Voice Of the Customer - iscsglobal.com · Voice Of The Customer (VOC) 4 CDA Sailing Company Improvement in Operating Profit from each 1% improvement in selected operating factors

Voice Of the Customer: An Introduction

International Supply Chain Solutions

Voice Of The Customer (VOC)

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CDA Sailing Company

Organization of This Presentation

Origins of VOC

What is VOC?

What does VOC deliver?

What are the benefits of VOC?

How is VOC done?

When is VOC needed?


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Origins of VOC

VOC originated

with the recognition

of three basic

business truths.

?


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Improvement in Operating Profit from each 1% improvement in selected operating factors for a representative* manufacturing client

0%

1%

2%

3%

Revenue G&A Material Mfg. OH Selling Ind. Lbr. Dir. Lbr.

2.90%

2.00%

1.00%

0.93% 0.76%

0.60% 0.47%

* Based on financial ratio analysis of twenty “typical” manufacturing companies. Actual client values will vary

Revenue enhancement has the greatest bottom line leverage of any improvements a client can make.

1


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Supply Chain Success Begins and Ends with the Customer

Flexible Manufacturing

Strategies

Production Scheduling

Inventory Planning

Distribution Scheduling

Quick Response

Activity -Based Costing

Salesforce Planning

Network Rationalization

Integrated Micro-

Marketing

Electronic Data Interchange

Customer Service Process

Redesign

Net Landed

Cost

Palletization, Bar Coding

Vendor Managed Inventory

Flexible Fulfillment

Customer Needs, Wants, and Expectations

Voice Of The

Customer Suppliers Warehousing Delivery Inbound

Logistics

Manufacturing Transportation

Accurate, in-depth knowledge of the needs, wants and expectations that drive customer decision making is essential to achieving total customer satisfaction.

Forecasting

Total Customer

Satisfaction


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Resources are not unlimited

Companies need to

prioritize their efforts

and allocate scarce

resources to concentrate

on the most important

initiatives


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What is “Voice Of The Customer?”


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VOC (Voice Of the Customer)

is a proven methodology for

quickly and economically determining, ranking and quantifying

the needs, wants, and expectations that drive customer decision making.

VOC supplements a client’s internal market research and customer satisfaction monitoring efforts.


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customer ratings of client performance, and the performance of competitors

gaps between client perceptions and those of its customers

best practice benchmarks

trends and emerging expectations

improvement suggestions

VOC also yields important additional information, including:

VOC is also effective with suppliers and within client organizations.


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What Does the Client Get From a VOC Survey?

1. Ranked Customer Expectations & Metrics

2. Customer Perceptions of Performance

3. Trend Analysis

4. Supply Chain Process Flow Analysis

5. Gap Analysis - Customer Expectations Vs. Performance

6. Gap Analysis - Customer Perceptions Vs. Client Perceptions

7. Customer Quotes


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The primary deliverable of a VOC survey is a rank ordered list of customer expectations and their associated metrics.

End User Expectations from Distributors Place Heavy

Emphasis on Delivery Speed and Reliability

Importance: 1=low 5=high

Delivery

Impor-

tance POOR FAIR GOOD EXCELLENT REMARKS

“Core” Order Cycle Time 5 >24 Hrs 8-24 Hrs 4-8 Hrs 2-4 Hrs Bulk of purchases

Items Order Fill Rate 5 <98% 98-99% 99-99.5% 99.5% d istributor to

On Time Delivery 5 <98% 98-99% 99-99.5% 99.5% keep in inventory

“Standard” Order Cycle Time 5 >48 Hrs 24-48 Hrs 24 Hrs <24 Hrs Stock items delivered

Items Order Fill Rate 5 <97% 97-98% 98-99% >99% from distributor inven-

On Time Delivery 5 <95% 95-97% 98-99% >99% tory or drop shipped

“Special” Order Cycle Time 3 As stated in distributor catalog. Special o rder and

Items Order Fill Rate 3 <90% 90-95% 95-97% >97% custom made items

On Time Delivery 3 <80% 80-90% 90-95% >95%

Other Factors

Cost/Price Product Price 5 Cost reduction is a

Transaction Costs 5 major driver

Product LineBreadth o f Catalog 5

Looking to sa tisfy all

requirements from

3rd Part y Purchasing 4 one source

Technology/EDIElectronic Cata logs 4

On Line

Catalog

Interactive

CD ROM

Objective = fully

automated,

Automated Ordering 5 instantaneous system

Paperless Transaction 4 throughout supply chain

Technical AssistanceDistributor Sales Force 3

Access to

Manufacturers 3

Exhibit taken from actual VOC report


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Customer perceptions of client and competitor performance versus expectations provides important insights to opportunities and threats

Kimble is Perceived to Lead Corning in Relationship Related

Areas, But to Lag Corning in Performance Related Areas

Delivery

Impor-

tance POOR FAIR GOOD EXCELLENT REMARKS

To Order Cycle Time 5 Distributors compen-

Inventory Order Fill Rate 5 sation with higher

On Time Delivery 4 Kimble inventories.

Drop Order Cycle Time 5 Corning “Express”

Shipments Order Fill Rate 5 program = strength.

On Time Delivery 5

“Special” Order Cycle Time 4 Corning Manufacturing,

Orders Order Fill Rate 5 flexibility viewed

On Time Delivery 5 as superior.

Other Factors

Cost Gross Margin 5 Inventory reflects

Inventory Level 4 order cycle time

Transaction Costs 4 and fill rate.

ProductsQuality (Complaints) 4

Line Breadth 3-4 Kontes = Differentiator

New Product Dvpt 3

ServiceEDI/Systems 5

Sales Support 1-4

Marketing Support 4

Information 4

Relationships 4

Importance: 1=low 5=high

CK

C

K

C

K

K

K C

C

C

K C

K C

C KK C

CK

KC

C K

K CKC

CK

CK

CK

Consensus Ratings of Kimble and Corning CK

CK

K

K C



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Trend analysis is used to illustrate how customers expect their wants, needs and expectations to evolve.

Customer Performance Expectations are Becoming

More Rigorous.

•48 hr. delivery to inventory

•Inventory level 20-40 days

•80% of sku’s d rop shipped

•48-72 hr. delivery o f drop

shipments.

•95%-99% fill rates

•“Specia ls” with in 1 week

•Full EDI capabilities

•Supplier managed inventory

•Inventory level <20 days

•90%+ of sku ’s drop shipped


shipments

•99.5%+ fill rates

•“Specia ls” with in 48 hours.

•Tota lly electronic transactions

& info. exchange.

•48 hr. delivery to inventory




shipments.


•“Specia ls” with in 1 week

•Full EDI capabilities

•4-10 day del. to inventory



•4-10 day delivery o f drop

shipments


•“Specia ls” with in 2 weeks

•Order processing EDI

capabil ities




•4-10 day delivery o f drop

shipments


•“Specia ls” with in 2 weeks

•Order processing EDI

capabil ities



•10-20 day delivery of drop

shipments


•“Specia ls” with in 3-4 weeks

PAST PRESENT FUTURE

MinimumRequirements

Advanced Requirements



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-10-

Key Trends in the Science Products Supply Process

-9-

Pick, Pack

& S hip( 2-4 hrs)

The Science Products Supply Process is Moving TowardIncreased Drop Shipments by Manufacturers with RapidResponse Supported by Electronic Data Interchange

Place

Or ders

(E DI)

Receive

Shipping

Info

Cross Dock

Enter

Shipping

InfoReceive

Restock

Pay Invoice

( EFT)

Receive

“Specials”(3-10 days)

Enter

Receiving

Info

Receive

“Basic” Items(1/2 - 1 day)

Electronic

Match

Pick Pack

S hip

(2-4 hr’s)

Recieve

Shipping

Info

Invoice

End User

(E DI)

Receive

“Standard”

Items(24-48 hrs)

Sort

Or ders

Cross Dock

Determine

Restock

Needs

Manufacture “Special”(1-5 days)

Manufacture

for Inventor y

Ship Specials( 2-4 hrs)

Pick, Pack

& Ship Restock

Sort

Or ders

Enter

Shipping

Info

Enter

Inventor y

Order

Enter

Shipping

Info

(E DI)

End User Distributor Manufacturer

“St andar d” & “Speci al”

It em s

“B asic” It em s

“S pecial ”It em s

“St andar d”It em s

• Elimination of directpurchases

• Very rapid delivery of

“basic” items

• Distributors inventory only“basic” items

• Drop shipment (crossdocking) of all other items

• “Paperless” transactions;

high level of automation

• Rapid responsethroughout the supply

chain


Supply Chain Process Flow analysis can highlight critical capability and performance needs in a changing environment


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WEAK FAIR GOOD EXCELLENT

Cooperation Responsiveness Sales Force Marketing Relationships IT capabilities Tech. Support

Size, Mkt . Share Line Breadth Product Quality Del. to inventory Drop Shipments “Specials” Product Prices Transaction Costs

- 12 -

Client is viewed as strong in many higher level currencies for supply chain leadership, but weaker in several basic currencies

High Level Currencies

Basic Currencies

Customer perceptions of gaps between expectations and client performance help to illustrate strengths and weaknesses.



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Customer and Supplier perceptions show important differences. Importance

Unimportant Somewhat Important Important

Very Important Critical

On Time Delivery

Honesty, Openness

Accuracy, High Fill Rates

Good Communication

Partnership Relationships

Quality Products, Free of Damage

Low Cost

Customers Say

client Believes

Analysis of differences between customer and client perceptions helps to correct misconceptions.


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CDA Sailing Company

“_______’s challenge is their operating systems. Their systems suck!”

“Their sales force is a major strength. It is important for them to continue to work with the whole supply chain.”

“Their sales force is worse than useless!”

“Their field service people are great, but we see them far too often.”

“Their product quality is outstanding, but the best equipment on the market can’t make use of even 1/3 of it.”

“The separation - the different faces they present to the market - cuts their own face. Maybe they can get away with it, but I would figure a way to provide a united front.”

Quotes* serve to clarify and drive home customer concerns and attitudes.

* Examples taken from actual VOC reports


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CDA Sailing Company

What are the Benefits of VOC?


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Hearing and heeding the Voice

Of the Customer enables clients

to focus on what is most

important to their customers,

thereby increasing revenue in

addition to reducing costs.


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CDA Sailing Company

Customer

Requirements

and

Priorities

VOC findings help clients to prioritize improvement opportunities and allocate scarce resources.

Red

uce S

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51

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2.1

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0.3

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1.2

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5.4

18

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11

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19

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3.3

%

8.0

%

8.6

%

14

.3%

3.5

%

17

.6%

4.2

%

Quality

Line Breadth

New Products

Drop Shipments

Speed

Completeness

Accuracy

Low Product Prices

Low Transaction Costs

Inventory Management

EDI/Systems

Sales & Marketing

Cooperation

Communication

Responsiveness

PRODUCTS

DROP SHIPMENTS

ORDER FULFILMENT

COST CONTROL

SERVICE

RELATIONSHIPS

TECHNICAL IMPORTANCE

RELATIVE TECHNICAL IMPORTANCE

CU

ST

OM

ER

RE

QU

IRE

ME

NT

S

HOW’s

WHAT’s

DIRECTION OF IMPROVEMENT

44 4 1.0 1.0 4.0 4%

3%3.01.01.0443

1 2 4 1.5 1.0 1.5 1%

10%10.01.21.6535

5 53 1.6 1.5 12.5 13%

19%18.71.52.555 2

4 4 5 1.2 1.0 5.0 5%

4%4.51.51.0443

2 4 4 1.0 1.0 2.0 2%

10%10.01.02.5524

4 3 5 1.6 1.0 6.6 7%

3%3.61.21.0553

4 4 4 1.0 1.0 4.0 4%

4%4.01.01.0444

4 4 4 1.0 1.2 4.8 5%

ROOF MATRIX WEIGHTS ARROWS

Strong Pos

Positive

Negative

Strong Neg

Strong

Medium

Weak

Maximize

Minimize

NominalX

#

9

3

1

CUSTOMERS

QFD* to prioritize effort and

allocate resources

*QFD is a feature selection tool widely used in product design and development.


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CDA Sailing Company

Red

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Pla

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Schedu

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Manufa

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Pro

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Fin

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3.3

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8.0

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8.6

%

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%

17

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4.2

%

Quality

Line Breadth

New Products

Drop Shipments

Speed

Completeness

Accuracy

Low Product Prices

Low Transaction Costs

Inventory Management

EDI/Systems

Sales & Marketing

Cooperation

Communication

Responsiveness

PRODUCTS

DROP SHIPMENTS

ORDER FULFILMENT

COST CONTROL

SERVICE

RELATIONSHIPS

TECHNICAL IMPORTANCE

RELATIVE TECHNICAL IMPORTANCE

CU

ST

OM

ER

RE

QU

IRE

ME

NT

S

HOW’s

WHAT’s

DIRECTION OF IMPROVEMENT

44 4 1.0 1.0 4.0 4%

3%3.01.01.0443

1 2 4 1.5 1.0 1.5 1%

10%10.01.21.6535

5 53 1.6 1.5 12.5 13%

19%18.71.52.555 2

4 4 5 1.2 1.0 5.0 5%

4%4.51.51.0443

2 4 4 1.0 1.0 2.0 2%

10%10.01.02.5524

4 3 5 1.6 1.0 6.6 7%

3%3.61.21.0553

4 4 4 1.0 1.0 4.0 4%

4%4.01.01.0444

4 4 4 1.0 1.2 4.8 5%

ROOF MATRIX WEIGHTS ARROWS

Strong Pos

Positive

Negative

Strong Neg

Strong

Medium

Weak

Maximize

Minimize

NominalX

#

9

3

1

Prioritization and Resource Allocation is a Five Step Process

Step 5 Determine Weighted Importance of each Opportunity

Step 1 Enter Customer Requirements from VOC Survey

Step 3 Enter Improvement Opportunities Step 4

Estimate Relationships Between Opportunities and Customer Requirements

Step 2 Assess Customer Requirements to obtain weighting factors


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VOC frequently

identifies critical

opportunities, threats and

decision drivers that

other methods have failed

to identify.

Additional Benefit


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An industrial imaging client discovered that its long standing quality improvement efforts had resulted in resolution capability in its film products that exceeded by several times the resolution capabilities of the best cameras and readers available, and had long since ceased to be a competitive advantage.

A medical equipment manufacturer discovered that while its prized field service force was universally rated “outstanding,” customers saw their field service representatives far too often because the equipment was constantly breaking down.

A chemical client who learned that many of its key customers regarded its sales force as “worse then useless,” also learned what those customers felt could be done to make the sales force valuable to them.

Some Real-life Examples From Actual VOC Surveys


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How is VOC Done?


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A client’s customers will tell outsiders things they will not tell the client!

Customers will often tell an independent third party (who can guarantee anonymity) things they would never say to supplier people.

Outside professionals have highly developed interviewing skills that client personnel typically have neither the need nor the opportunity to develop.

Outside people are objective: they do not have the years of client/industry focused experience that often leads client personnel to interpret what they hear in ways that fit what they already “know.”

VOC is most effective when done by an outside party


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A comprehensive, in-depth, in-person VOC survey of 8 to 10 targeted respondents should take 4 to 5 weeks to complete.

Preliminary issue identification

Target respondent identification

Target respondent notification

Interview Guide preparation

Interview scheduling

Sales force interviews

Customer Interviews

Interview documentation

Follow-up

VOC Report preparation

Week 1 Week 2 Week 0 Week 3 Week 4

Each VOC survey is tailored to the unique needs and situation of each client

There are Ten Steps in a VOC Survey


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CDA Sailing Company

Preliminary Issue Identification helps to insure that important issues, concerns and perceptions are not overlooked.

Interviews with key managers and others who have

knowledge of the client and its customers to identify

their issues, concerns and perceptions

Literature search on the client and its market

Conversations with knowledgeable individuals in

BDO Seidman and the industry.

Steps include:


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CDA Sailing Company

Target Respondent Identification is done in conjunction with client Sales and Marketing executives.

Sample should cover all major market and customer segments.

Target 3 to 6 completed interviews per segment, if possible

To get 3 to 6 completed interviews it is usually necessary to

identify 6 to 8 target respondents

Identify the key person to talk to in each target customer

Management should provide contact name, title, phone, address

and a brief synopsis for each target respondent

Identify client sales persons to interview at this time also

Client managers who know their customers can ensure cooperation and a representative sample


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CDA Sailing Company

Target Respondent Notification by client executives to gain their cooperation is crucial to VOC success.

Client management should speak to each target respondent (Customers and client sales personnel) to secure their agreement to be interviewed

They should provide each target respondent with the following information.

• The nature of the effort

• Why they are being asked to participate

• Who will be calling them

• What they can expect in terms of:

– Time commitment

– Topics to be covered

– Confidentiality

Client executives can get through to their customers and secure their participation better than anyone.


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Interview Guide Preparation is an ongoing task

A draft interview guide is prepared and reviewed with client

management before meeting with target respondents.

Customized versions of the basic interview guide are prepared

for each major respondent group (e.g.: Sales Force, OEM

Customers, Distributors, etc.) to focus on their unique

circumstances

Interview guides are reviewed after each interview and refined

to reflect new issues, information and insights

It begins before preliminary issue identification and extends throughout the survey.


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CDA Sailing Company

Effective Interview Scheduling is essential to insure that respondents are prepared and will give the necessary time.

Respondents should be phoned by the interviewer ASAP after consenting to be interviewed.

The interviewer should make sure they fully understand what is being done, why, and what they should expect during the interview.

• Focus on the objective of improving service to customers.

• Assure them of total confidentiality.

• Be sure they understand the time commitment

• Accommodate their preferences.

Interviews should be confirmed 24 hours before the scheduled time and rescheduled as necessary


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Sales Force Interviews are valuable preparation for customer interviews and for identifying gaps in perceptions.

Sales Force interviews should be conducted as early in the interviewing process as possible, but after executive interviews.

Whenever possible, the sales person responsible for a targeted customer should be interviewed before the customer.

• Establish baseline of sales person’s perceptions

• Identify customer specific issues, if any

• Get additional customer background information

• Surface and deal with concerns and questions


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Customer Interviews are the core of VOC Surveys

If you’re going to be even a little late, call, explain, and reschedule if necessary.

Arrive 15 minutes early for in-person interviews; call on-the-dot for telephone interviews

Reconfirm that this is still a good time

• if not, reschedule, even if you’ve just flown 3 hours to get there.

Make sure all the respondent’s questions are answered

Ask general, open ended questions first; listen carefully

Strive for understanding, not just information

• Probe to get at root causes and drivers of behavior

• Use feedback to verify understanding

Some useful guides for conducting customer interviews include:


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Be alert for sensitive areas and avoid them, even if it means skipping parts of the interview guide.

Take copious notes

Honor time commitments

• Keep track of the time and let the respondent know when approaching the agreed limit

• Be prepared to go longer, but only with the respondent’s consent

Ask for permission to follow-up by phone if necessary

Thank respondents for their help

Always remember that respondents are doing us a BIG favor by taking their valuable time to talk to us.

Some useful guides (Continued):


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Interview Documentation is a critical task.

Hand written interview notes should be transcribed ASAP to:

• minimize misinterpretations and information loss

• incorporate unrecorded details and insights before memory of them fades

• re-enforce learning

Complete sentences and the respondent’s own words should be used as much as possible to facilitate later extraction of quotes and other report inputs.

Use a clean copy of the interview guide to facilitate organization, data entry and subsequent analysis

Completed documentation should be backed up on disk so that it is available to others


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CDA Sailing Company

Follow up can enhance the survey’s value.

Note major discrepancies and inconsistencies (if any) in interview notes, and frame clear questions to get clarification.

Phone respondent within a day or two to get clarification

• apologize for the inconvenience

• keep it short

• express thanks for the additional help

Make any indicated changes to the interview guide

Send a brief “thank you” letter to respondent


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Report Preparation begins early and continues throughout the survey.

A tentative outline and format should be established as soon as key issues have been identified.

Tables of customer expectations should be structured to facilitate incorporation into QFD

Be alert for:

• differences between client perceptions and customer realities

• things others are doing that customers value

• trends; where customer expectations will be in 2 - 3 years

• “AH-HA!” insights

Conclusions should be supported with customer quotes wherever possible.


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When is VOC Needed?


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Indicators of a need for VOC

Dissatisfaction with current revenue, profitability and/or market share.

Strategic and/or tactical planning uncertainties.

Uncertainty as to which improvement efforts to tackle first.

Ineffective Marketing, Sales, and/or Customer Service.


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Summary


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Summary VOC is a proven methodology for quickly and economically

determining, ranking and quantifying the needs, wants, and expectations that drive customer decision making.

VOC delivers in-depth insights into the factors and metrics by which customers evaluate their suppliers, and their perceptions of client and competitor performance.

Hearing and heeding the Voice Of the Customer enables manufacturers to focus on what is most important to their customers, thereby increasing revenue in addition to reducing costs.

VOC frequently identifies critical opportunities, threats and decision drivers that other methods have failed to identify.

VOC is most effective when done as a joint effort by the client and an experienced, outside specialist.

VOC is indicated whenever a client is contemplating a major change effort or facing significant business issues.

Documents

Voice Of the Customer - iscsglobal.com · Voice Of The Customer (VOC) 4 CDA Sailing Company Improvement in Operating Profit from each 1% improvement in selected operating factors