2018 Is The Year Customer-Driven Quality Redefines Manufacturing

• 88% of B2B customers say that quality is the most important factor in their decision to remain loyal to a manufacturer or brand according to Data, Strategy & Technology.
• 89% of manufacturers rely on Cost of Quality to improve customer satisfaction, and 84.52%, for ISO 9000 compliance (Kaur, 2009).
• 92% of manufacturers say product quality defines their success in the eyes of their customers according to a recent IQMS survey, What Drives Growth In Manufacturing? (free, PDF, opt-in).
• Customer-centric companies are 60% more profitable than their product-driven counterparts according to a Deloitte study on the many benefits of being customer focused.
• Loyal customers are 5x as likely to repurchase, 5x as likely to forgive, 7x as likely to try a new offering, and 4x as likely to refer according to a study by the Temkin Group.

2018 is quickly becoming the year of customer-driven quality. From automotive suppliers working to excel at compliance with the Materials Management Operations Guideline/ Logistics Evaluation (MMOG/LE) assessments and benchmarks to many of them expanding the scope of engineer-to-order short notice production runs they can complete, manufacturing scale and quality are at an inflection point today. The long-standing metrics that are great for measuring internal process efficiency need to be balanced with more customer-driven performance and quality benchmarks. Manufacturer’s customers are often suppliers to OEMs and Tier 1 suppliers themselves, which is further amplifying the importance of quality across supply chains.

Manufacturing Customers Are Driving A New Quality Inflection Point

Real-time production monitoring, quality management, compliance, supply chain and ERP systems all built on a single database are providing customers with the visibility they need to create, plan and execute new business models faster than ever before. Customers need far more data than legacy quality management systems can provide. For many customers of manufacturers I’ve visited and spoken with, the pressure they are under to excel at product quality for their customers and supply chains have never been greater. For automotive parts suppliers, the quickest path to getting more business from their customers is to excel at product quality at a level far beyond their competitors.

Here are a few of the many ways manufacturers are rising to the challenge of excelling at quality to meet and exceed customer expectations:

• Prioritizing supplier quality and audits, then providing the results across manufacturing to improve collaboration, communication, and long-term performance. Breaking quality out its isolation on the shop floor or just in manufacturing is the first step to showing an entire company what needs to be done to excel and serve customers better. Those excelling at product quality are using dashboards and scorecards, often visible across shop floors on flatscreen monitors, to change the culture of their companies daily.
• Quality metrics and the people who own them change behavior and results faster than bonuses do. I recently had lunch with a manufacturing CEO who told me that customers are more focused on speed and quality at scale than ever before. The CEO is opening a new production center to be able to handle more short-notice production runs. Over lunch, he said “quality metrics and the ownership they give teams are more valuable than money. Sure, we pay bonuses, yet the pride my production teams have in exceeding quality and schedule targets is taking our potential to grow to an entirely new level.” His company has a profit-sharing program. Bonuses based on the sales uplift from customers repeating buying because of their quality outpace the traditional bonus plan they had in place before.
• Mobile-enabled production scheduling, manufacturing execution, and fulfillment applications give production teams what they need to respond to customers in real-time. Manufacturers are winning the majority of upsells and cross-sell deals can respond the fastest with the complete data on the status of shipments. Mobile-enabled ERP systems give manufacturers the power of knowing now what the customer needs to make a decision. Quick, complete responses are what customers expect. Exceeding those expectations using mobile-based ERP systems is a quick way to win both upsell and cross-sell sales.
• Reporting from the shop floor to the top floor including analytics and Business Intelligence (BI) must be indexed to customer success. There are dozens of different metrics, key performance indicators (KPIs) manufacturers rely on today to track activity, performance and quality plant wide. Turning quality into dollars starts by indexing production performance into what it means for customers. Concentrating on their metrics and integrating them into existing scorecards and dashboards is critical. The best customer-driven audits are based on metrics and KPIs from customers, and eventually, they become a core part of quality and production reporting.

Sources:

Kaur, P. (2009). Current Cost of Quality Management Practices in India in the Era of Globalization: An Empirical Study of Selected Companies. Decision (0304-0941), 36(1).