Do you meet customer expectations consistently?

After understanding the customer and how your product or service makes him pay the price you want, one must ensure that the product or service indeed meets the customers’ needs all the time and every time. The nagging question every entrepreneur must face is: Can my system or process do this consistently?

The next critical step in the QDP (Quality-Delivery-Productivity) process is the evaluation of the inputs or materials and the transformation process adopted in order to come up with the desired service or product. One looks at the role of each raw material in the satisfaction of customers’ needs, determines the critical quality materials and checks out what is essential to its delivery. Do these inputs have the essential characteristics to be transformed into the product or service that the customer is willing to wait and pay for?

The resulting evaluation will reaffirm that the inputs are correct to start with.

What follows is a step-by-step examination of the transformation process. Which step in the process determines the customers’ needs? Which step in the process makes the customer willing to pay the price? How is this critical quality process being managed? Is the performance of the process people-driven or technology-driven?

Remember, no amount of investments and good management can transform improper inputs into the product or service that the customer will be willing to pay for. Most of the time, the key to meeting customer expectations is a combination of managing inputs and the transforming unit.

To simplify, products and services can be classified as standard or customized. Inputs can, likewise, be classified as standard (no deviation from each other) or variable (great deviation from each item). Transforming units can be classified as fixed (special purpose process that can only do one type) or variable (general purpose process that can do many types). It is important to bear in mind that these concepts are critical to the management of QDP.

On the one hand, if the product or service required is customized but the inputs are generic or standard, it is correct QDP to have a transforming unit that is variable. It is the variability of the transforming unit that will customize the product to satisfy the different needs of the customers.

On the other hand, if the product or service needed by the customer is standard and the inputs have great variability, then it must be the variability of the transforming unit that must tame the variable of the inputs to meet the standardized needs of the costumer.

There are also other combinations. If the customer needs are standard and the inputs are standard, the transforming unit is best made fixed. The key is to know the character of the customer demand, manage the inputs and design the transforming unit to give to the customer what he needs by design, not by accident. This is the only way to make sure that the entrepreneur makes the happy customer pay the price all the time.

Does managing the transforming unit the QDP way really transform the business?

As I noted in this column last week, my Master in Entrepreneurship (ME) students apply QDP as part of the course. Let me cite more examples.

One of the customer needs that has been promised for delivery by one of my students in the food business is the appetizing Pampango dish called sisig in five minutes; otherwise, a discount is given.

When QDP was used to review and to improve on the process, the promise was always kept and, correspondingly, the quality of the sisig was always met. Before QDP, it was met by consistent watching over; after QDP, it is now met by design. QDP transformed the business from one that was being managed to meet customer needs to an organization that meets customer needs by consequence.

Today, more products are being put in the five-minute list and an increasing number of customers now want the five-minute service.

Another student in the food delivery business had a similar finding. He was in the type of business where the customer hated wrong deliveries. Before the use of QDP, making a wrong delivery was accepted as normal or even natural for the business. The successful application of QDP became a challenge and led him to review all his processes.

The review showed the process allowed wrong deliveries, and was checked only when noticed by the customer. A redesigned process not only disallowed wrong deliveries from ever happening but, in the event it happened, it was noted even before the truck left the loading bay.

The redesign did not need any new investment. All that was needed was the re-examination or the transforming unit to make sure that it conformed to the needs of the customer. Thereafter, no wrong deliveries were made.

Even the number of deliveries per day also increased because, under the new system, the goods were also rearranged in the delivery according to the order and time of delivery. The fact that the last delivery was in the innermost portion of the truck prevented the delivery of right items to the wrong customers.

Let us look into another entrepreneur’s quandary that surfaced during our mentoring sessions at the AIM’s Asian Center for Entrepreneurship.

"I distribute ingredients for bread products to bakeries. Customers call my office for a delivery on the day they run out of stock. By that time, not only had they lost sales opportunities for their products but they had already bought the product from competitors on an emergency basis. How can QDP help me?"

This was the QDP application opportunity for him. After reviewing his delivery process, he discovered that his system led to two situations he did not want: running out of stock and being over-stocked. It led to a nightmarish scheduling of deliveries to his customers.

His inputs were customer inventory information. His transforming unit was his delivery system. His desired output consisted of customers with correct inventory levels. This system made customers call for deliveries when they ran out of the ingredients. He addressed the problem by increasing deliveries.

The subsequent review of his process using QDP resulted in a new system. Instead of letting his customers take care of stocking his products in their storage area, his delivery people now took care of stocking. This resulted in knowing the real inventory situation of the customer.

In addition, based on the historical consumption report of the customer, a reorder point was established. Physically, the reorder point was identified by a differently marked product box. The stocks were arranged by the delivery people so that when the reorder point was reached, the differently marked box would be visible. This box says, "Now is the time to reorder.

This GDP applications had led to increased sales and zero stock-out at the customer level.