IE673Session 4 - Customer Relationships1 Customer Relationships (The Voice of the Customer)

IE673Session 4 - Customer Relationships2 Supplier - Process - Customer Model Supplier ProcessCustomer

IE673Session 4 - Customer Relationships3 Two Approaches Customer Value Management (CVM) - (ref: B.T. Gale, “Managing Customer Value”) Quality Function Deployment (QFD) - (ref: R. King, “Better Designs in Half the Time”)

IE673Session 4 - Customer Relationships4 Customer Value Management Conformance Quality Customer Satisfaction Market-perceived quality and value relative to competitors Quality a key to customer value management

IE673Session 4 - Customer Relationships5 CVM - Conformance Quality Conform to requirements Do it right the first time Reduce scrap and rework

IE673Session 4 - Customer Relationships6 CVM - Customer Satisfaction Get close to the customer Understand needs and expectations Be customer-driven

IE673Session 4 - Customer Relationships7 CVM - Market-Perceived Quality Get closer to the market then your competitors do Use customer value analysis Understand why orders are won or lost Be market-driven

IE673Session 4 - Customer Relationships8 CVM - Quality; a Key to CVM Use metrics and tools to: –Track competitiveness –Decide on what business to be in –Make capital investments –Assess acquisitions Align entire organization with the evolving needs of your targeted market

IE673Session 4 - Customer Relationships9 Creating Value Customers Can See Understanding Customer Needs Advertising & other Communications Superior quality in areas that matter to customer Market-perceived Quality Exceptional Customer Value Business Result: Profitability, Growth Shareholder Value Effective Design & Quality Control Low Cost of Quality & overall cost leadership

IE673Session 4 - Customer Relationships10 CVM - Seven Tools The Market-perceived quality profile The relative price profile The customer value map The won/lost analysis The head-to-head area chart of customer value A key event time line A what/who matrix

IE673Session 4 - Customer Relationships11 Steps to Create Quality Profile Ask customer to list factors other than price that are important to them Establish how various quality attributes are weighted For each attribute divide your score by competitor’s and multiply by the weight of that attribute The total of all weight-ratio products is the overall market-perceived quality score

IE673Session 4 - Customer Relationships12 Example

IE673Session 4 - Customer Relationships13 Customer Value Map Worse Value Better Value Fair-value Line

IE673Session 4 - Customer Relationships14 Won/Lost Analysis Ratio of number won to number lost Why won? Why Lost? Who Won?

IE673Session 4 - Customer Relationships15 Head-To-Head Chart

IE673Session 4 - Customer Relationships16 Who/What Matrix (XX = Primary, X = Support)

IE673Session 4 - Customer Relationships17 Quality Function Deployment (QFD) Quality: Works right first time; fitness for use; meet requirements; of value to customer Function: Research, design, manufacturing, quality, sales, etc. Deployment: Put into effect, systematic prioritization - Pareto principle QFD: A system for designing a product or service

IE673Session 4 - Customer Relationships18 QFD Elements Inputs: Customer demands, company’s current performance, competitors performance company ratings, and sales features Outputs: 3 or 4 quality characteristics –Compares customer demands w/ quality characteristics –Weights company’s current performance, plans, sales features and competitor performance –Develops initial plan for meeting customer demands –Prioritizes customer demands –Develops which quality characteristics are controllable

IE673Session 4 - Customer Relationships19 How QFD Works Organizing the QFD Project –Extent of study –Who is the study for –Project selection –Team selection –Statement of theme

IE673Session 4 - Customer Relationships20 How QFD Works The descriptive phase –Customer demands –Quality characteristics –Functions –Mechanisms –Parts –New technology –New concepts –Product failure modes –Part Failure modes

IE673Session 4 - Customer Relationships21 How QFD Works The breakthrough phase –Creativity - combining two items in a new way –Form matrices by combining various categories from the descriptive phase

IE673Session 4 - Customer Relationships22 How QFD Works Implementation phase –Product planning –Product design –Production preparation –Regular production –Sales and service –Comprehensive monitoring

IE673Session 4 - Customer Relationships23 Levels of Detail Product System Sub-system Components Parts Raw Materials Car Car Chassis Door Door Handle Opening Lever Steel Alloy

IE673Session 4 - Customer Relationships24 Benefits and Results Strategic choices for increased market share Better communications between departments Focused effort Reduced engineering changes on critical design elements Better control of critical elements of critical designs Better reliability of critical design elements Openness to new concepts Cost reduction (VE integrated with QFD) Competitive benchmarking Cross training of design engineers

IE673Session 4 - Customer Relationships25 Benefits and Results Better understanding of: –customer demands –different customers –conflicting customer demands –engineering requirements –conflicting engineering requirements –quality in general –market research –planning - individual efforts fir into product Improved structure of the design process

IE673Session 4 - Customer Relationships26 Benefits and Results Establishes a critical path Build in quality upstream Improved documentation Common language for all departments Identifying customers Break down walls Make quality real - touch, taste, feel Improve internal budgeting (potentially) How individual efforts fit into product Why designs are set the way they are Potentially early identification of conflicting Substitute Quality Characteristics - down stream fixing user problems without causing other problems

IE673Session 4 - Customer Relationships27 Most Frequent QFD Errors Charts too big. Chart A-1 is a Pareto chart - not improved by more items Using only Chart A-1: –Not knowing in written detail what the customer wants –Not doing something about it is probably worse –Putting everything (e.g. cost, reliability, wants, functions) in the chart is often confusing and misleading QFD if mandated. QFD if propely done, is complex. As a ritual it will not be understood Parts should not be mixed with substitute quality characteristics –Parts belong in A-4 –Parts are different from quality characteristics Engineering and customer demands should not be mixed –Customer demands should be in Chart A-1 –Engineering demands should be in Chart A-2 Customers should not be asked about things they know nothing about Do QFD when it is too late to make changes or there is no buy-in for changes

IE673Session 4 - Customer Relationships28 How to Select and Facilitate QFD Projects Select –Identify project that support company priorities –Select projects that will improve key interfaces –Involve personnel who believe QFD will work –Select projects that are likely to succeed –Select projects that are likely to generate significant success Facilitate –Clearly define the project –Obtain management commitment to take action on findings –Focus on process rather than contents of project