by-product.”
De Mar uses selective hiring, ongoing training and education, performance measures, and compensation that incorporate customer satisfaction, strong teamwork, peer pressure, empowerment, and aggressive promotion to implement its strategy. Says credit manager Anne Semrick: “The person who wants a nine-tofive job needs to go somewhere else.” De Mar is a premium pricer. Yet customers respond because De Mar delivers value—that is, benefits for costs. In 8 years, annual sales increased from about $200,000 to more than $3.3 million.
  

Discussion Question:

1. Even though De Mar’s product is primarily a service product, how should each of the 10 strategic OM decisions in the text be managed to ensure that the product is successful?    

Explanation / Answer

Solution:-
As it can is evident from the case study that the company has increased its profit within the last 8 years dramatically, they can do on with their current business strategy with minor adjustments with regards to the 10 strategic OM decisions. They need to focus on the competitive advantage that is a great source of bringing in new customers. They need to keep their costs constant unless really necessary. This will add to the quality of their services. They need to provide flexible working hours to their employees and give bonuses when necessary. To keep their operations smooth, an inventory monitoring system has to be established.
• Following is a detail of the management of the 10 strategic OM decisions from De Mar’s point of view:

1. Goods and services design: The services should be designed in such a way that the customers are asked for a feedback at the end of the service.

2.Quality: there should be no compromise on quality so that the repairs are not problematic within the one year guarantee time.

3.Process and capacity: Business processes must be kept within the capacity of the company. If there is forecast of more customers call, more people should be employed.

4.Location Selection: Location of the service delivery should be close to cities and towns to minimize on travel costs.

5.Location Selection: Location of the service delivery should be close to cities and towns to minimize on travel costs.

6.Layout design: The quality of the layout of the physical locations of the business adds to the quality of the business itself.

7.Human resource and job design: Jobs should be designed in accordance to the capabilities and skills of specific human resources.

8.Supply chain management: There needs to be a proper communication with the suppliers who provide the tangible items.

9.Inventory: The Company must have a clear view of what items it has and what is required.

Scheduling: There need to be proper job schedules for the employees who attend different customer calls.

10.Maintenance: The business operations of the company itself need a regular maintenance.

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