Customer Focus

• Of All the Baldridge Award Criteria, none is more important than customer focus and satisfaction

• A study by Ernst & Young of 584 companies found that customer complaints were primary important in identifying new product among only 19% of banks and 26% of hospitals.

• It is estimated that for every complaint, there are other 26 other customer who feel the same way

• Failure to identify the root cause of complaints means reduction of variation is more difficult

• Cause: inadequate support from top management for TQM infrastructure and continued focus of techniques of TQM

But…

• Quality performance measure such defect rates and customer level play a key role in determining pay for senior manager only fewer than one in five companies

• Profitablity is still king• Another reason for lack of customer focus:

singular emphasize on tenchnique of TQM. This like put the cart before the horse. The customer do not interested in company’s proces control, Training program or its culture.

• The bottom line is: whether he or she obtains the desired product.

Process vs customer

Listen to the voice of customer

Listen to the voice of the process

Predict customer behaviour

Predict process behaviour

Determine customer quality expecttation

Determine optimum process outcome

Determine customer quality expecttation

Listen to the voice of customer

Listen to the voice of the process

Predict customer behaviour

Predict process behaviour

Determine customer quality expecttation

Determine optimum process outcome

Determine customer quality expecttation

Analog of customer complain and process variation

From company’s point of view:

Human Resources

Management

Customer Expectation

Company Operation

• Ritz carlton hotel Company won the Baldridge Award in 1992. Many people thought hat no hotel could do this because service in this industry is so difficult to measure and to deliver. The company gathers data on every aspect of the guest’s stay to determine if the hotels are meeting customer expectations. Key to the research are daily quality production reports that identify all problems and defects reported in each 720 work areas. Range from the time it takes for housekeepers to clean a room to the number of guests who wait in line to check in.

A Quality Focus

• Some company sent quality messages in media. Much of them are only rhetoric, like ‘satisfaction guaranteed’, low price guaranteed’, etc.

• Many company back up a satisfaction guaranteed with promise of a reward if they fail to meet their own standard:• Pizza hut: get it free if not served in five minutes• Delta dental send you $50 if you get transferred from phone to

phone while seeking an answer to an insurance question• Automotive dealers: offer free towing service, free rides to work or

loaner car if the customer car is kept overnight.• Two advantages:

• Cure employee apathy• Buyer’s perception of dedication

• This will not effective if the variation is not traced back to process improvement and the cause of variation.

Break point

• Standing in a line:• 0 – 1 minutes: oustanding• 2 – 5 minutes: acceptable• > 5 minutes : unacceptable

• Delivery:• Below 90% : unacceptable• Over 98% : outstanding• 90 – 98% : acceptable

Driver of Customer Satisfaction• Key excellent indicators:

• Service standard derived from customer requirements• Understanding customer requirement

• Objectivity• Customer types• Product/ servive features

• Front line empowerment• Strategic infrastructure support for front line employees• Attention to hiring, training, attitude and morale for front line

employees• High level of satisfaction• Proactive customer service systems• Proactive management• Use of all listening post:

• Surveys• Product/ service followups• Complaints• Turnover of customers• Employees

• Quality requirement of market segment• Surveys beyond current customer• Commitment to customer

Getting Employee input

• This could help identify barrier and solution to service and product problem.

• Employee surveys can measure:• TQM effectiveness• Skills and behavior that need improvement• Effectiveness of team problem solving

process• Outcome of a training program• Need of internal customers

Measurement of Customer satisfaction• Two basic steps:

• Develop key indicator that drive customer satisfaction:

• What the company has chosen to represent the quality in its product and services and the way in which this is delivered

• Example: reliability, aestetics, timeliness, dependability, responsiveness, competence, appearance, approachability, location etc.

• Collect data regarding the perception of quality received by customer

• Required in order to identify the need of customers and the related problem of process delivery.

• Survey both customers ( what they expect) and employee (what they think customers expect)

Group Discussion:

• Choose a specific function or activity (design, order processing, data processing, engineering, market research etc) and identify a measure of quality that you would expect if you were an internal customer

• Choose a product or service and list 5 or 5 characteristic that you as a customer would want and expect. Based on your experience, do you think that the firm will deliver?