The ASQ Global State of Quality

Spotlight RepoRt

the Qustomer

Qustomer? Yes, Qustomer. According to the ASQ Global State of Quality Research: Discoveries 2013, outstanding quality requires high levels of customer in-volvement (internal and external) throughout the entire life cycle of an organizations activities. This means directly integrating customers into these processes to collaborate at key points where quality is critical to overall successnot just at the point of delivery. Over the last decade, this level of customer integration has increased as the quality discipline has evolved from a requirements-/compliance-based concept to practices that are focused on understanding how to truly create customer value. To ensure value is created in the most effective, efficient manner, organizations are increasing integration of the quality process and the customercreating a new partnership called ... the Qustomer. Through a series of deliberate contact points, the Qustomer is involved in product or service design, prototyping, production, sup-ply chain planning, logistics development, and delivery processes. By putting the customer needs and input first, an organization can unlock additional customer value at various points in the life cycle.

Based on the findings from the Global State of Quality Research thus far, it is clear that organizations view both the definition of quality and how quality practices create customer value as critical components to the success of the organization. What are the characteristics of organizations that have focused on developing the Qustomer? What

successful practices have these organizations utilized to create this stronger relationship with the customer? And what return have both the supplier and the customer realizedfinancial, cultural, and operational efficiency?

This Spotlight is the first in a series addressing questions such as these to uncover data, real-world examples, and insights into quality topics identified in the Global State of Quality Research up to this point. These reports will pro-vide you with insights from both survey data analysis and conversations with quality leaders throughout the world whose organizations have implemented mature quality practicesstarting with the Qustomer.

Just the Facts

Analysis of the Global State of Quality survey results has uncovered several interesting patterns that begin to describe the types of organizations focusing on developing the Qustomer as a core component of the quality process. Four questions on the survey focused on the main characteristics that define the Qustomer. Organizations responded on a scale of 15, with 5 being highly agree and 1 being highly disagree to the following statements:

1. At our organization, the belief is that the customer is the only person qualified to specify what quality means.

2. Information on our product/service quality performance is shared with customers.

3. We communicate with customers regarding our efforts to address their needs and complaints.

4. Our organization seeks to understand product performance through customers eyes.

Although there is some variation among responses for each question, statistical analysis shows the variance is small enough that one statement can be used to represent the group. The statement, Information on our product/service quality performance is shared with customers, was selected as the main Qustomer characteristic for fur-ther investigation. Of the 2,193 responding organizations, 67.4 percent share quality performance, to some degree, with customers. Figure 1 shows the organizational characteristics and use of quality practices that correlate with both a higher and lower level of agreement with the selected Qustomer statement. Six characteristics have a

Characteristics of a Mature Qustomer1. High levels of collaboration between the

organization and the customer throughout the entire product or service life cycle.

2. Opportunities for staff at all levels of the organization to interact with the customer.

3. Sharing of quality-related data with the customer on a standardized schedule; this includes successes as well as failures and the steps being taken to fix any problems.

4. Quality is ultimately judged by the cus-tomer, not just the results of quality tests.

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statistically significant relationship (i.e., correlation) with an organizations use of the Qustomer:

1. The inclusion of quality measures in the overall strategy of the organization

2. The transparency of quality measures throughout the organization

3. Governance of the quality process

4. Senior quality leaders reporting directly to the CEO or equivalent

5. The use of the quality process as a driver of organiza-tional performance

6. Management of the quality process

Organizations in the lower left corner of the figure do not integrate the customer into the quality process. Only 21 percent of the organizations that do not include quality measures in the organizational strategy actually share quality information with customers. Organizations in the middle of the figure, where quality and the customer have a moderate amount of integration, do not have a senior quality leader reporting directly to the CEO. Organizations in the upper right have the highest level of Qustomer integration and are more likely to include quality measures in strategy, use the quality process to drive continual improvement, and have a high level of transparency with quality measures.

The data reveals several important facts about the overall characteristics of organizations using Qustomer more than others. These organizations tend to include quality as a core part of organizational strategy, are transparent with quality measures across the organization, have the most senior quality position reporting directly to

the leader of the organization, use the quality process for more than just meeting compliance, and are both managed and governed by senior leaders.

These relationships appear in more detail in Figure 2, where the scale for three of the six characteristics, going from least to most mature (along the x-axis for each chart) have a strong correlation with the use of the Qustomer (along the y-axis for each chart).

The data provides the set of characteristicsbased on the application of quality practicesthat are more apt to be used by organizations also focused on higher levels of integration of customers into an organizations processes. For example, the last chart in Figure 2 shows a strong, almost linear, relationship between higher levels of quality measures, transparency, and the Qustomer. All the data provides a basic description of the characteristics of organizations that are focused on high levels of customer collaboration through-out the quality process. Although the analysis describes the relationship or correlation between key organizational characteristics and the Qustomer, we still dont understand the causal impact these quality practices have on core quality performance and overall organizational outcomes.

What are the main factors that facilitate Qustomer implementation effectively? There is a delicate balance that is critical to success: Extreme levels of customer collaboration can ultimately be very expensive, whereas too little can result in poor quality in terms of meeting customer needs. After discussing this concept with five organizations that have created an effective balance between too little and too much, there are several commonalities that help to inform how to actually go about creating the Qustomer.

Figure 1: percentage of organizations by quality characteristic that share quality product/service information with customers B

Qustomer 83% (quality process governed by senior leadership)

79% (quality measures shared across the organization)

77% (quality measures part of organizational strategy)

76% (quality process managed by senior leadership)

74% (quality process is the driver for continual improvement)

69% (senior quality leader reports directly to CEO)

Quality + Customer 67% (all organizations) 60% (senior quality leader does not report directly to CEO)

54% (quality process governed by committee of business unit leaders)

34% (quality measures shared only within individual programs)

21% (quality measures not part of organizational strategy)

Customer

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the Qustomer is essential

The data from the Global State of Quality Research has already aided in further data collection and analysis to help answer these questions about how to actually work toward higher levels of customer collaboration throughout all organizational processes. To better illustrate the presence of high levels of customer collaboration, APQC spoke with five organizations that have demonstrated ex-ceptional organizational performance and mature quality practices, and have effectively engaged customers in their quality processes.

Thomas Joussen, an internal audit manager at Airbus, said that while airplanes are built based on requirements, the customer is an essential component to the internal customization. The seats are customer influenced, he said. The distance the aircraft can fly is customer influenced. The airlinesour customershave significant influence on the product.

This sentiment was reiterated by Marlene Wolf, the ex-ecutive director of quality at Educational Testing Service.

She said, Customers provide the requirements and are involved in design reviews to ensure, along the path of development, that they are receiving what they need.

The idea of customization of products to client needs was noted in all six interviews. Ben Tomic, a senior quality engineer at Bombardier Inc., said, We try to implement customer ideas where it is technically feasible.

This Qustomer concept is deeper than simply including requirements. Its about forging a relationship that puts customer needs first. Joe Davis, a director of training and quality at ABF Freight System Inc., said, You have to be talking to the customer every day. You cant just contact them once a month or once every six months and say, Are we doing okay? Everything good? You have to have a constant dialogue with them.

Ron Lear, a corporate quality director at Booz Allen Hamilton, said frequent quality discussions with the customer involve: reviewing priorities and requirements, program management reviews that report on status and finances, quality management plans to address subjects

Figure 2: percentage of organizations by quality characteristic that share quality product/service information with customers B

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74% 77%

The quality process in the organization is mainly used to (options are additive)

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that often appear in quality assurance surveillance plans, and market reviews that transfer best practices and verify accounts. Lear said the most important tool Booz Allen uses is called the dependent quality assessment process. We basically talk to clients based around voice of customer methodology, Lear said. We go in to the customer and say, How are we doing in these areas? With the feedback, the organization makes changes to better address the key issues raised. Lear said, Then we circle back to them after a period of time with the action items that weve identified. Well say, This is what we heard from our previous session, and heres the actions weve been taking. Are we on the right track? Do you think that we are performing better? It goes into that continual monitoring phase.

The results of such discussions are a close, productive relationship with customers, as evidenced by a recurring problem ABF had with one of its customers. Before ABF Freight System took over a specific account, products were damaged regularly. Davis organization assembled a team of account managers, operations people, and of course, the customers. The focus was on problem solving to ensure the customers products were appropriately managed. They discovered that the pallets used to carry the parts were too small. Davis said, I told them that if they spend a little bit more money and make a different pallet that is a little larger than the product, the damages would stop. Nobody had ever sat down to try and find this solution.

Davis said this was the perfect solution, and it reinforced the idea that working with the customer in such an intimate way is not about big, massive changes: A lot of it is just the little things. There arent any huge issues with customers. Most of it is just the small stuff that customers dont think about doing.

the Value Chain

The organizations interviewed all involve customers from the beginning of their quality processes. This includes incorporating customer input into the design phase of product/service development. Lear, from Booz Allen said, Were actually able to build in the customers needs and address their requirements at the level of quality were accustomed to.

Deborah Perian, a director of quality at BAYADA Home Health Care, said this involvement allows her organi-zation to look at their issues from the most important perspectivethe customers. Up until now, I dont think

that we included our clients in the quality process, Perian said. We were supposed to include them by creating goals for them.

Yet customer inclusion doesnt end with the design and capture phase; the real value comes through collaboration with the customer at critical points, starting with design, through production and logistics, and ultimately with delivery.

For example, Joussen, from Airbus, said its not only about creating a customized airplane but also about providing customer input opportunities through the entire product or service life cycle. After the design, he said, The customer is at the assembly line doing quality checks while the aircraft is assembled. For all the stages from beginning to end, they give quality checks and clearances. And when the product is in use, Airbus continues to solicit input through maintenance and customer service.

Barriers

Despite the numerous benefits an organization can reap through close collaboration with the customer, it isnt always easy. Several barriers were noted throughout these interviews:

Suppliers: For organizations that develop complex platforms or systems that require many suppliers, it may simply be impossible to implement the Qustomer throughout the product or service life cycle because much of the work occurs outside the organization. One method to overcome this barrier is to include the Qustomer characteristics as requirements into supplier quality documentation and contracts. Integrating the quality systems of suppliers into the organizations overall quality management system can lead to more effective quality collaboration with customers.

intellectual property (ip): For products or services where the processes are equivalent to intellectual property or capital, it can be extremely difficult to effectively create the Qustomer without negatively impacting the organization. Sometimes the IP barrier can be overcome with a few key customers through the addition of specific language to contracts or stronger nondisclosure agreements.

Regulatory standards: Often there are many require-ments that impact the products or services that are moved across political boundaries and how organizations actu-ally communicate and share information. These types of limitations cannot be circumvented, but the critical aspect

The ASQ Global State of Quality

Spotlight RepoRt 1:

Quality Governance and Management

Contact information for ASQ and ApQC:

Laurel Nelson-Rowe, CQIA Managing Director, ASQlnelson-rowe@asq.org

Travis Colton, CMQ/OESenior Consultant, APQCtcolton@apqc.org

is ensuring that all stakeholders, including customers, understand the direct impact on how work gets done and the risk to quality.

economic conditions: With the increasingly global dis-tribution of customers, the cost of high levels of effective collaboration can quickly become prohibitive. In these cases it is critical to identify the core quality outcomes for key processes and reach toward implementing the Qustomer at these points.

Cultural issues: Increased customer interaction through-out the product or service life cycle requires high levels of trust and understanding, which are based on a com-mon set of valueswhat is important to you is important to me. In some cases the differences in cultural values and norms across geographies can lead to misunderstandings and perceived insensitivities from the perspective of the customer. For the Qustomer to be effective, it is important to identify these cultural differences like any risk and apply appropriate mitigation activities.

Such barriers are overcome through frequent communica-tion with the customeron a daily basis, if necessary. A great example of an organization that employs frequent and systematic communication can be found throughout all of Caterpillars global plants, where large voice of customer boards are placed on the plant floor and updated daily with input from customer experiences. In this case the communication is unidirectional from cus-tomer to employee; it provides a constant communication channel on quality. Through regular communication with the customer, organizations direct the focus on them so the necessary progress can occur.

The Qustomer is an important facet of the growing focus on quality. Quality is not simply a regulatory standard; its acceptance by the customer. By including the customer throughout the product or service life cycle, organizations are able to generate additional customer value.

Continuing Conversations Organizations are moving toward a more integrated quality process, with customers involved not only in the final delivery and use of products and services but also early in the operational value chain. They develop numerous feedback loops that provide voice of customer input at critical quality points. This Spotlight provides insights from a few of the organizations along with data highlights describing characteristics of these organizations that are more apt to develop and promote the Qustomer. The next Spotlight in this series (Quality as a Competitive Advantage) will detail how these practices affect the success of these organizations, in terms of financial results and operational excellence. The data provided in the Global State of Quality Research is the foundation for the conversations to move forward. Although the research has been limited to the identification and correlation of various quality practices, the next step is to focus on causation. Understanding the causes will further arm quality and organization leaders with actionable data and information on quality practices to enhance their own organizations performance. Practitioners need to know which quality practices can cause higher performance and the magnitude of that change. Further analysis will reveal: Does creating the Qustomer really lead to improved quality outcomes? And if so, by how much and in what ways? Our continuing conversation (in each of the Spotlight reports) with the ASQ Global State of Quality Research and insight from quality leaders in the discipline will answer those questions.

For more information about the ASQ global State of Quality Research, visit globalstateofquality.org.