Wednesday, August 06, 2008

Measurement for Quality and Performance

Measurement for Quality and Performance

Management of delivery performance and customer service: Measurement tools include customer feedback mechanisms, surveys, interviews, documentary delivery data and service reports. For example, one area Korean companies appear proficient is in the after-sales service of repairs and defective parts. Most small cities have walk-in centres which appear eeriely similar to medical clinics or veterinary hospitals. Customers take a number and sit in chairs with their product on their lap, be it a rice cooker or remote controlled fan. Even documentary warranties periods are often waived as was my case my computer power cord had shorted in a rainstorm. I was provided free new cord no questions asked.

While this may not have reduced cost it did build impressive brand equity. While focusing on features, delivery timing and reliability are important providing excellent after sales service is an often missed opportunity. How many sales are lost at the outset with poorly trained, under-paid sales staff at big box retail stores?

Management of process line: This may be monitored by inspection however as this is the most costly in terms of time and as W. Edwards Deming demonstrates in the "Red Bead Experiment" quality must be designed into the process from the start be it through kanban, JIT or EDI control systems.

Red Bean Experiment

Eliminating any or all defects at the point of design and production is a reality for many suppliers at Toyota or they do not remain suppliers at Toyota. This means strict adherance to specifications are a key component to successful auto manufacturing in today's globally competitive market. So far few global car companies can exceed the Japanese in their control and management of total quality. If and when they do so (Chinese or otherwise) buyers and shareholders will vote with their check-books. Customer satisfaction in internal downstream production facilities require efficient methods of maximizing productivity and minimizing errors. Kanban and JIT provide cellular-type manufacturing opportunities to soldify quality in production.

Japanese Toyota Car Commercial

Our text lists cycle times, lead times, setup times,materials availability, material movement distances, machine repairs timeand customer service time.

Management of production flexibility: How flexible the design of new products and their profitable production is determines the successful sale of products meeting customer needs. For example, few customers require 4X4s at this time and how quickly a product and factory could be re-engineered to market economy cars would determine market share. This wouldinclude monitoring customer reports as well as cost for quality. North American motor companies have their share of failures in terms of marketing economy cars in times of oil price hikes.

Lemons and Junky Cars Timelines

Japanese car companies quickly minimized the number of parts needed to make a car reducing wear, replacement and number of suppliers, with low percentages of unique parts even for premium models, minimized differentiated processes of production, without compromising new product launches and options all saving money or rather placing money in the profits rather than costs category.

Management of quality performance: Control of suppliers is a high art form among the Japanese and sometimes it appears hard to tell if they are not all the same company after all. Higher quality equals higher customer satsifaction and higher quality management with more satisifed employees also equals higher customer satisfaction. Statistical analysis indeed provides data measurements to ensure quality delivery is profitable.

More from W. Edwards Deming - Gospel, "A Prophet Unheard" -vis a vis management of western companies, "We are doing miserably."

Measurement of financial performance: Our text lists such performance measures as monitoring waste levels, returns, value-added costs, cost and productivity measures, overhead, cheque book accounting and systems complexity. The Japanese quality concept of kaizen easily reflects financial performance measures in elimination of waste or "muda".

Measurement of social issues: Our text lists morale, teamwork, corporate vision-enhancement of employee ownership of company vision, leadership abilities,education and training, CSR as methods of improving company performance of social issues.

For many in the banking industry the lack of accountability measures, such as NINJA loans, zero interest loans, etc. were sources of financial advantages in terms of fully leveraged debt buy-outs. Local content requirements and vertical integration can often be financially advantageous in non-free trade pact nations.

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