Voice of the Customer

Quick reference

• 00:04 Hi, I'm Ray Sheen.
• 00:06 We've already discussed that one of the best practices for
• 00:09 process improvement is customer focus.
• 00:11 Let's take a look now at the voice of the customer.
• 00:15 I'll start by clarifying who is a customer.
• 00:18 Customers are the people or organizations which receive all or
• 00:22 a portion of the process outputs.
• 00:25 We often segment customers into external and internal customers.
• 00:29 External customers are those who purchase or use the process results and
• 00:33 are not a member of your internal organization or company.
• 00:37 They are external to the management control of your operation.
• 00:41 For example, the customer service call center process has external customers,
• 00:47 those individuals calling in for service.
• 00:49 Internal customers are those who use all or a portion of the process output, but
• 00:54 they are members of your company or organization.
• 00:58 Normally, they're taking the results of your process and further modifying or
• 01:02 using it in order to ultimately get to a customer facing process.
• 01:06 An example would be the new hire on onboarding process.
• 01:10 The internal customer is the new hire and once they have been successfully
• 01:15 onboarded they can begin to work in other business processes.
• 01:19 It's rather common for a process to have both internal and external customers.
• 01:24 So for instance, your organization's payroll process has internal customers,
• 01:29 who are the employees receiving paychecks, and
• 01:32 external customers, who are organizations like the bank processing the checks or
• 01:37 government processing the payroll taxes.
• 01:40 Customer needs can be categorized into elements of value.
• 01:43 These include cost to the customer, delivery to the customer,
• 01:47 the functional performance of the product or service that is used by the customer.
• 01:52 The degree of quality in the product or service,
• 01:56 the relationship between the customer and the supplier, and
• 02:00 the value the customer perceives in being affiliated with the brand or the product.
• 02:06 So how do you gather the voice of the customer?
• 02:09 You communicate with them.
• 02:11 Remember, this is an existing process, so
• 02:14 we can easily find out who is using the process results.
• 02:18 There are many techniques for communicating.
• 02:20 Let's look at a few.
• 02:22 Surveys are a designed set of questions that are sent to your existing and
• 02:26 prospective customers.
• 02:28 It's relatively low cost, but normally has a low return rate.
• 02:33 Interviews are a great way of getting in-depth, one-on-one communication.
• 02:37 The interviewer can ask follow-up questions for clarification and
• 02:40 understanding.
• 02:41 But this can be expensive and
• 02:43 time-consuming depending upon the number and location of customers.
• 02:48 Focus groups can provide almost as much in depth information as interviews and
• 02:53 can reach more customers, but these are more difficult to set up and schedule.
• 02:58 Don't overlook the obvious communication path,
• 03:01 which is suggestions from current customers.
• 03:04 They will often provide both formal and informal suggestions,
• 03:08 provided there is a venue or forum where they can engage.
• 03:11 Finally, there is direct observation of the customer using the product or
• 03:15 service or watching how they interact with the process or step in the process.
• 03:20 While this is usually not verbal communication,
• 03:23 there is often a great deal of feedback available just watching.
• 03:27 Generally speaking,
• 03:28 this technique works best with internal customers rather than external customers.
• 03:33 It's easier to work out the logistics.
• 03:36 An interesting perspective on the voice of the customer is the Taguchi loss function.
• 03:42 Traditionally, we would say that parts or
• 03:45 processes are good if they're within spec and bad if it's out of spec.
• 03:49 There is no inherent value difference between items that are within spec.
• 03:53 Dr. Taguchi's approach is different, he said the ideal value is
• 03:57 achieved when the attribute is precisely on its target value.
• 04:01 And therefore, there were losses to the overall system whenever the product or
• 04:06 process started to deviate from that target value,
• 04:10 even if it was only a little bit.
• 04:12 In fact, the closer the deviation came to being at
• 04:15 the edges of the allowable spec limits, the greater the loss in value.
• 04:20 One of the reasons for this is that if a part or process is right at the ragged
• 04:25 edge of the limits, it must be constantly monitored to fix or
• 04:29 scrap those instances where it is out of limits.
• 04:32 Uncertainty requires additional management to monitor that uncertainty and
• 04:37 make decisions.
• 04:39 As shown in the diagram,
• 04:40 the further the actual value is from the ideal target, the greater the loss.
• 04:45 The formula for this is a parabolic curve.
• 04:48 The formula is normally denominated in monetary units such as dollars.
• 04:53 As the variance, that's the difference between the actual value and
• 04:58 the target, increases the loss begins to climb quickly.
• 05:02 The loss function is a way to illustrate importance of variation and
• 05:07 its impact on acceptable performance.
• 05:10 As we have stated before, all processes have some inherent level of variation.
• 05:15 As you can see by the graph on the left, if the variation is very low,
• 05:19 the loss represented by the area of the distribution under the Taguchi line,
• 05:23 is very small.
• 05:24 When the variation is high variation but still within spec as shown in the center
• 05:29 graph, there's a significant amount of the distribution function that is under
• 05:34 the Taguchi line and representing loss to the system.
• 05:37 If the variation is so large that the product or process is occasionally out of
• 05:42 tolerance, as we see on the right graph, the actual loss based on the Taguchi
• 05:47 line is representing nearly half of the distribution.
• 05:50 This illustrates that the greater the normal variation,
• 05:53 the greater the loss to the system.
• 05:55 These system losses may not be product scrap.
• 05:58 They may be extra inspection, rework, and
• 06:01 monitoring costs to ensure that the product is not out of spec.
• 06:05 Reducing the process variation brings the process under control, and
• 06:10 that leads to lower costs throughout the system.
• 06:14 This is one of the fundamental principles behind the Six Sigma methodology and
• 06:19 the desire to dramatically reduce process variation.
• 06:23 Lean Six Sigma doesn't care how you communicate with your customers, so
• 06:27 use a combination of the techniques.
• 06:29 The important point is that you interact and communicate so
• 06:35 that you know what the customer needs from their viewpoint and
• 06:40 you don't assume that you understand it.

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