Basics. Manufacturing & Service

Transcription

1 Basics Manufacturing & Service

2 The Six R s of Performance 1. Reach - physical presence 2. Revenues - sales 3. Returns - bottom line profit 4. Recognition - image & reputation 5. Ratings - product rating by clients 6. Responsiveness- impact on market

3 Basics of Manufacturing Customer Focus Capable Management Value Profitability Productivity

4 Working in the manufacturing division and keeping pace with other divisions Company is structured into specialized divisions Organization needs to operate as a unified entity Activities are coordinated towards the same direction Linking divisions facilitate communication and mutual understanding - understand the job content of each job function of other divisions - make organized efforts to identify and solve problems existing throughout the organization

5 Basics of Manufacturing 1. Customer Oriented Manufacturing producing goods according to the needs of the consumers Build consumer trust thru quality goods Make products that sell Respond quickly to consumer needs Anticipate changes & make prompt decisions

6 Basics of Manufacturing 2. Strong management structure Management Strength = Development Capacity Production Capacity Marketing Capacity Production Capacity = Quality Cost Delivery

7 Basics of Manufacturing 3. Continuous pursuit of Value-Added Value = Usefulness Metal Panel Phone Plain sheet of metal by itself has limited use Properly transformed in a process, its usefulness is enhanced Materials transformed into a useful item that has value added

8 Basics of Manufacturing 4. Importance of Profits Profit is a measure of the degree of recognition of the product & business by its consumers Good Quality: Assures customer acceptance Cost design: Attains suitable profit within allowable cost Market price - appropriate profits = allowable cost Quick development: Ensures continuous flow of profits

9 Basics of Manufacturing 5. Improvement of total productivity -effective use of input resources to increase product & service value Productivity = Output Input

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11 Examples Establishment Restaurant Retail Store Chicken Farm Power Company Paper mill Appliance Factory School Car Repair Shop Productivity Measure Customers per labor hour Sales per square foot Pound of meat per pound of feed Kilowatts per pound of coal Tons of paper per cord (128 ft 3 ) of wood Units produced per shift Numberof students enrolled per term No of cars repaired per day

12 4 Core Elements of Service by Francis Frei (HBR ) 1. Service Offering 2. Funding Mechanism 3. Employee Management System 4. Customer Management System

13 4 Core Elements of Service 1. The Service Offering A. Focus on the experiences customers want to have. - Customers may attribute convenience or friendly interaction to your service brand - Customers may compare your offering favorably with competitors because of extended hours, closer proximity, greater scope, or lower prices Ex. Commerce Bank focuses on customers who care about visiting the physical branch. They offer evening and weekend hours since their customers priority is convenience. They provide cheerful, familiar tellers as the second need is friendliness of interactions with employees. They provide a lovely ambience through high ceilings and natural light. They provide fun for old people with an amusing loose change counting machine. Ex. A Convenience Store stays open for longer hours but charges more than the competition. It excels on convenience but inferior on price.

14 4 Core Elements of Service 1. Service Offering: B. Determine which attributes of service to target for excellence and which to target for inferior performance, based on customer needs and wants. - At Wal-Mart, low price and wide selection are most valued by customers while store ambience and sales help are least valued. - At Commerce Bank, rates and product ranges which are less important to their customers are low and limited against competition.

15 4 Core Elements of Service 1. Service Offering: C. Identify attractive customer operating segments and create design offerings for them. -Optimize specific aspects of your service offering to cater to your customers priorities - Minimize investments in underappreciated attributes

16 4 Core Elements of Service 2. The Funding Mechanism A. Charge the customer in an acceptable way. - Pricing is not transaction based but involves the bundling of various elements of value. - Starbucks allows you to stay indefinitely but charges more for the coffee (setting up meters on your chair would not be acceptable) - Commerce Bank is open for extended hours but gives half a percentage less for interests for deposits (charging for evening visits would be rejected)

17 4 Core Elements of Service 2. The Funding Mechanism B. Create a win-win between operational savings and valueadded services. - Progressive Car Insurance goes to scene of accident ahead of the police or tow truck and issues insurance refund on the spot. (saves money on staged or fraudulent claims and gets high marks for quick service) - Progressive gives quotes of competitors when asked for prices. (They are not the cheapest but makes up for it in on the spot service refund and prevents a loss quote, while putting the burden of providing an unprofitable price on its competitor)

18 4 Core Elements of Service 2. The Funding Mechanism C. Spend now to save later. - Intuit fielded their higher-salaried product development people instead of customer service people to provide technical support to their financial software. Designers got what customer wanted to accomplish and why they were frustrated first hand, to accomplish their DIRST program or Do it right the second time program Better software means a lower call volume

19 4 Core Elements of Service 2. The Funding Mechanism D. Have the customers do the work. - Create a situation where the customer will prefer the do it yourself capability over a readily available full service alternative reducing operating costs Examples are pump your own gas stations, flight check in kiosks, bank ATMs, convenience stores - Customer avoids long lines, gets a pleasant experience or even lower costs

20 4 Core Elements of Service 3. The Employee Management System What makes our employees reasonable able to achieve excellence? What makes our employees reasonably motivated to achieve excellence? - You have a bad service by design if your business requires heroism of your employees to keep customers happy - A system must be so designed that an average employee can thrive

21 4 Core Elements of Service 3. The Employee Management System - Commerce Bank did not require straight-a students to master its limited product set. - They hire for attitude and train for service - In interviews, an applicant that does not smile in a resting state is rejected. - Its employees act as talent scouts looking for people like them (it takes one to know one) - Employees who are above average in both attitude and aptitude are expensive to employ

22 4 Core Elements of Service 4. The Customer Management System The employees and customers are both part of the value- creation process Unlike employees, customers are difficult to train and have a great deal of discretion - Which customers are you focusing on? - Which behaviors do you want? - Which techniques will most effectively influence behavior? (use of carrot & stick method like giving discounts and penalties, and using blame, shame and pride like returning shopping carts even when no one is looking)