2. GENICHI TAGUCHI
• Born in Japan, 1924
• Electrical Engineer
• Worked during 1950’s to improve
Japan’s post-WWII telephone
communication system
• Father of the “Taguchi Method” and
“Robust Engineering”
3. Don’t run away!
• Not a mathematician?
• You can still successfully apply
Taguchi Method concepts to your
service business.
• Basic concepts are simple.
• Just keep reading.
4. Competitive Edge
• “To compete successfully in the
global marketplace,
organizations must have the
ability to produce a variety of
high-quality, low-cost products
that fully satisfy customers’
needs.”
5. Quality Defined
• “Any engineered system
reaches its ‘ideal function’ when
all of its applied energy (input)
is transformed efficiently into
creating desired output energy.”
6. Basic Ideas:
• CUSTOMER SATISFACTION
• Design to the highest standards
early in the process to eliminate all
non-random errors
• Quality Loss = Loss to Society
quantified through “Quality Loss
Function”
• Variation (+/-) from optimal measure
results in a loss.
• For best results, GET HELP.
7. Resources Expended on
Quality
$
Design
$$
Service Delivered
$$$$$$$$$$
Post Service Delivery
8. Customer Satisfaction
• Ways to measure service:
1. Returning customers
2. Number of complaints (1:10)
3. Number of compliments
4. Employee attitude
9. Design
• Equipment – No breakdowns
• Specific jobs defined – Need to know
responsibilities
• Policies and Procedures – What do
you want, anyway?
• Taguchi Method experiment
10. Quality Loss Concept
• Deviation from
target results in
loss.
– Lower than
target
– Greater than
target
– Both lose
11. Quality Loss Function
• Quantify the Loss
• Warning:
Next slide contains
math formulas
• But give it a try!
12. Quality Loss Function
L(y) = k(y-m)2
L(y) = Loss
k = constant = cost to correct
tolerance2
y = reported value
m = mean value (average)
13. Example:
• Company C received an average of 10
complaints per month last year. In
November they received 15 complaints (y).
Management sets an acceptable level at 2
(tolerance).
• It costs the company $50 directly per
complaint to correct the problems. They
determined the cost in lost sales to be
$100.
• Total cost per complaint: $150
14. Example continued:
k = $150/22 = $37.50
L(y) = 37.50 (15-10)2
= 37.50 (5)2
= 37.50 (25)
= $937.50 is loss for the
month of November
18. Step 2:
Brainstorming
• Identify critical variables in the
service that affect quality.
• Open and honest discourse with
all people involved.
• Decide which factors are
controllable and which are not.
19. Step 3:
Experiment Design
• Using results from
brainstorming session,
facilitator will design an
experiment.
• Management must understand
this part, and needs to fully
support the resources needed
for it.
20. Step 4:
Experiment
• Use of ANOVA requires
managers understand its use.
• Facilitator, although in charge of
the experiment, must assure
management’s understanding of
the process.
21. Step 5:
Analysis
• Factors closest to target
specification identified.
• Means to reduce controllable
variation produced.
23. Conclusion:
• Best improvement is early in the process.
• Use expert consulting help for full
experiment and implementation.
• Successfully used in airlines, insurance,
hotels and restaurants.
• Quality is a major feature that sets a
service apart from the rest.
Robust Engineering is an excellent way to build high quality into the design of your product. Increasingly being applied successfully to the service. Engineers and mathematicians can study and understand the methodology. But what if you are a manager in a service company, trying to improve services? DON’T GET SCARED OFF BY THE FORMULAS! If you understand the basics, you can apply Robust Engineering to your service and measure its success.
Measure service quality through customer satisfaction By designing your product or service to the highest standards, you will eliminate the need to correct problems later in the process. “Quality cannot be inspected into a product or a process.” i.e. it happens in the design. (Taguchi: p. ix). Quality loss can be quantified through a formula called the “Quality Loss Function.” All variation from the optimal standard measure results in a loss to society through either under or over appropriation of resources. When quality must be your priority to compete, invest in consulting help to design a Taguchi experiment. The results will be to identify those areas needing attention first.
Problem Solving at different stages of service delivery. If the problem is corrected in the design phase, less resources are expended than if the problem is corrected post-delivery.
How do you know if you are meeting the needs of your customers? Take a good look at you customer base. How many are return customers? Find out why they come back, or don’t come back. How many complaints do you receive? Remember for every complaint you hear, there are TEN you don’t hear. How many customers take the time to compliment your service? You employees must be happy with what they do.
To provide excellent customer service, the equipment used must also be of excellent quality. Do this by managing your suppliers. How does your equipment supplier manage their quality. Demand the best. Your telephones and computers can not break down. If they do, there is loss of customer service Every job assignment must be clearly defined. A service employee who doesn’t know exactly what and how to perform the service will deviate from the best way. Provide well-thought out procedures whenever possible. Be sure your policies are clear. For very high quality management, hire a consultant to perform a Taguchi experiment. This investment will save money later by starting with a superior design of your service.
Whenever a product or service misses its intended quality mark, a loss to society occurs. Whether it is too little service or too much service, resources are lost.
While a Ph.D. candidate, Dr. S. Thomas Foster wrote an article describing the process for performing a Taguchi experiment within a service enterprise. In that paper he summarized these steps. To initiate a Taguchi process, managers must perform three steps. They are 1) Problem Identification 2)Brainstorming and 3) Experimental Design The rest of the experiment can be performed by a consulting facilitator for best results.
Controllable factors include: Procedures Room environment Uncontrollable Factors: Number of public contacts
The earlier in the process you build in quality, the more it will help, and the less it will cost. Don’t try to do this without the help of a very knowledgeable consultant. It will cost less to do this right once, than wrong twice. Insurance offices, airlines, CPA offices, fine hotels and restaurants have successfully applied the Taguchi Method to their businesses. Quality is one of the features that sets a business apart from the rest. The new global competitive market brings new dimensions to business.