Dear All,

Another question for discussion - What do you think should be the primary objective of Six Sigma? Should it be Customer Satisfaction or Cost Reduction?

Dear All,

Here is an interesting article that talks about why customer satisfaction is not sufficient and that companies need to be looking at customer loyalty.

/>http://www.returnonbehaviormagazine.com/main-articles/customer-satisfaction-versus-loyalty.html

Best Regards,

SJ

 

Hi SJ sir & all,

             It is understood by all in business (whether as a business person or as a customer) that, customer satisfaction is a precursor to customer loyalty. The latter cannot exist without the former. Subsequently, erosion in the value of satisfaction of a loyal customer would certainly make the customer change his/her loyalty.

Other thoughts....

Thanks & rgds.

I agree both types of projects shall be done in practically every company. However, in certain situations, the two objectives lead to conflicting six sigma projects or solutions. The resolution of this conflict is one of the important Six Sigma leadership issues. Let us have more opinions -What should be the key driver (the guiding light in conflicting situations) - customer satisfaction or cost reduction? 

Although Manian has left very little for others to pitch-in yet I would still sneak in and say that the organisations exist due to customers and through them they make money which is there ultimate objective so keeping customers happy and satisfied would act as a lead measure to control and achieve the lag measure of making money.

Its proved that for any improvement journey if the thrust is on lead indicator, the lag indicator is taken care of to certain extent. So in short it needs to be established what is lead and lag measure for an organisation and then take a call.

 

Friends,

It would be interesting to have some more responses on above,

Anxiously looking forward ....

 

Hi All,

In the Modern era , the new concept of Quality is to reduce the cost with improve in Quality (Customer satisfaction) simulateously. Both are like romeo and juliat. if you will prioritize cost reduction only and do not measure as a secondary matrix cutomer satisfaction . It means you are providing solution for cost reduction at the cost of low customer satisfaction.

So both primary and secondary ctq should be measured simulataneously.

Increase in cust satisfaction with more cost makes no sense

Reduction in cost with redution in customer satisfaction also makes no sense.

ONLY WIN WIN CASE IS REDUCTION IN COST WITH IMPROVE IN CUSTOMER SATISFACTION.

I hope this will help

Navin Rohilla

BB

Hi Manian,

To my mind, considering both factors (lead and lag) in isolation may not be a right thing for a SS practitioner as the objective for any organisation is drawn based on its Mission. Therefore, whether the emphasis should be on cost reduction or C- sat improvement, would be solely driven by Mission of any org.

Thnkx,

 

Hello! everyone,

Really interesting inputs from the group.

In my view the WIN WIN situation (as mentioned by Navin & Manian) in case of the conflict situation is very clear If your Cost reduction project is not going to reduce the worth of the product/service to the customer it is a WIN WIN situation.

But the caution factor is one should really be aware of the the "worth" of the product/service from customer's presepective.

Bye for now,

Rajeev Kamboj

In my view, if we keep one as primary metric and the other as secondary, the complexity is addressed. Views?

Dear All,

I beg to differ on the issue. Being on the technical side of Six Sigma, it always seems to make more sense to carry Six Sigma undertakings for the purpose of reducing costs. Then thinking of passing on the benefits incurred to the customers and strive to enhance customer satisfaction. If we make progress along this thought-line, then no doubt there would be cost-reduction benefits obtained.

Yet this is the same thought-line which, after giving initial cost-reduction advantages, has failed either to provide sustenance of benefits, or bring about desired change in overall culture of organization. There are profound examples of companies which adopted six sigma, but failed to become truly Six Sigma companies. They've always wondered--how other companies like GE, Motorola (with its second avatar of Six Sigma practices) have been far more successful in this arena of Six Sigma.

The prime-most reason has been that they focused most of their Six Sigma efforts/initiatives and projects on less-important Y's driving their companies. They failed to correctly embrace Six Sigma from right vantage points.

First, they didn't realize that it should stem from company's Big Y's where customer's successes (even more than satisfaction or loyalty) is paramount to the company itself.

Second, they failed to see their process from the point of view of-- 'Where' and 'how' their own processes adds & contributes to customers' successes.

Well, they must learn to forget viewing their own processes as internal processes and essentially see them as small processes in the scheme of things at their customers. This understanding is far more broader and enriching than their current understanding of VOC as they know it. And they should design their Big Y's from this understanding and all the projects or drill-down metrics should be derived from that only.

Jack Welch, the CEO of General Electric, while setting GE for Six Sigma, clearly elaborated:

".....................So the financial rationale for embarking on this quality journey is clear. But beyond the pure financials, there are even more important rewards that will come with dramatically improved quality. Among them: the unlimited growth from selling products and services universally recognized by customers as being on a completely different plane of quality than those of our competitors; and the resulting pride, job satisfaction and job security from this volume growth for GE employees.........

...............By 2000, we want to be an even better company, a company not just better in quality than its competitors – we are that today – but a company 10,000 times better than its competitors. That recognition will come not from us but from our customers."

My point of view is that untill and unless, companies embrace the similar approach for their Six Sigma endeavors, they won't be able to think of high-hanging fruits, forget even to touch those. I'm of the opinion that the quest for cost reduction is just like loosing the entire dimesions of Six Sigma in the maze of lowly-hanging fruits.

With thanks,

RK