• January 5, 2006
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

The Best Makers Take Pains to Monitor Quality

The top performers in the manufacturing industry are four to five times more likely than their competitors to empower decision-makers with integrated systems for process support, and more than half employ a unified quality system all the way from materials sourcing to customer support, according to a new report. Aberdeen Group's "The Product Quality Benchmark Report" details what successful manufacturers are doing to monitor and ensure quality, and what the weakest ones are doing wrong. As in other businesses, customer satisfaction is the focus--so much so, in fact, that it overshadows other KPIs. "Normally we include a list of KPIs in the report," says Jane Biddle, vice president of global manufacturing research at Aberdeen Group and report coauthor. "When we conducted the survey, nearly 100 percent of respondents said customer satisfaction was their most important goal. The next KPI came in somewhere around 20 percent." However, the definition of customer satisfaction and quality is not universal. "Exactly what they measure for customer satisfaction varies," Biddle says, noting that specific metrics and the weight applied to them varies by segment (process, discrete, or consumer), by product, and sometimes by customer. "Although quality is a key determinate of customer satisfaction and longterm corporate viability, many companies continue to struggle with basics such as data collection, maintaining disparate systems, and enforcing standard operating procedures," the report states. Best-in-class companies are taking pains to integrate their systems, and approximately one-third of them are considering adding business intelligence solutions or enterprisewide quality databases. Aberdeen recommends a comprehensive approach, with a strategy that ties together purchasing, product life-cycle management, ERP, CRM, and other systems to create a 360-degree view of the customer and the business itself. This would ease tasks and approval processes that require data, metrics, or functions from multiple operational areas. Data integration, analytics, and BI are likely to be what receive the most attention from manufacturers seeking to improve performance. According to the study, roughly half of survey participants cited lack of quality metrics as a major challenge. Metric valuation is further inhibited by the inability to view quality across processes. An extreme example of this, according to Biddle, is the Tylenol poisoning event from 1986, when the inability to quickly identify the source of contamination and track it to the tainted product batches delayed the recall. Manufacturing, as an industry, has a broader concept of just who a customer is, Biddle says. "Sometimes the customer is a retailer or wholesaler; often it's another manufacturer." As such, even quality is subject to multiple definitions. The report states: Transcendent quality is an ideal, a condition of excellence; product-based quality is based on a product attribute; user-based quality is fitness for use; manufacturing-based quality is conformance to requirements; and value-based quality is the degree of excellence at an acceptable price. This leads to manufacturers designing for serviceability, Biddle says. "To increase quality and customer satisfaction manufacturers are considering, 'How do I design my product so I can service it easily?' They are using CRM and other systems to better understand the cost of quality, and especially the cost of poor quality in terms of support billings, returns, and lost revenue." Related articles: MarketScope: Manufacturing: CRM's Next Makeover
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