Customer Driven Quality - Research Paper Example

Driven Quality Team A Stephanie Bullinger, Cari Callery, Nageena Miftah, David Roman MGT 449 C Cromley April 9, 2007 The purpose of this paper is to discuss customer-driven quality. One organization from the following four industries has been chosen. Toyota was used for the manufacturing industry; Cox Communications for Service industry; The Gates Foundation for nonprofit and Underwriters Laboratory for government. The value of quality will be discussed as it pertains to each industry and a comparison matrix of each of the industries will follow. David The value of quality is critical for organizations to be successful. With standards and greater focus on quality by consumers businesses can not afford to underestimate the need for quality. One of the driving factors for this trend is the "impact of competition" (Burrill and Ledolter, 1999, pg. 523). The second major factor is the ISO 9000 system of standards. These standards provide a baseline by which processes and organizations are checked. The organizations strive to achieve certification as a stamp of approval. The final factor is quality awards. Companies compete to earn the highly visible quality awards. Not only do these awards make a statement about the organization, but these needs will have leverage in marketing campaigns (Burrill and Ledolter, 1999, pg. 523). The major factors that help define the value of quality have been presented. The next phase is to tie these factors to customer satisfaction. Greater levels of competition provide a catalyst to force companies to keep improving products or services. Consumers can generally choose from one of many companies to meet needs. One way for a company to keep customers is to provide a much greater level of satisfaction. The manufacturing industry will be used to illustrate this example. Automotive manufacturing is a $484 billion industry (Yahoo! Finance, 2007). Quality plays a major role in the success of this business. According to industry data Toyota is currently at the top of the market capitalization with $228.3 billion. Toyota takes both employee's and customer seriously when it comes to satisfaction. Toyota vehicles are in the top five in both the Midsize Car Initial Quality and Midsize Car Reliability awards from JD Power (JD Power, 2007). These examples of quality awards and the financial standing in the industry provide evidence of Toyota's value of quality being important. Consumer trends show the importance of fuel efficient vehicles that are still safe and fun to drive. Industry trends cited record-level gas prices for the beginning of the trend toward more fuel efficient vehicles. The forecast for the 2006 model year showed Japanese Big Three (Honda, Nissan, and Toyota) continuing to capture market shares. Customer needs were being met by these companies. Fuel efficient and hybrid vehicles were being manufactured with attention to quality (Edmunds, 2007). The manufacturers spotted the trend and produced quality vehicles that met the customer's needs. Toyota maintains quality at all levels of the company. This method allows Toyota to garner the best input from every employee. Special attention is paid to Toyota's methods for gathering input from all employees. "Toyota receives 4,000,000 ideas from its 80,000 employees. Since over 95% are implemented, this is over forty-six implemented ideas per employee per year" (Wadsworth, Stephens, and Godfrey, 2002, pg. 92). Toyota leverages the knowledge each employee gains while performing job functions. This allows for a close check to be kept on the quality of the products being manufactured. Steph Service companies lose millions of dollars when failures become repetitive. The failures result in redesign costs, liabilities, and transaction costs (Free Quality, 2007). Much of the business lost as a result of failures is the most serious cost and causes customer defection. The task that service companies must provide is error-free services. Error-free service becomes challenging due to subjective perceptions of quality. Since production and consumption are a simultaneous process, then becomes the uncontrollable element of participation by the customers. Customer satisfaction is guaranteed when service providers aim to develop an error-free process for service. A research study conducted by the American Society for Quality (ASQ), derived from the American Customer Satisfaction Index (ACSI), demonstrates a dramatic fall in service quality and stabilized product quality. In most industries, quality improvements have failed to keep up with customer expectations, indicating room for improvement and opportunity for better quality systems and processes (ASQ, 2007). Customers have evolved in their expectations. What customers wanted 10 years ago has developed into higher quality standards. Consumer demands cause companies continually to strive to increase their quality practices to remain successful. Service and customer-driven quality go hand-in-hand. The service industry success is defined by customer demands. Customer-driven quality in the service area is defined by the customers' desires. Quality is established by the customers' needs and satisfaction. Consumers desire service by obtaining such that coincide with their standards of quality, service, and availability. To give an example of a service industry, let us take a look in to Cox Communications. Cox Communications offers service in the area of digital cable, telephone, high-speed internet, and DVR/HDTV (Cox, 2007). Cox has met requirements posed by customers to bundle its services, offering better rates to customers who chose to obtain multiple services. Services provided by Cox has expanded into many outlying areas of in order to offer services based upon customer-driven quality. In order to meet requirements established by customers, managers could benefit by conducting service questionnaires or surveys. The questionnaires and surveys provide vital information about quality standards and customer expectations. The information gained can aid the company so that the services rendered are satisfactory in the eye of the consumer. In addition, the various websites offered by service companies allow a direct communication link between companies and consumers. Quality improvements can be adjusted by using the resource to gain knowledge of possible failures. Keeping an open line of communication allows organizations to improve service and keep satisfied customers. Upgrading quality reveals to consumers that they are a priority and keeps them coming back as a valued customer. Nageena After years of contributing to charitable causes, Bill and Melinda Gates, in 1994, consolidated their giving to address two main initiatives: Global Health and Community Needs in the Pacific Northwest. With the support of William H. Gates Sr., Bill and Linda formed William H. Gates Foundation in December 1994 with an initial stock gift of about $94 million (About Us, Bill and Melinda Gates Foundation, 2007). Gates Library Foundation - a non profit organization - was a landmark initiation by Bill Gates and Melinda Gates in the year 1997, while Foundation's Headquarters were situated in Seattle. The initial mission of this foundation was to introduce the public service libraries with World Wide Wed access for financially poor1 communities in the USA. Bill and Melinda Gates' initial thought for opening of such organization were to spread quality education to all possible areas and especially to those which are considered as 'poor and backward'. However, William H. Gates Foundation was later on merged with the Gates Library Foundation, and hence, The Gates Foundation was established in the year 1999 with initial contribution of approximately 16 Billion US$ by the founders (About Us, Bill and Melinda Gates Foundation, 2007). The motive of this newly founded non-profit organization was to eliminate unfairness, injustice, discrimination among and within the communities so that common belief, equal value for every one, could be justified. Apart from USA, Gates Foundation also works in other countries - especially the developing and poor countries - to increase the health standards while working towards elimination of the deficiency levels. Foundation works to achieve this motive of their while spreading the education in these countries at all levels while upgrading the technological aspects in public libraries. For Gates Foundation, it always has been very important to value and promote customer satisfaction within the organization for the purpose of enhancing customer orientation, so that the overall agenda of the organization gets greatly improved with required success. Foundation achieves this through fine tuning its all customer-centered services. Since Bill and Melinda Gates Foundation is a nonprofit organization, it believes most in the satisfaction of its customers, who are ranging from individuals to various organizations such as public libraries and schools. For the foundation, satisfaction of customers is regarded as most significant, since billions of dollars of charitable investments are considered as of no use without attaining the proper satisfaction by the customers. As Klee has mentioned it in the 'Impact of Customer Satisfaction and Relationship Quality', that it is the combination of products and services of an organization with its level of customer satisfaction that guarantees any organization for its long term aggressive steadiness in the market (Klee, 2007). If it is like this then preservation of an organization's customers must also be directly related to the satisfaction levels of the customers. Since the Gates Foundation is not a commercial organization, it does not have customers who it may fear of losing quickly. Rather due to its gigantic profile, this non-profit organization's customers are of long term basis. Gates Foundation makes it sure that the level of complaints from its long term based customers is always kept minimal if it can not be eliminated. Gates Foundation achieves this by taking care of the basic requirements of its customers while addressing their issues in a very quick and effective manner. In another important aspect, the foundation also considers and takes care of the reasons and visions of its highly regarded customers while assisting them with the financial and technological aids while remaining entrusted in taking care of the quality in attainment of its goals, which are always parallel with the mission and vision of the foundation itself. The Bill and Melinda Gates Foundation successfully achieves the above stated while going all-out to manage predefined methodological systems; determining performance levels always remains important in this respect for the foundation. This practice certainly enhances the quality related activities in the organization while boosting the chances of its customers' and employees' direct participation in various aspects. As Fenner has suggested in an article 'Quality-driven means Customer-driven' this is available online, that "A customer's perception of value and satisfaction begins with an initial purchase and continues throughout the actual ownership and the overall service experience. Regardless of whether the perception is positive or negative, a customer's thoughts and desires will influence what the company provides as it strives to maintain a healthy relationship with customers" (Fenner, 2004). This shows that if an organization is successful in fulfilling its customers' basic requirements, then above suggested relationship between an organization and its customers could certainly be built. Fenner suggests that this happens due to the increasing levels of faith, assurance, and reliability. According to Fenner, 'Customer Driven Quality' is the other name of above stated relationship. This concept of 'Customer Driven Quality' also creates a product differentiation - an edge for the organization over its rivals. For Bill and Melinda Gates Foundation, it becomes utmost important because the organization is supposed to do better then the anticipations of its customers, or else the foundation's cause will die; Foundation achieves this motive by bringing in more customers, so that poverty can be eliminated, educational levels could be increased, and health issues could be resolved in no time not only in USA but throughout the world. Since it is a charitable non-profit organization, its customer's expectations are always very high; and it is of absolute importance for the organization to implement and maintain healthy relationship with its customers, in other words it can be said that it is responsibility, which the foundation effectively serves, while facilitating the customer driven quality. I an article 'Community Empowerment, Participatory Management' published online, Bartle suggests that an organization's staff, along with its high profile nominated managers, are supposed to contribute to in some way to the formulation of organization's vision of the future by authorizing their rights over the long-term decisions. Bartle reflects this idea while relating it with Participatory Management. According to Bartle, "In participatory management, the designated managers nevertheless, have the final responsibility for making decisions and answering for them, but members of the staff who are affected by those decisions are actively sought to provide observations, analysis, suggestions and recommendations in the executive decision making processes" (Bartle, 2007). Hence, it becomes of highly importance for the Bill and Melinda Gates Foundation to implement participatory management style, which it effectively does, by involving all its stakeholders, which include staff members and customers, in the development of long term based decisions while making it sure that the future vision of the organization resembles in parallel to the much desired objectives of its customers. Cari Anytime a product or process is endorsed with a government quality process it builds on consumer confidence for that enterprise. Building consumer confidence is a large part of the government involvement in quality assurance. The government has set standards for quality in production. Some visible signs of government quality are the UL label; Underwriters Laboratory of the United States, which is a manufacturing quality seal of approval (Burrill & Ledolter, 1999). The customer can rely on a product being relatively safe when they observe this seal of safety on a product they purchase. Government standards help to assert society's requirements for safety, health, and a certain uniformity of products (Burrill & Ledolter, 1999 pg 93). In other words, when products are quality controlled by the government the fact that they are government endorsed builds consumer confidence. A common perception of a government agency's concern for quality is not taken seriously by the public. The government has a history of being full of processes and not much processing. The Social Security Administration is trying to better the public perception of a government agency by creating a more user friendly customer service environment. It is now easier to contact the Social Security Administration and get a warm body to help with an issue. By this agency listening to the public concerns for better help in these areas and modifying these issues, builds consumer confidence in the ability for the government to quality control its relationship to customer satisfaction within its own organization. To conclude, our findings have discussed customer-driven quality and its relationship to customer satisfaction from the following four industries, Toyota for the manufacturing industry; Cox Communications for Service industry; The Gates Foundation for nonprofit and Underwriters Laboratory for government. Our research has found likenesses and variances from each industry to follow in a matrix below. Matrix of Commonalities and Differences: Nonprofit Service industry Governmental Industry Manufacturing Industry Teamwork and Collaboration: Working collectively to accomplish more than what one can alone. Working collectively to maintain customer loyalty Working under the continuous governmental monitoring with collaboration to governmental agencies. Working independently and without any collaboration to accomplish the preset goals. Quality Management Commitment to excellence and the discipline to continually improve Commitment to both customer and employee Commitment to uniformity within the organization to maintain already defined level of improvement with transparency. Commitment to improve for as long as the profit can be generated heavily. Customer Service Responsiveness to the needs of external and internal customers Customer driven satisfaction Sluggish Responsiveness to its customers and up to a certain level. Responsiveness to its customers' requirements for maximizing total sales. Purposefulness Deliberate action focused on the organization's goals and priorities Maintains customer oriented products and services Strong focus on organizational goals and priorities. Severe and sincere focus on organizational goals References ASQ (2007). Services and quality. Retrieved on April 2, 2007 from www.asq.org/quality_report Bartle, P. (2007)Community Empowerment, Participatory Management. Available online: Retrieved on April 07, 2007 from http://www.scn.org/cmp/modules/pm-pm.htm Bill and Melinda Gates Foundation, About US. (2007) Available online: Retrieved on April 07, 2007 from http://www.gatesfoundation.org/AboutUs/QuickFacts/Timeline/default.htm Burrill, C. W., & Ledolter, J. (1999). Achieving Quality Through Continual Improvement. New York: Wiley. Cox, ( 2007). Cox communication and Tulsa. Retrieved on April 7, 2007 from www.cox.com/oklahoma Edmunds. (2007). 2005 Automotive Trends Spotted by Edmunds.com. Retrieved April 6, 2007, from http://www.edmunds.com/help/about/press/108914/article.html Fenner, C. (2007) Quality-driven means Customer-driven. Available online: Retrieved on April 07, 2007 from http://www.claudefenner.com/content/detail/CustomerDrivenPage.htm Free Quality (2007). Services and quality. Retrieved on April 5, 2007 from www.freequality.org JD Power. (2007). JDPower.com. Retrieved April 6, 2007, from http://www.jdpower.com/default-autohome.aspx Klee, A. (2007) Impact of Customer Satisfaction and Relationship Quality. Available online: Retrieved on April 07, 2007 from http://www.hennig-thurau.de/Hennig-Thurau%20&%20Klee.pdf Mora, E. (2007)Customer Service is the Question. Available online: Retrieved on April 07, 2007 from http://www.tpmonline.com/articles_on_total_productive_maintenance/management/customerservice.htm Wadsworth, H.M., Stephens, K.S., & Godfrey, A.B. (2002). Modern Methods for Quality Control and Improvement (2nd ed.). New York: Wiley. Yahoo! Finance. (2007). Industry Center - Auto Manufacturers - Major. Retrieved April 6, 2007, from http://biz.yahoo.com/ic/330.html Read More