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Home arrow Management arrow Strategic Management in the 21st Century. Corporate Strategy

Holistic Approach to Satisfying the Customer

Customer satisfaction will always be a key driver in maintaining and improving a firm's market share. Based on the core values of the organization, customer needs that can be met must be delineated. This will in turn drive the mission and the strategic plan. Further, the core values will shape the implementation of the quality initiatives based on the organization's core competencies.

Meet Product Life Cycle Needs

For manufacturing organizations, only the quality of the delivered product has in the past been considered. In this new era, however, satisfaction of customer needs will extend beyond the sale of the product alone. Not only does the customer want a quality product, they will increasingly expect adequate service for the product, as appropriate, over the life of the product. A segment of this need is satisfied through the use of warranties offered at the time of sale of the product. A common practice at present is the use of optional, extended warranties that cover, for example, a longer time period or amount of use, prior to expiration of the initial warranty. Examples of products for which these are common include home appliances such as washing machines, dryers, and refrigerators. What is also emerging is the concept of providing service during the operating life of a product based on its prevailing condition. Consider, for example, an automobile. Technology currently exists that enables the manufacturer to obtain real-time data on the functional status of the automobile using wireless sensors. Using this data, the manufacturer may be able to determine the performance of the engine, and if necessary, send a message to the owner indicating that the car be brought in for service. Such actions will rectify a potential problem prior to a failure. It will also excite the customer, who now has greater confidence in the operation of the vehicle, and that the integrity of the vehicle is being monitored based on real-time operating conditions. Hence, even manufacturing organizations will have to incorporate a broader concept of what it means to satisfy the customer. This will impact the strategic plan and corresponding quality initiatives.

Flexibility and Agility to Address the Dynamic Needs of the Customer

As discussed previously, customer needs not only change on a dynamic basis but also vary based on societal preferences and cultural norms. Whereas customers in the United States demand left-hand-drive automobiles, those in certain countries in Europe and elsewhere require right-hand-drive vehicles. Depending on the degree to which a given manufacturing/assembly plant satisfies demand for automobiles in different markets, there must be adequate flexibility to make the necessary changes so that the appropriate mix and volume of products is produced. This flexibility affects not only tooling and equipment but also employee training and qualifications. Quality management practices and standards may also vary since automobiles in one country may be subject to different standards than those in others. If separate facilities were to be used to produce automobiles for different country markets, some of the complexities relating to quality management practices could be avoided. Nevertheless, at the corporate level of the organization, adequate planning must take place to ensure that the challenges of variety and complexity of products demanded are met. It should also be noted that even for customers within a region or country, the choice of product features and options demanded could be numerous. The ability to handle customization to customer-specific needs will continue to be a key factor for successful organizations. The quality management function must incorporate adequate steps, from planning to the implementation phase, to ensure that an adequate structure is in place to meet the variety in customer requirements.

Also of importance is the speed with which the company is able to meet the variety and complexity of customer needs. Being able to respond to customer demand by reducing lead time for the product does not necessarily imply increased responsiveness to changing market needs. A company can, for example, reduce lead time for a specific product by increasing the use of overtime. In contrast, a change in customer needs that involves adding a new option to an existing product may require design changes, tooling and equipment changes, as well as process-routing changes. How quickly the company can make the transformations necessary to meet changing customer needs is a measure of its responsiveness or agility. Quality management practices must ensure that the lead time to meet changing customer requirements is as short as possible. Even if a company is able to meet the diversity of customer needs, if they cannot do so within a time span that the customer expects, a loss in market share could result. One means by which lead time can be reduced is to have parallel lines of operation/assembly available. However, this will result in an increase in capital expenditures for machines and equipment. It may also necessitate the use of overtime or the hiring of temporary employers, thereby increasing operational costs. Management will have to balance the added costs against the benefits of increased customer retention and/ or growth in market share that results from the superior lead time relative to that of competitors.

Meet the Needs of Other Constituencies in Order to Effectively Meet Customer Needs

Meeting customer needs requires effective and efficient processes. In a manufacturing setting, this implies having adequate equipment and machinery, a qualified labor force, and an effective management system of which the quality management is a subsystem. Exploiting technological advances by using up-to-date equipment and machines can help keep the company up with if not get ahead of its competitors. The quality management team will, however, need to consider the pros and cons of using the latest technology. Whereas fixed costs for equipment may rise, variable costs may fall, which will necessitate a new evaluation of the break-even quantity and cost. Moreover, the impact of learning effects as well as the need to integrate new technologies will need to be considered.

Another constituency that needs to be considered is the employees of the organization. A motivated workforce is the foundation to a quality product/service. Accordingly, it is imperative for the quality management function to give appropriate attention to the morale and motivation of employees. In this context, extrinsic and intrinsic rewards exist. Merit increases in salary, awards for meritorious service, recognition among peers for innovative contributions, and public recognition in the organization and community are some means by which rewards can be given. Based on Maslow's hierarchy of needs, once basic needs and safety needs have been satisfied, the focal point should be on meeting needs related to self-esteem and self-actualization.8

Organizations must also strive to retain productive employees, doing so through the creation of appropriate promotion and recognition policies. They will have to examine what attributes are valued in employees. Does the organization seek only technical competency or also the ability of employees to work with others? What importance does innovativeness play? Does it value the ability of an individual who goes beyond his/ her prescribed responsibilities? Answers to these questions will define a core set of values that must be conveyed to the employees and rewarded accordingly.

Shareholders represent another constituency, and will have certain expectations regarding an organization's performance. Effective execution of the quality policy will ensure the production/delivery of a quality product/service. This will influence the ability of the firm to maximize revenue at the lowest feasible cost, which will in turn influence the rate of return on investment that is of concern to shareholders. It should be recognized, however, that the quality management policy has to be implemented in harmony with other corporate strategies. The integration of corporate strategies at the top management level is critical to the ability of the organization to achieve its mission.

 
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