Transcript Managing Quality Integrating the Supply Chain S. Thomas Foster

Managing Quality
Integrating the Supply Chain
S. Thomas Foster
Chapter 5
The Voice of the Customer
Quality is as the customer sees it.
09/16 – 6:00PM
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Strategic Quality Planning
The Voice of the Customer
Chapter 5
Introduction
Customer
Driven Quality
What is the voice of the customer?
Customer –Relationship management
The “Gaps” approach to Service Design
Strategic Supply Chain Alliances Between
Customers and Suppliers
Communicating Downstream
Actively Solicited Customer Feedback Approaches
Passively Solicited Customer-Feedback Approaches
Managing Customer Retention And Loyalty
Customer Relationship Management Systems (CRMS)
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Strategic Quality Planning
The Voice of the Customer
Chapter 5

Customer service is important because:
Customers
will tell twice as many people about bad
experiences as good experiences.
70%
of your customers will remain your customers if you resolve the
complaint satisfactorily.
Service
firms rely on repeat customers for 85% to 95% of their
business.
80%
of new product and service ideas come from customers.
cost of keeping an existing customer is 1/6th of the cost of
attracting new customers.
The
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Strategic Quality Planning
The Voice of the Customer
Customer Driven Quality
quality – This is a proactive approach to
satisfying customer needs that is based on gathering data about
our customers to learn their needs and preferences and then
providing products and services that satisfy the customers.
Customer needs are constantly changing. If you are
attempting to meet customer expectations you are in a reactive
mode because you are pursuing a moving target.
Reactive customer-driven quality – This occurs when a firm’s
quality performance is increasing while customer’s expectations
also are increasing. Problems occur when the customer’s
requirements increase at a faster rate than quality and service
improvement. This places the firm in a reactive mode that may
signal the need for major process and service redesign.
Customer-driven
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Strategic Quality Planning
The Voice of the Customer
What is the voice of the customer?
of the customer – This is the wants, opinions,
perceptions, and desires of the customers. This can be a
standardized, disciplined, and cyclic approach to obtaining and
prioritizing customer preferences for use in designing products
and services.
Voice
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management
Approximately
90% of the business for service firms is repeat
business. The focus of process and system design must be
on developing relationships with customers rather than
simply providing clean transactions at each stage of the process.
Customer
relationship management views the customer as a
valued asset to be managed.
In
relationship management, the tangibles (facilities and
machinery) meet the intangibles (professionalism and empathy)
to provide a satisfying experience for the customer.
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management
Complaint
Resolution
Customer
Relationship
Management
Feedback
Gurarantees
Corrective
Action
Four components of a Customer-Relationship
Management Process
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management - Complaints





Complaints should be viewed as opportunities to improve. Because
only a small percentage of customers ultimately will complain, this
small percentage may represent a much larger population of
dissatisfied customers.
Complaint resolution process – This involves the transformation of
a negative situation into one in which the complainant is restored to
the state existing prior to the occurrence of a problem. The recovery
process must document complaints, resolve complaints, document
recovery, and provide feedback to the customer and feedback to the
firm for system improvement.
You must compensate customers for losses.
You must show contrition.
You must make it easy for complainants to reach resolution to simple
complaints.
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management - Guarantees

To design a process that ignores product and service failures is a
form of denial.

The guarantee is both a design and an economic issue that must be
addressed by all companies before the first sale occurs.

Guarantees should be designed prior to beginning business so that
employees can be trained to implement the guarantee and marketing
can advertise the guarantee properly.

Guarantees are an important economic issue because of the sales
potential that is created by a guarantee and the costs associated with
fulfillment of the guarantee.
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management - Guarantees

To be effective, a guarantee should be:

Unconditional – No small print exceptions.

Meaningful – Customer grievances must be fully addressed.

Understandable – The customer must be able to understand easily the
parameters of the guarantee and how to achieve resolution quickly.

Communicable – The phrasing of the guarantee should resonate with
the customer.

Painless to invoke – The customer must not be inconvenienced too
much.
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Strategic Quality Planning
The Voice of the Customer
Customer-Relationship Management – Corrective Action

Corrective Action – This means that when a service or product
failure occurs, the failure is documented and the problem is
resolved in a way that it never happens again. Teams should be in
place to regularly review complaints and to improve processes so
that the problems do not recur.

Closed-loop Corrective Action – The loop is in effect closed
because a process is in place that ensures that complaint and field
repair data is used for improving processes.
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Strategic Quality Planning
The Voice of the Customer
The “GAPS” Approach
Gap – This refers to the differences between desired levels of
performance and actual levels of performance.

Once a gap is identified, it is a candidate for corrective action and
process improvement.

Gap Analysis – The formal means for identifying and correcting
gaps.

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Strategic Quality Planning
The Voice of the Customer
Strategic Supply Chain Alliances…
Competitive Model – the traditional customer-supplier
relationship in which one party attempts to gain advantage over the
other. Theoretically, the competition among the suppliers drives
costs lower and quality higher. However, this theory ignores the
costs associated with variability in materials created by using
multiple suppliers which is a major cause of defects.
 Single-sourcing Model – this model develops relationships with
a few suppliers for long contract terms.
 Strategic Partnership Model – developed from single-sourcing
arrangements where the suppliers become de facto subsidiaries to
their major customers. These suppliers integrate information
systems and quality systems that allow close interaction at all
levels. Suppliers also enter into agreements to reduce costs and
improve productivity and are graded on an annual basis concerning
the attainment of these targets.

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Strategic Quality Planning
The Voice of the Customer
Communicating with Customers
Marketing
views every dollar of income equally. Operations does
not view a dollar of income from diverse customers equally with a
dollar of income from a single set of homogeneous customers for a
single product or service because of the costs and confusion
associated with trying to satisfy diverse customer groups with
different products or services.
Customer
rationalization results from marketing and operations
focusing on those products and services for the 20% customers
that contribute 80% of the profit.
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Strategic Quality Planning
The Voice of the Customer
Customer-Feedback approaches
Actively solicited customer-feedback approaches – includes all
supplier initiated contact with customers, such as:
telephone contacts
focus groups
customer service surveys
Passively solicited customer-feedback approaches – includes
all customer initiated contact, such as:
filling out a complaint card,
calling a toll-free complaint line, or
submitting an inquiry via a company’s Web site
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Strategic Quality Planning
The Voice of the Customer
Customer Relationship Management Systems
relationship management systems (CRMS) – use
data to manage the following phases of the customer life cycle:
Acquisition
Retention
Enhancement
CRMS monitor customer interactions and preferences
through media such as customer transaction records, call center
logs, searches, and Web site clicks.
CRMS are used to identify active customers, inactive
customers, and the profitability of customers.
Customer
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