October 25, 2007

Operations Management Lesson 9 Exercise

Create a new entry in your Blog using the subject ‘Operations Management Lesson 9 Exercise’.

Take a process that you are familiar with and critically appraise the existing quality control system.

For this blog I will develop the quality control barely mentioned in the blog 5 about the personal computer supply chain.

We will look in details two processes of the value chain: production and customer support; for each process we will try to assess if the quality control is effective or not.

On this purpose we have to keep in mind wich are the steps to follow for establishing an effective quality management system:

1. Define the quality characteristics of the product or service.
2. Decide how to measure each quality characteristic.
3. Set quality standards for each characteristic.
4. Control quality against those standards.
5. Find and correct causes of poor quality.
6. Continue to make improvements

In the production of personal computers the quality control activity already exists: when the Personal Computer assembly is completed, it moves to the testing area, in order to check if the product quality is compliant to the quality standards already defined.

Lenovo expertise, market intelligence (both customer side than competitor side) and market leadership on personal computers industry allow to define high level quality standards expected on products.Those standards have to be reached in order to confirm the market leader role.

The testing activity is fundamental for a threefold purpose: 1. Control if everything works; 2. Monitor the quality of components acquired from the suppliers 3. Decrease the number of repairs to be carried out on site by the customer (cost saving on the maintenance, if a problem is not resolved at the factory Lenovo will has to send a technician to solve at the customer).

On my opinion the production process is effective, since there is a strong focus on measuring quality features of finished products. It could be improved introducing a quality control system even before the testing process, in order to reduce reworks and bottlenecks in the production line.

In the "Customer Support" process Lenovo has many shortcomings: it is a process that Lenovo has outsourced.

Let's analyse how it is structured. We have: 

  • The Call center to which customers refer for any problem on products (outsourced to a company A)

  • The Call center for the first level at which calls are diverted to solve the problem (outsourced to a company B, in India and in South Africa)

  • The Call center for the second level at which calls are diverted if the problem persists (Done by Lenovo)

  • The technical staff, that eventually works on site to repair products (outsourced to a company C)

To check the quality of the process of the work, Lenovo usually control and measure several KEY performance indicators about the work of each outsourcing company and in case of non compliance with the service level agreements, Lenovo gives a feedback to the suppliers asking to improve the quality.

Due to several issues with customer support claimed by customers themselves Lenovo recently asked to an external company D to make a survey on customer satisfaction; through interviews conducted, the society D has revealed a low level of quality for the first level support, which was very detrimental because “the interaction between the customer and the service provider is another critical aspect of service delivery (that makes a difference to the customer’s perception of service quality)”.

As a consequence of these reports, it was decided to speak with Company B management, asking them to increase the quality of service.

Also in the customer support process there is a good quality management system, since all the standards are defined and the performance is always measured and compared to standards.

In my opinion another important thing to do would be to integrate the feedback of the technical staff of the outsourcing company C, within the "Lenovo Chain Management", this in order to speed up the resolution and detection of problems. It is very likely that people involved in daily maintenance of personal computers can suggest constructive improvements.
For instance to encourage them a good way could be a contribution to any suggestion that will be applied to the production process.

Zoe Radnor (2007); «Operation Management »;Warwick Business school

N. Slack, S. Chsmbers, R. Johnston, A. Betts; «Operation and Process Management »; Prentice Hall
Navi Radjou (2005); «IBM Transform Its Supply Chain "To Drive Growth"»

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