MMZG 522 Total Quality

Management
Rajiv Gupta
BITS Pilani
August 2014
Lecture 4

Session 4
Module 1
Recap of Lectures 2 and 3

Module 2
Systems

Module 3
Customer Focus

Module 4
Understanding Who is the Customer

Module 5
The Voice of the Customer

Module 6
Summary

Session 4
Begin Module 1
Recap of Lectures 2 and 3

Recap of Lecture 2
In lecture 2 we discussed
The role of leadership in implementing Quality
How the implementation of Quality goes through a
false start before realization sets in about the true
meaning of the process
The attributes of leadership and how these contribute
to the successful implementation
What is meant by vision, mission, values etc.
The difference between vision and shared vision

Recap of Lecture 3
In lecture 3 we discussed
Demings System of Profound Knowledge including

Systems Thinking
Understanding Variation
Theory of Learning
Psychology

Demings 14 Points

Session 4
End of module 1

Session 4
Begin Module 2
Systems and the SIPOC Model

System
Systems consist of a number of interacting components
that work together to achieve a common purpose
There are several processes, methods and steps
undertaken to achieve the system objective
Example: a Pizza parlor
Process: Making pizza dough
Method: Rolling it by hand or feed it through a machine
Step: Dusting the work surface with cornmeal before rolling out
the dough

THE DEMING FLOW DIAGRAM

Stage 0
Generation of ideas

Design and
Redesign

Suppliers of materials
Consumer feedback
and equipment
Receipt and test
Consumers
of materials
Production, Assembly, Inspection

Tests of processes, machines,

methods, costs

SIPOC Model
Purpose

Supplier

Input

Process

Output

Customer

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 Purpose:
A system has to have a purpose. A system cannot
exist without a purpose.
The purpose of the system defines the relationships
among the system components
The purpose not only defines what the system should
accomplish, but also what it should not do as well
A component of a system cannot have a purpose
independent of the system it is a part of

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 Purpose
Meet (and exceed) the needs of the customer
Provide the features and quality
characteristics
Achieving the capabilities to provide the
above two purposes

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Functional objectives unaligned

with system purpose

Component objectives aligned

with system purpose

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Examples of Non-Alignment and

Alignment
Company wishes to reduce cost and asks purchasing to
find cheaper materials. The cheaper material causes
more rejects in manufacturing. So although purchasing
achieves its goal, manufacturing (and customer
satisfaction) takes a beating. Who wins?
In grocery stores in the U.S., eggs and milk are typically
sold at a loss (or minimal profit). The dairy department
takes a hit, but the low milk and eggs prices brings
customers into the store and the overall sales increase.

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Session 4
End of module 2

15

Session 4
Begin Module 3
Customer Focus

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A customer is the most important visitor on our

premises. He is not dependent on us. We are
dependent on him. He is not an interruption of our
work. He is the purpose of it. He is not an outsider of
our business. He is part of it. We are not doing him a
favour by serving him. He is doing us a favour by
giving us the opportunity to do so.

Mohandas Karamchand Gandhi 1890

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Is business good or bad according to the dictates of fate?

Must we accept the conditions as inevitable? Business is
good or bad as we make it so. The only reason for growing
crops, for mining, or for manufacturing, is that people may
keep warm, have clothing to wear, and articles to use. There
is no other possible reason, yet that reason is forced into
the background, and instead we have operations carried on,
not to the end of service, but to the end of making money
and this because we have evolved a system of money that
instead of being a convenient medium of exchange, is at
times a barrier to exchange.
Henry Ford I, in My Life and My Work
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Instead of giving attention to competitors or to demand,

our prices are based on an estimate of what the largest
possible number of people will want to pay, or can pay,
for what we have to sell.

Henry Ford I, in My Life and My Work

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Inverted Organizational Pyramid

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What the customer

needed AND we
provided

What the customer

needed

What we provided

What the
customer needed
that we did not
provide

What we provided that the

customer did not need

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Why the Mismatch

We did not understand what the customer really
wanted
We felt that the customer might be better served
by what we provided
We are in the business of providing a certain
product or service not custom products or
services
The customer did not know what he/she really
needed
The customer needs changed
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Product Out Approach

Products and
services designed
to our reqts with
features that
satisfy us. We
know what is best
for the customer.

??

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Customer-In Approach
Understand the
customer needs
and combine with
our ability to
develop and produce
products to satisfy
and delight the
Customers.

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Examples of Product Out

Approach
When a company is more focused on its capability and
its product line, it loses sight of the customer need it
satisfies (or does not satisfy)
The manufacturers of carburetors in cars thought they
were in the business of making carburetors.
When fuel injection systems were developed, the
carburetor manufacturers did not have any business left
Had they understood that their business was providing
fuel in an appropriate fashion to provide vehicle
movement and acceleration, they would have adapted to
the new technology
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Examples of Product Out

Approach
Manufacturers of wristwatches run the risk of running out
of business today as the advent of cell phones has made
wristwatches redundant, except as jewelry
Wristwatch manufacturers need to ask what specific
customer need are they satisfying in order to stay in
business
Xerox realized in the 1990s that paper copies might
become obsolete
So they redefined their mission by saying they were a
Document Company instead of a copier company. This
way they could adapt to whatever form the document
took, electronic, etc.
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Session 4
End of module 3

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Session 4
Begin Module 4
Understanding who is the customer

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Who is the Customer?

It is not easy to define who the customer is
There are both internal and external
customers
Internal customers are the next person who
receives our work
External customers who pays/uses the
product or service

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Internal Customers
Internal customers are people who are at the
receiving end of what we produce
They need to do further processing to the
product or service
Internal customers have their requirements in
terms of
How the product is received by them
When it reaches them
In what packaging it reaches them
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Internal customers
For example, if the stores sends parts to the line for
processing or assembly then the line worker is an
internal customer for the stores. If the part is
packaged in a way that the line worker has to spend
undue time to unpack the part before he can use it,
then it valuable time lost on the line. Also, the
packing material has to be removed from the line
side area. It would make more sense to send the
part unpacked, perhaps in a bin where the line
worker has to expend minimum time and effort to
access the part.
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Internal Customers
Questions to ask internal customers
What do you need from me?
How do you prefer to receive it?
What do you do with it after you receive it
from me?

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External Customers
External customers can be of different kinds
Those that pay for the product
Those that use the product
Those that influence the purchasing decision

Each of the above may be a different person

In addition there may be a number of
intermediate customers in the customer chain

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Customer Chain
Who purchases
The coffeemaker
Manufacturer
Of coffee maker

National
Distributor

Regional
Distributor

Retail
Store

Who makes the

coffee
Who is the customer?

Who drinks the

coffee
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Other Examples of Multiple

Customers
Parents pay for the college fees of the students but the
students select the colleges that they want to study in.
Companies that hire the students upon graduation
influence the choice of college that students select.
Children influence the decision for the purchase of
breakfast cereals and other foods while the parents pay
for them. Marketers of breakfast food items target the
children in their marketing campaign, while maintaining
the price that parents find acceptable.
Doctors prescribe the medicines that patients purchase.
Pharma companies target doctors in their marketing
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Session 4
End of module 4

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Session 4
Begin Module 5
The Voice of the Customer

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Voice of the Customer

If a company does not have an ear for the voice of
the customer it will not last long
The voice of the customer is the companys only
method of finding out
What the customer needs and does not need
What are the problems that a customer faces in using the
product or service
How does our product or service compare to the
competition
Why do non-customers not buy from us
Why did past customers stop buying from us
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Voice of the Customer

Companies need to actively seek customer opinion
and feedback, not wait for customer complaints
Customer complaints can be an opportunity to
gain/regain a customer depending on how we handle
the complaint example of on-line retailer and TV
purchase
Another (bad) example of on-line retailer for
purchase of books

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Customer feedback
methods
Comment cards enclosed with warranty card when
product is purchased.
Customer survey and questionnaire
Customer visits
Customer focus groups
Quarterly reports
Toll-free phones
e-mail, Internet news groups, discussion forums
Employee feedback
Mass customization.
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Other Methods
Mystery shoppers
Hire professionals to go an shop for the product or
service provided. This can also be done by senior
managers without disclosing who they are
The same may be repeated at a competitor and
experiences compared

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Problems With Feedback

People notoriously hate to fill out surveys and
questionnaires
Surveys have a very low return rate, often below
10 percent. Do they capture the needs of the
broad market?
Most people dont have a strong opinion, or do
not have an opinion. Henry Ford used to say that
95% of the people do not have an opinion. How
can I base my product on the opinion of 5% of
the people?
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Problems With Feedback

Customers do not know what is possible.
Example: If you had asked a farmer what he
wanted, he would have asked for a horse that
worked twice as hard and ate half as much
you would never have invented the tractor.
People change their minds

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Design Thinking
You need to observe people doing what they do
Which of what they are currently doing, or
wanting to do, is not facilitated by what is
available in the market
Design the product or service to meet the
requirement
Test it in the field and iterate the design until it is
perfect (or close)

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The Total Experience

Understand that purchasing a product or
service is a total experience, from
looking/shopping through purchase, and
service.
If the provider of the product or service
falters at any stage, the customer carries a
negative opinion of the entire experience
That is why you need the total involvement
of everyone
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Session 4
End of module 5

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Session 4
Begin Module 6
Summary

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Summary of Lecture 4
Customers are the reason for a company to exist
Companies need to clearly understand what the
customers need and ensure that they get what
they want and do not get what they do not want
Customers can be both internal as well as
external. Both need to be satisfied.
Sometimes it is not easy to define who is the
customer it is not always the person who pays
for the product or service
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Summary of Lecture 4
Seeking customer feedback is both important as
well as challenging
People do not like to fill out surveys and
feedback forms and do not know what may be
technologically possible
Design thinking is a method for observing
people using the product in practice and
understanding gaps in the product.

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Session 4
End of module 6

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