The Value of Quality in Marketing terms

February 18, 2008

It is incumbent upon the marketing function to both understand and provide a holistic view of how the market defines the value of quality. This requires expanding the view of how value is created and delivered throughout the entire delivery system of the organization. It is essential to understand that value at the point of production does not necessarily translate into value at the point of consumption. Issues of product support, parts availability, service, warranty and so forth all figure prominently into how customers and markets define and evaluate the value offerings of competing suppliers. Consequently, the value information collected and provided by marketing must identify those factors that are critical to quality (CTQ) throughout the organization’s value stream.

            The marketing role also should include linking value information from the marketplace to internal processes throughout the organization that create and deliver value. This is the process so critical to the identification of Six Sigma projects, linking the organization’s processes (inputs) to competitive performance criteria associated with the CTQs (outputs). The tools used to identify the linkages must allow the organization to set project priorities.

            Once Six Sigma projects are under way, an important function in the analysis of information is the development of appropriate tracking metrics to monitor market-perceived changes in value based on changes brought about through Six Sigma projects.

Strategies of Six Sigma

February 18, 2008

The decades-old manufacturing theory is getting new life as it’s applied to business-process strategies. In this metric-conscious economy, many managers like the fact that Six Sigma is a highly disciplined, project-based methodology that can help companies focus on developing and delivering near-perfect products and services. Six Sigma concepts are proactive tactics based on the idea that rather than wasting time and money fixing products that come out wrong, and dealing with the customer-service fallout and refunds that result, companies should work toward achieving “zero defects”–or as close as possible to that mark–in the first place. Few would dispute that goal.

          Six Sigma has both management and technical components. On the management side it focuses on getting the right process metrics and goals, the right projects and right people to work on the projects and use of management systems to successfully complete the projects and sustain the gains over time. On the technical side the focus is on enhancing process performance (improving the average level of performance and reducing variation) using process data, statistical thinking and methods, and a disciplined and focused process improvement methodology .This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process (defines, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement.

Mass Customization in the Supply Chain of the Automobile Industry

October 31, 2007

The mass customization model presents a challenge to the production planning process in the automobile industry. Mass customization implies that the customers can select order and receive a specially configured product to satisfy their specific requirements.

The goal of mass customization is to produce a high quality product with the shortest delivery time and lower cost. Mass customization is accomplished by proactively developing product families around a modular product architecture, implementing a flow manufacturing to achieve one-batch-size capability, establishing a spontaneous supply chain around standard materials, creating agile systems to order process based on product configuration and building parametric CAD templates with automatic CAD/CAM linkages to CNC equipment.

In the future, many companies will go from a make-to-stock to a mass customization business model. For instance, General Motors plans to transform from a make-to –stock company to a mass customization company to reduce the costs of parts and unsold cars. Some of the important strategies required for mass customization are:
•Supply chain management


Supply chain management:
A typical supply chain management in the automobile industry is formed by thousands of companies related with the raw materials supply, the part of production, the sub-assembly, the final assembly and the distribution. For example, the Hyundai supply chain has approximately 400 first tire suppliers, 2,500 second tier suppliers and an unknown number of third or superior tier suppliers.

One of the problems in the automobile industry is the simultaneous combination of a large-volume-production requirement with a large variety of small-lot, make-to-order requirement involving a big number of suppliers.

As in other industries, the internet revolution has had different impacts on the automobile industry. Four primary areas where automobile manufacturers are applying internet technologies are
1.Procurement and supply chain
2.Integrating Internet services into vehicles, such as web and e-mail access
3.Sales, marketing and distribution systems
4.To attract online customers

The internet facilitates e-procurement across the auto industry. The low cost and high speed of this communication method is necessary for the mass customization strategy to be economically feasible and to tell the automakers what you want them to build. The advent of electronic commerce over the internet has facilitated new relationships for connecting with new supply chain partners, thereby significantly increasing the quantity and quality of inter-organizational information flows.

The direct channel between manufacturers and consumers is enabling mass customization, and is influencing the production planning process. As a consequence, producers get better signals regarding the customers’ preferences and demand levels, which in turn lead to better inventory management and production planning.

Why use 3PL and How to Implement a Successful Third Party Logistics Project

October 31, 2007

Why Use 3PL?
To Save Time: Outsourcing the Logistics function can free up resources to focus on core competencies.
Because Someone Else Can do it Better: Even if you have resources available, another organization within the supply chain may be able to do it better, simply because its relative position in the supply chain, supply chain expertise and economies of scale.
To Share Responsibility: 3PL companies can share responsibility for managing global supply chains, keeping customers and stores properly stocked, and delivering the perfect order every time.
To Re-Engineer Distribution Networks: Logistics outsourcing can be a quick way to re-engineer distribution networks to meet global market demands and gain a competitive edge.

Implementing a Successful Third Party Logistics Project

Outsourcing Strategy: Without it, there will be no clarity about outsourcing and outcomes to the organizations. It should be well thought-out and measured against the in-house solution and capabilities.
Document the Processes: To eliminate gaps in understanding and expectations, organizations should develop Standard Operating Procedures for all the processes to be outsourced.
Analyze SWOT:  This analysis helps to understand the strengths, weaknesses, opportunities and the threats of outsourcing logistics versus in-house solutions.
Conducting a Comprehensive Study: The advantages, challenges and cost benefits of outsourcing should be documented.
Create a Robust Selection Process: Adopt a scientific selection process. Invite eligible third party logistics companies for formal presentations on without giving any requirements. The organization can also hire a third party to help create a short list of service providers.
Document the Expectations: Set down expectations in clear terms and include current costs. This will help avoid confusion later.
Use a Request for Information (RFI): This tool will help gather information and measure strengths and weaknesses. Beware of service provider over commitment.
Do Your Homework: Making a site visit. Interviewing the service provider’s existing customers. Evaluating responsiveness, ability to meet and exceed the expectations, management team quality, experience, flexibility and other factors important to company.
Create Good Legal Documentation: Document what is agreed and what is disagreed clearly. Address possible friction points and specify remedies.
Define Targets: Create specific performance targets not only to measure performance but also to initiate corrective action if needed. Explore the possibility of gain share arrangement for positive performance.
Measure and Review Performance: The measurement system must be efficient and accurate. Create qualitative measures which focus on effectiveness and quantitative measures which focus resource efficient utilization. Some Fortune 500 companies measure performance daily, weekly and monthly and discuss it on a quarterly basis.
Develop an Efficient Costing System: This will help in understanding the costs involved in outsourcing and help the organization measure cost efficiency and answer the question, “Are we making any money doing this?” Gather detailed data about the true costs of receiving, storage, pick-n-pack, value-added processing, special packaging, staging and loading. Avoid “pallet in” and “pallet out” costing and consider adopting Activity Based Costing to understand variance between projected costs and actual costs.
Create a Project Implementation Strategy: Create a project plan or road map. Be clear with the service provider about who does what. Create a project management team should consisting of stakeholders from both organizations. Review progress vs. planned milestones periodically to make sure everything is on track.
Nurture the Relationship: Both the parties must nurture the relationship to make outsourcing successful, creating mutual trust, respect and a sense of integrity.

3PL & its Advantages

October 31, 2007

More and more organizations worldwide want to develop products for global markets. At the same time, they need to source material globally to be competitive. One of today’s trends to solve this problem is outsourcing logistics or using third-party logistics (3PL) to manage complex distribution requirements.

Organizations have developed strategic alliances with 3PL companies all over the world to manage their logistics operations network. These alliances are also known as logistics or supply chain outsourcing and contract logistics. 

 3PL provider can be classified into

  •  Asset-based
  •  Non-asset-based

 The Asset-based 3PL provider owns some assets, particularly transport-related assets such as trucks, warehouses, etc., while The Non-asset-based 3PL provider does not own such assets, and usually relies on sub-contractors’ assets. Examples of Non-asset 3PL providers include forwarders, brokers, marketing companies, and information system management companies.

There can be 3 Levels of Outsourcing with 3PL
Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company.
Tactical Outsourcing: Outsourcing on a long term basis with 3PL with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility.
Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency.

Advantages  of 3PL

One of the advantages of using 3PL results from economies of scale (merits from large truck fleets, warehouses, etc.) and economies of scope, which encourage firms to increase net value by reducing costs. The effects of these economies are obtained depending on the type of 3PL provider (e.g. IT-equipped, marketing-based, non-asset-based (and then flexible), etc.) Competent 3PL providers possess high coordination ability, enabling them to search reliable partners or sub-contractors, and to manage efficiently the inter-firm flow of goods. Such ability can be developed through experiences as a 3PL.

Likewise, by outsourcing logistics activities, firms can save on capital investments, and thus reduce financial risks. Investment on logistics assets, such as physical distribution centers or information networks, usually needs large and lump sum costs, which involves financial risks. Furthermore, the 3PL providers can spread the risks by outsourcing to sub-contractors.

Global Logistics

October 31, 2007

 When we use the term “Global”, we talk about imports from Asia to the U.S.; we talk about exports to Europe; we talk about movements within North America – and we talk about more; products, components and finished goods, which never touch the U.S. They move from a vendor in Singapore to a manufacturing plant in the Philippines. Or they move from Hong Kong to Germany. 

With such a complex scope of locations, plants, warehouses, vendors and customers the five key issues of logistics are especially critical with global logistics-
•Movement of Product
•Movement of Information
•Time / Service
•Integration–within your company between you and your customers and between you and your vendors

Within these issues are additional influences and factors. For example, time zones. People in the Far East, Europe and North America are all networking at the same time. There is too great a difference in the time zones. This means there must be a firm understanding of plans and strategies by each element. Or, there are cultural factors. Different cultures view and understand business topics differently. These understandings and their complexities can compound if the strategies and plans for doing business are not the result of collaborative effort with input by all groups.

In the drive to reduce costs, auto industry manufacturers are scouting the planet looking for the lowest-cost suppliers. Attracted to lower-wage areas such as Mexico and China, globalization is stretching supply lines longer than ever. What’s more, major manufacturers are eyeing overseas markets for expanding their sales. This boosts outbound logistics. And a global glut of manufacturing capacity is forcing many manufacturers to shutter redundant plants. The remaining plants are picking up the slack but now must export to more countries.

Global Operations: Focus on Automobile Industry

October 27, 2007

Right from the Industrial revolution and after the world wars the automotive world has emerged, as no one has ever imagined. It is one of the biggest industries in the Europe, USA and South-East Asia that contributes significantly to the world’s GDP. “Global competition”, “Innovation” and “Product life cycle” are the terms that are re-defined in the automotive business.As global competition intensifies, the ability to source, make or sell products in more than one country has become a critical success factor in most businesses, particularly automobiles. This has generated a considerable interest for several firms. Automobile Industry continues to experience dynamic changes — changes that sweeps across national borders. Manufacturing is already the most global of all sectors and every company, large and small, needs to constantly review its international configuration.

With prices set by large-scale buyers, raw materials costs increasing, IT and lean initiatives reaching diminishing returns and investors impatient for bigger profits, there are few business levers left. To succeed, auto manufacturers and auto component manufacturers must manage large and complex supply chains, spanning many geographic regions, and pursue opportunities in diverse national markets. While national policies play an important role in shaping the environment for local manufacturing operations and resulting products, cost competition increasingly drives the industry toward global product offerings.The networks of overseas facilities and partners may either emerge incrementally in response to local opportunities and threats, or be acquired ready-made following merger or acquisition. In either case, they may no longer be appropriate for the current competitive situation.

The rapid growth of Asian economies, in particular India and China, offers exciting opportunities and challenges for manufacturers in today’s global marketplace. In order to realize the enormous market potential of these emerging markets, companies need to look beyond traditional logistics and supply chain management strategies. Countries must build transport, trade and information technology infrastructure to make their manufacturing and service industries globally competitive and to create jobs.

An effective global manufacturing network is more than the sum of its parts. Each site and plant needs a clear purpose to which it sticks closely. The co-ordination of sites,Plants and functions needs to be optimized. At the same time, the network needs to be constantly redesigned as world situations shift. Most companies have started to create business processes from scratch for the design and implementation of their manufacturing networks. What they probably don’t know is just how close to world-class those processes are. The consequences of being nearly right could be the difference between business success and failure.


October 27, 2007

Managing customer relationship is being followed from ages. In earlier days there was a direct relationship between the customer and the supplier, but over the time the distance is increased to such an extent that we can say there is hardly any contact between the consumers and the suppliers.
The challenges today are:
*The customers being spread over the globe
*Most of the business done over the telephone
*The customers are more aware of the products and services
*The expectations are going high day by day, quality being the most important among them
*Fierce competition in market
*The suppliers are not in contact with the customers

 CRM today is all about retaining the customers even if you can’t see them, to satisfy the customers by making use of the modern day’s technologies, making each and every one in the organization to know the customers needs and work according to them. Maintaining customer relationship is not the sole responsibility of any one division; all divisions in the organization should interact with the customers in the same way. If one employee does not understand the customer needs and delivers unsatisfactory communications, he or she stereo types the entire organization in that customer’s perception.
 The organization should interact with the customers in such a way that they will be waiting for a chance to get the same experience of buying again!!! For any organization the deal is not closed once the sale is made but it is opened i.e. CRM all about maintaining the after sales services.
 Today customers can make a choice of their suppliers, so the organization should concentrate on the buying habits of the customers and all the other companies in the target market.The organizations should understand the customers choice, they want exactly what they want and at the right time, nothing more or less than that. But in today’s world how easy is it to give individual attention?? Why is mass marketing increasing day by day?? One of the most likely answers being with the increasing markets and the competition we have to make our existence in the first place and in this run mass marketing is taking over. In most cases the mass marketing concepts will not help in retaining the customers as they do not feel special, and they tend to go to a supplier where he gets more personal attention.
 One of the solutions for the organization to maintain good customer relations may be following the 3 phases of CRM likely:

*Acquire: Innovating the products according to the customers needs, may be in a mass level in this stage, but by giving excellent service
*Enhance: Modifying the  products based on smaller segments of customers and cutting down on cost and maintaining the quality levels
*Retain: Listening to the customers and implementing the changes and having a regular follow up about the performance of the product with the customer.

What is TQM??why does it fail very often??

June 5, 2007

“Total Quality Management” one of the buzzing words now a days…what does this Total Quality Management(TQM) really mean?? does it mean that we have to change the current on going process in which every onr is comfortable…or just introduce a new way of doing the same thing??? Many of the companies are behind implementing the TQM methods may it be to achieve the “6 sigma level ” or the heighest of the “CMM” levels….and now its the time for the Quality team to come up with new fancy terms and introduce some other way of doing the same work…then why dosent any thing change in the company??? why dosent the sigma level increase???? Few of the reasons may be

#1Most of the management functions are left to “experts and specialists” 

#2 The management is bureaucratic.

#3.People and their activities are confined to small functional activities.

           Many companies/organizations are facing this problem of “Small Functional Activities”. Due to these the employees are actually unaware of the customers needs and expectations,they fail to understand who is responsible for reaching the customers expectations and this leads to bad grevience handling and the employee ends up to limit his thinking within the boundraies set for him.The basic principle of TQM is all about the “customer first attitude” and to involve people and encourage out of the box thinking.TQM is a process, a process that  combines the customers the people and the process of the organization all working towards the common goal of “customer satisfaction”.

                       When any company/organization wants to implement TQM they should first have the acceptence and willingness from each and every employee including the top management,but this does not happen in most of the cases as man is basically comfortable in his own comfort zone and would never like to change,,,but what one needs to know is “Change is in-evitable” and once every body understands this implementing TQM methods would be very simple.

          The other reason why implementing TQM is not successful mostly is its a very slow process which includes a total cultural change in the process,it involves changing the organization from a function focused to customer focused.Many organizations think that TQM is very costly to implement but what they need to know is about “The cost of quality” i.e. they should know the cost of attaining quality,cost of running a quality department and above all the cost of having a poor quality.Not every body is interested in statistics and numbers which acts as one of the reasons for TQM to fail as most of the methods include the statistical calculators and complex numbers.

TQM is a process of continious small improvement which involves customers,money and people,the best way to implement TQM is to implement “design in quality” instead of “test in quality” and the output is “Extraordinary results”!!!

“Need For MBA”

June 4, 2007

I always had ths question on the top of my mind “Is there a need to do MBA???” Most people have an impression that MBAs can be managers easily in their careers,,,but i think its not true…when we look into the course details of any MBA..we see that we actually know every thing thats there in it…may it be “Business Ethics” or the “Management Control Systems”..we have the “Organization Behavior” which tells us how to deal with our collegues,subordinates and every one in the organization….but if we just think for our selves dont we know the ethics to be followed or how to manage the work we are doin??? dont we know how to behave with people around??? then why does one have be an MBA for that???

I would say one needs to do an MBA coz, though we know most of the things that are thought in this course..MBA puts it in a more organised way and teaches us how can we practice them or rather implement them in our daily life…we all lknow the difference between the mission and vision statements…dont we?? weill if we know then what is it that we learn in MBA?? I say MBA polishes the way we know thing and gives us the in-depth meaning and effect of the minutest things happening around…with the help of all the case studies and the analysis to be done…one clearly gets to know about the thing which they already know in a more detail way and the various effects of it….when working in an organization we work with various people from all over the does one get along with his collegues if he is not a agood teamplayer?? here is where the Soft Skills comes into picture which is one of the most important part of MBA…most of the MBA programs include the training in teambuilding either as a part of student orientation, in work shops or as a topic in Organization Behavior course.

Being an MBA my self i do feel that there ia a need to do MBA as it helps us to bring out a way of analytical thinking from within us and helps us in being more organised.The various quantitative skills and the simple concepts helps us to get along quite easily what ever we do!!!