Select Measure Analyze Improve Control

Note: This file contains KRA's for various functions on different sheets. Click on respective sheets for navigation.

KRA:Market performance
1 2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

5 Analyze Gap 4-3

1

Market share ( in percentage )
Click here to see causes of low market share

15

25

10

2

Overall customer satisfaction ( on a 10 point scale )

3

No. of New products and services introduced

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

Click here to see example

Click here to see example

100000000

Low Market share

9 Improve List solutions Click here to see example

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

6-9 months

Y

Negative 11 Improve Result after improvement 12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

25

0

Y

Select Measure Analyze Improve Control

KRA: Manufacturing Productivity
1 2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

1

Productivity ( Input - output ratio )
Click here to see causes of low productivity

2 3 4 5

Percentage of parts scrapped. Percentage of parts reworked. Percentage of final product graded as seconds. Production per man / machine.

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

11 Improve Result after improvement

12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

Select Measure Analyze Improve Control

KRA: Purchase management
1 2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

1

Excess inventory.
Click here to see causes of excessive inventory

2 3

Down - time because of parts shortages. Premium freight cost/ demurrage charges.

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

11 Improve Result after improvement

Negative

12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

Select Measure Analyze Improve Control

KRA: Efficient Human Resource Management
1 2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

1

Employee turnover ratio
Click here to see causes of high employee turnover

2 3 4 5

Number of people trained / number of people required to be trained No. of days the positions are vacant without the person No. of grievances resolved / total number of grievances Number of days the company was closed due to labour problems

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

11 Improve Result after improvement

Negative 12 Control Control Gap between Positive result & Target ( 11-4 ) Standardize

Select Measure Analyze Improve Control

1

1 2 3 4 5 6

KRA: Quality Assurance
2

Select KI

Click here to see example

Percentage of products having defects detected by customers. Percentage of lots rejected due to errors. Number of engineering changes that should have been detected in design review. Errors in inspection / test reports. Cycle time to get corrective actions. Percentage of appraisal cost compared to production cost.

3

Measure
Current Performance

4 Analyze Performance Target

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

Negative 10 Improve Take corrective action ( yes / No ) 11 Improve Result after improvement 12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

Select Measure Analyze Improve Control

1

1 2 3 4 5 6

KRA: Product Engineering
2 3

Select KI

Measure
Current Performance

Click here to see example

1. Number of engineering changes per document. 2. Number of errors found during design review. 3. Number of errors found in design evaluation test. 4. Percentage of time over- run compared to planned time for development. 5. Percentage of cost over - run over estimated cost of development. 6. Number of tooling redesign after trial production.

4 Analyze Performance Target

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

11 Improve Result after improvement

12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

Select Measure Analyze Improve Control

1

1 2 3 4

KRA: Product reliability
2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

Click here to see example

Failure rate. Probability of failure occurrence during given time interval. Mean life time. Mean time to repair.

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

10 Improve Take corrective action ( yes / No )

11 Improve Result after improvement

12 Control Gap between result & Target ( 11-4 )

Control Positive Standardize

Select Measure Analyze Improve Control

KRA: Financial performance
1 2 3

Select KI

Measure
Current Performance

4 Analyze Performance Target

Click here to see example 1 2 3 4 5 6

Profit before interest and financial charges Profit before tax Growth in profits over last year Return on capital employed Return on sales EPS ( Earning per share )

5 Analyze Gap 4-3

6 Analyze

Impact on bottomline in Rs per annum

7 Improve Define problem

8 Improve Identify causes

9 Improve List solutions

Improve Time frame for implementation

Negative 10 Improve Take corrective action ( yes / No ) 11 Improve Result after improvement 12 Control Control Gap between Positive result & Target ( 11-4 ) Standardize

MARKETING

COMPETITION
Increase in number of competitors

Poor after sales service Poor marketing Non competitive pricing Lack of market penetration Click on the boxes for solutions

Poor product quality

Perceived credibility of organization

Poor designing

Late market entry

Poor technology

Low customer satisfaction

PRODUCT

CUSTOMERS

MEN

MACHINE Frequent breakdowns

Lack of experience

Inadequate training

High set up times

Too much of variation Unclear instructions

Low Productivity
Poor supplier evaluation Inefficient processes

Complex design Inadequate Q.A

Poor inspection & testing

Unclear specifications METHODS POOR QUALITY OF RAW MATERIALS

MEN

SUPPLIERS

MEN
Over caution by purchase

SUPPLIERS
Excessive supplier lead time

Over ambitious marketing targets

High rejections Late deliveries

No check before financial approvals

Supplier defaults

High Inventory
High transportation time High stock of slow/ non moving items

High production cycle time

Min-Max levels not in place Single source

Delayed indents Obsolete inventory lying in stores

SYSTEMS

MATERIALS

MEN
Looking for faster growth

PAY & PERKS
Uncompetitive pay & perks

Do not relate future with us

Poor career planning

Lack of family sensitivity

Locational preferences

No rewards or recognition

High emplo turnover
No counselling Unprofessional atmosphere

No resolution Previous reasons for departure not analyzed Lack of cocern for employees No negotiation Employee surveys never done

SYSTEMS

ATMOSPHERE

ber of competitors

ompetitive pricing

LOW MARKET SHARE

ate market entry

much of variation

Low Productivity

oor inspection & testing

te deliveries

High Inventory

Single source

of family sensitivity

High employee turnover

Lack of cocern for employees

Cause
Increase in number of competitors

Cause
Poor technology

Cause
Poor product quality

Cause
Poor designing

Cause
Non competitive pricing

Cause
Low levels of customer satisfaction

Cause
Lack of market penetration

Cause
Poor after sales service

Cause

Poor marketing

Cause
Late market entry

Cause
Perceived credibility of the organization

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Solution
I.Have competitive edge by delivering more value II.New product development
See complete chart on "Gaining competitive Edge" See New product development cycle

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Solution
I.Review existing technology , features and capabilities II. Identify technology functionality gaps III. Mapping functionality to business processes

IV. Develop new technology and functionality framework

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Solution
I. Improve supplier quality to ensure defect free materials II. Install / Outsource state-of-the art manufacturing technology II. Ensure strict quality checks & controls so that a bad product never passes on to the customer IV. Improve functioning of products under stressful / difficult conditions V. Improve robustness
See checklist for product designing

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Solution
I. Add irressistible product features II.Sleek designing II.Environment friendly IV.Easy operation
See checklist for product designing

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Solution
I.Competitive pricing through efficient cost management II.Balance price and value
See "Efficient Cost Management Model"

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Solution
I. Benchmarking products with best in class or world class parameters II. Compare customer satisfaction levels with key competitors by inhouse studies and independent surveys III.Use qualititative measures throughout the organization for performance measurement IV. Conduct customer satisfaction measurement at regular intervals and make improvements on the shortcomings

Know how to conduct effective customer surveys

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Solution
I.Install technologies that allow customers to easily access co's products II. Install technologies and workflows that allows prompt processing of customer requests. III.Improve networking to facilitate wider reach IV. Back the products with good warranty V. Conduct dealer training programs

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Solution
I. Improve aftersales network II. Improve service on the following fronts:- Timeliness - Responsiveness - Accessibility - Empathy - Deliverables

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Solution

I.Strategic selling II. Targeting marketing resources in proportion to potential returns. III. Make your company & product look interesting IV. Energise selling effort with good incentives to employees
See how to do strategic selling

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Solution
I. Create a niche market for products II. Good product segmentation III. Beat the price barrier
See how to create niche markets

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Solution
I. Improve market perception II. Induce culture of "excellence" throughout the organization
See "Market perceived value model" See 4C's of "Excellence culture"

1 2 3 4 5

6 7 8 9

1

2 3 4 5 6 7 8 9

1 2 3 4 5 6 7 8 9 10 11 12 13

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* *

2.

a b c d e

a.

b. * * * *

c.

d.

e.

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4.

5.

* * * *

.

.

.

.

Deliver value

1 2 3 4

1 2 3

1

1

I

II

III

IV

2

I II

3

I II

* * * * * * 4

* * * * * *

1

2

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4 5

6

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Checklist for product designing
Means of knowing the product Have the non quantitative features of the product been defined in some manner? Do the designers know the level of product sophistication suitable for the user involved? Are adequate design guidelines, standards, handbooks and catalogues available? Do the designers understand the interaction of their part of design with remainder of the design? Do the designers understand the consequences of a failure or other inadequacies of their designs on:i. The functioning of the total system ii. Warranty costs and iii. User costs ? Do they know the relative importance of various components & characteristics within components? Do the designers know what are the manufacturing capabilities relative to the design of tolerances? Do the designers derive tolerances based on customer/functional needs or just use standard tolerances? Do the designers know the shop and field costs incurred because of incomplete design specifications or designs required in change? Means of testing designs Do the designers have the means of testing their design with regard to the following :a. Performance & reliability tests b. Tests for unknown design interaction or effects c. Pilot run Is their an independent review of design? Have the detailed drawings been checked? Do the designers record analysis for the design? Do the designers receive adequate feedback from development tests, manufacturing tests, acceptance tests and user experience? Are the results quantified where possible including frequency of problems and costs to the manufacturer and user? Does failure information contain sufficient technical details on causes? Are the designers aware of material substitutions or process changes? Do the designers receive notice when their designs specifications are not followed in practice? Means of regulating Design Have the designers been provided with the means of regulating the design process? Are they provided with information on new alternative materials or design approaches? Have they been given performance information on previous designs? Are the results of research efforts on new products transmitted to the designers? Are the approvals required from the designers to use products from the new suppliers? Do the designers participate in defining the criteria for shipment of the product? Can the designers propose changes involving trade-offs between functional performance, reliability and maintainability? Are designers told of changes to their designs before they are released? Have causes of design failures been determined by thorough analysis? Do designers have the authority to follow their designs through the prototype stage and make design changes where needed Can the designers initiate design changes? Are field reports reviewed with designers before making decisions on design changes? Do designers understand the procedures and chain of command for changing a design?

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Customer surveys
Steps in conducting customer surveys: 1. Identify your customers requirements under various segments. 2. Determine your survey methodology 3. Develop survey / interview questions 4 Conduct survey / Interview your customers 5 Disseminate findings of your Customer Surveys Identify your customers requirement areas. It is extremely important to know the requirement of your customers before designing a questionnaire or survey. This is because if we do not ask the right questions, the answers we get will be irrelevant and it will be difficult to find out if the customers are really satisfied with the issues that are important to them. Ways to identify customer requirements:Discuss the issue with sample group of customers Ask your existing customers “If we have to develop a questionnaire to measure our customers’ satisfaction, what questions should we ask. Brainstorming with employees from various functions within the organization. A cross section of ideas from various people will give us the complete picture about the requirement of the customers Determine your survey methodology This requires the organization to answer the following questions : How many customers to survey? Whom to survey? How to survey? When to survey? Who should conduct the survey?

How many customers to survey? The basic rule behind sample selection is to choose a cross section of customers which represents your overall customer base. For example if your customer database consists of large, medium & small organizations, your sample

must represent the same. Other criteria for selecting may include percentage of frequent versus infrequent customers, industry sector & geographic area. Whom to survey? While conducting the survey, the organizations must include the following customers: Present customers Potential customers Past customers Competitor’s customers The customer sample must never be biased. Everyone wants to hear good things from the customers and nobody wants to hear a negative feedback. There is a natural tendency to include a positive feedback and to exclude the negative feedback. This will never reflect the true measure of customer satisfaction. The organization must be willing to hear both positive & the negative from the customers if they are truly willing to improve their customer satisfaction. How to survey? The following methods can be used for conducting the survey: Mail survey Telephonic surveys Face to face interviews Comment cards The best method will depend on your situation, number of customers in the sample group and what works best for your customers. When to survey? I.Survey at periodic intervals: Many organizations prefer to conduct customer satisfaction measurement survey at certain time of the year. This however has certain disadvantages. If the period of survey is widely known it can signal the time for enhanced services to the customers during that period. The marketing personnel may distribute questionnaires to customers during these periods. Such conduct is open to all sorts of bias & this practice should be discouraged and avoided.

II. Surveying continuously: More & more organizations are moving towards continuous measurement of customer satisfaction due to turbulent & dynamic m & dynamic marketing environment. Continuous measurement recognizes the on-going importance of customer satisfaction and is not influenced by momentary events (good or bad). This method keeps the organization completely focused on customer satisfaction & does not allow it to be forgotten between survey waves. III.Surveying after “moments of truth” : Moments of truth are any interactions with customers in which an organizations effectiveness is tested. For example making payments in a bank is a moment of truth. Similarly, settlement of claim in the Insurance business is also a moment of truth Every moment of truth can be followed up with a satisfaction survey to determine as to how well the organization has performed in this important interaction. Who should conduct the survey? The survey can be undertaken by the organizations themselves or it can also be given to outside agencies. here are following advantages of getting the survey by outside professional agencies. They are more objective in formulating questions & analyzing responses.

Customers are more open when providing information to third parties. Professional agencies have the expertise to ensure that the process is productive & effective. 3. Develop survey questions The organization must develop a pre-determined set of questions which must take into account all the requirements of the customers. The questionnaire must give an impression to the customers that you are thorough & organized when gathering customer satisfaction information. The presentation & packaging of the questionnaire should not be shoddy. A good appearance can suggest evidence of organization’s high commitment to customer satisfaction management process and vice versa. Interview your customers Customers appreciate if asked for a feedback and have come to expect in many industries. Whichever method is chosen to gather the information, it must be done in a way which shows the customers that you sincerely desire the feedback & are serious in using their input for improving the product / service. It is equally important to acknowledge the participation of the customers in the survey. Once the survey is over and their valuable inputs have been considered, they must be informed about it as well. This has a great impact on customer loyalty and retention. Disseminating the findings of your Customer Surveys The report on your customer satisfaction management must include the following: Summary of findings Key trends Planned follow up measures Methodology of improvement plan It is also important to schedule a presentation to the top management & top executives. In a face to face discussion, it is far easier for the executives to ask questions & form consensus of agreement with the results. The presentation must include an action plan & reference tools for quality improvement as well.
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Competitive Edge .

.

.

More output .

Less input

More sales

Less cost

Deliver value

New products

Strategic positioning

Customer satisfaction

People

Material

Equipment

Better quality

New features

Unexploited segments Identify new customer needs

Joy & pride in ownership Make customers more competitive Make customers more secure

Motivated employees Focused employees Skilled people Reduced turnover

Quality suppliers Reduced inventory Reduced scrap

Better technology

Lower prices

Innovation

Improved mfg processes Improved utilization Less downtime

Dependability

R&D

Niche marketing

Irresistable features Ease of acquisition

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Strategic Selling

New WHO?

New HOW?

New WHAT?

The new WHO? A new customer segment that emerges from the changes in the Industry, such as shifting customer preferences or new demographics. A new customer segment formed by creative re-segmentation of existing customer base. An existing customer segment which the competitors have neglected. An existing customer segment which explodes & grows as a result of change in the Industry. The new WHAT? The new customer need which emerges from changes in the Industry. A new customer preference that becomes important as a result of changing business envionment A new customer need created by marketing tactics of other companies The new HOW? A new way (usually made possible by a new technology) of manufacturing, selling and distributing an existing or new product or service.

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4 C's of excellence culture
Customer focus

Continuous Improvement

Excellence Culture

Creativity & innovation

Commitment

Culture

Commitment

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Market perceived Value model

Market perceived Value model
How customers perceive you In your favor Value Customer expectation s
Functional Quality Cost Delivey Emotional Behavior Sensitivity Respect

Custome r Decision

In favor of competito r How customers perceive your competitors

Improving perceived Value The customer perceived value is a relative concept. It depends on how your customers see you in relation to your competitors. An existing customer may be satisfied with you, or a new customer may not find anything wrong with your product, but the decision still may not be made in your favor because the competition is offering greater value. Merely improving quality or peformance may not provide any market advantage if the improvements do not offer enhanced value to your customers as depicted in the above figure. Functional Value Vs Emotional Value: Functional value is created by quality, cost and delivery factors.Unfortunately, your competitors can most easily duplicate functional values. They can easily drop prices to match yours, they can install better technology and even provide 24 hrs delivery. Emotional value on the other hand is created by good behaviour, sensitivity towards the needs of the customers and the ability of making the customer valued and important. This value is less easily duplicated by the competition and generally is the outcome of qualified, friendly and helpful employees. The creation of functional value is of course important but genuine customer relationships cannot be formed on the basis of functional value alone. We need to satisfy the emotional values of customers as well. Emotional value is more lasting but difficult to create and duplicated as well. How we make our customers feel is as important as how easy we make it for them to buy.
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Efficient Cost Management model

1. Reduce quality costs

2. Reduce cycle time

Cost Management

3. Eliminate non-value adding activities

4. Eliminate waste

Cost Management Vs Cost cutting
Most of the organizations have wrong notions about cost. They confuse cost management with cost cutting measures. It is extremely important to understand that cost management is different from cost cutting. What is required by the

organizations is efficient cost management as depicted in the above figure and not cost cutting. Many times organizions who have taken resort to cost cutting have faced serious quality problems.

Reduce Quality Costs
Categories of Quality costs are given below:The objective is to increase the preventive costs and reduce Appraisal, Internal failure and external failure cost. Prevention costs - Increase these costs as they pay in the long run. Market research Quality training programs. Contract review Design review Field trials Supplier evaluation Process plan review Process capability review Design and manufacture of jigs and fixtures Preventive maintenance Appraisal costs - Reduce these costs through proper preventive measures Proto type testing Vendor surveillance Incoming material inspection Process inspection/control Final inspection Laboratory testing / measurement Quality audits Internal failure cost - Reduce these costs through proper preventive measures Design changes/ corrective action Scrap due to design changes Excess inventory Rectification / reject disposition of purchased material Rework/rejection in manufacturing Downgrading of end product Downtime of plant & machinery Trouble-shooting & investigation of defects External failure cost - Reduce these costs through proper preventive measures Processing / investigation of customer complaint Repair/replacement of sold goods Warranty claims Product liability & litigation costs Interest charges on delayed payment due to quality problems Loss of customer goodwill & sales Note: Calculate your quality cost under each category and make improvements on a continuous basis.

Reduce Cycle Time
This involves reduction of following cycle times Inventory cycle time by following Just in time ( JIT ) Machine set-up times by efiicient Total Productivity Maintenance ( TPM )

Eliminate non-value adding activities
Activities in any organization can be classified into two broad categories Activities that add value to customers Activities that do not add any value to customers The organization's time and resources must be focused on activities that add value to customers and all effort must be done to eliminate activities that do not contribute any value to the customers. Examples of non-value adding activities Chasing information Misdirected queries Unproductive meetings Seeking authority to act Bureaucracy Ineffective procedures

Eliminate Waste
The following activities are termed as wasteful activities and must be eliminated:Waiting time. Set- up times. Time spent on over production . Avoidable Transportation. Ineffective communication. Inopportune timing of activity

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Get products to the market before the competition Use innovative distribution channels to bypass competitors Seize segments that competitors have overlooked

Be a big fish in a small pond

Niche Marketing

Customize products to satisfy customers

Attack established markets with special advantages Identify new needs

Make your own product obsolete before the competition

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1. Opportunity evaluation Customer's present & future requirements Customer's unperceived & unarticulated needs

8. Implementation Tool & vendor development Process refinement

2. The idea generation Creativity & innovation

7. Validation Prototype testing, field trials & market feedback

New product development Cycle

3. Product positioning and pricing options

6. Financial evaluation Commercial evaluation Logistics evaluation 5. Market research Present, Future & Worst case scenario

4. Feasability check on ideas Styling, Costing, sourcing & Resource requirements

Important tips for new product development Put innovation at the heart of every new product concept so that it meets the customer's unperceived and un articulated needs. Big ideas can originate anywhere in your organization. It is important to have a formal system for channeling them, testing them and converting them into product concepts Develop only those new products that have the best chance of success in the marketplace given company's capabilities and competitive strengths. Evaluate the fit of every new product concept with the market realities and only then distribute your resources Use cross functional teams to collectively design new products. Use concurrent and not serial participation of every function. Marketing, R& D, Manufacturing, Engineering, Sourcing & Finance - Involve all of them for their views. Make every new product conform to parameters chosen up-front for meeting the customers needs being targeted.

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& geographic

obody wants egative feedback.

This however

ese periods.

bulent & dynamic marketing environment. Continuous measurement recognizes the on-going importance of customer satisfaction and is not er satisfaction

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Equipment

Better technology Improved mfg processes Improved utilization Less downtime

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ganization completely focused on customer satisfaction & does not allow it to be forgotten between survey waves.