AUTOMOTIVE INSIGHT
Agile Automotive Quality Governance and Oversight Creating growth competitiveness through assurance and transformation to win tomorrow’s customers Eugene Nizeyimana
February 2019
Contents
Introduction 4
SSCG AUTOMOTIVE INSIGHT |
Agility to Compete
Customer Centricity
7
21
Agile Automotive Quality Governance and Oversight
Value Creation 28
2
Agile is changing the way companies manage quality. When becomes a company’s standard delivery methodology, it invigorate the way quality delivery, assurance and oversight is managed. This requires a significant shift in practices and behaviours that affect all parts of both the business and quality function. When well executed, Agile Quality Delivery will minimise quality risks, realise expected benefits, improve value delivery and cross functional collaborative management.
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Agile Automotive Quality Governance and Oversight
Introduction – Changing Automotive Landscape The automotive industry is undergoing an unprecedented level of transition with shifting demands, markets, business models, products portfolios (brands, models and nameplates) and wider mobility ecosystem overlaid with challenging economic conditions and significant levels of disruption in technology. The concept of what a vehicle is for is drastically changing. The convergence of four megatrends electrification (e-mobility), autonomous driving, connectivity and the sharing economy is revolutionising today’s automotive businesses. Each one of these trends is powerful on its own, but the combination of all four is profoundly disruptive and creating the need for change. In Today's dynamic business environment, the Original Equipment Manufacturers (OEMs) dominance of the automotive industry is diminishing as new players with customer-centric business models and propositions are entering the industry breaking down entry barriers and unlocking new sources of values. Customers’ mobility needs and expectations, shaped by technology advancement, experiences in other industries, Total Cost of Ownership (TCO) and regulatory requirements are accelerating the transformation. To be competitive in today’s marketplace, automotive companies must reinvent in key dimensions: new business models to enhance agility and quality to compete, customer-centricity and value driven products/services. In addition, must deliver an exceptional customer experience. SSCG AUTOMOTIVE INSIGHT |
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Evolving Quality Delivery and Governance Assurance Best-Practices in the Automotive Industry Automotive companies are particularly strong at embedding quality into operations. Have robust processes, standards, extensive oversight and monitoring. They apply principles for critical processes and follow structured and rigorous problem-solving approaches such as 8D, Six Sigma and DMAIC. Beyond own operations, have extensive supplier quality management across the supply chain. In developing new vehicle models, companies identify and design out previous quality issues into the new version. Rely heavily on commonisation of design structures, platforming and parts. Reusing proven structures also reduce risk and boost predictability. New vehicle introductions follow strictly quality gates and leverage several tools to ensure robustness. However, tighter compliance regulations and changing customer dynamics are challenging the industry practices in a variety of ways. Only those that are quick to adapt may enjoy distinct competitive advantage and growth. The traditional quality models are no longer as effective as were designed in a different era and with a different purpose in mind. Used primarily for control capacity with a limited focus on customer centricity, early prevention and de-risking.
In today’s fast-paced markets and environment with shifting demands, challenges remains, especially with the globalisation of production. Companies are working to maintain performance levels across geographic locations and suppliers, and even across shifts within factories. With the needs to shorten development cycle period and speed up quick delivery to market, means engineers often under pressure to launch quickly, and many do not use quality gates effectively to ensure a scaled-up design for manufacturability. Many companies are streamlining quality control processes, and adopting lean practices to respond quicker, but most have yet to reach best-practice levels. Are developing quality culture and customer first principles to ensure employees and leaders instinctively consider quality in their daily decisions and impact to customers, rather than simply reacting to problems.
Compliance and quality risks have become two of the most significant ongoing concerns for the automotive industry, the scope of regulatory and assurance focus continues to expand. Product recalls and compliance fines have dramatically increased relatively over the years following the diesel gate crisis, resulted in increasingly tight scrutiny across many other areas. SSCG AUTOMOTIVE INSIGHT |
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Key Megatrends Driving Transformation Putting Customers First and at the Heart of the Business To gain a competitive advantage, many automotive companies are undertaking an unprecedented changes. Our research found key drivers impacting the industry and likely to intensify the need for improved and agile quality governance models and assurance oversight are:
Growth imperative
Evolving consumer dynamics
Market competitiveness and complexity
Innovation and technologies
Regulatory change
Need for shortened cycle time and quick go to market
Solving product quality and operational challenges today, to create growth and resilience tomorrow. SSCG AUTOMOTIVE INSIGHT |
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Agility to Compete
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Agile Automotive Quality Governance and Oversight
Steering Towards Agile Quality Governance to Create Value and Accelerate Relentless Delivery - The Case to Transformation Amid this ever-evolving landscape, each industry defines quality differently and priorities depend on the customers, products and markets specifics. In the automotive, quality can be defined in various dimensions, from “fitness for purpose”, “ability to meet (or exceed) customer expectations” to “predictability in statistical terms” and “Conformance of Production (CoP)”. To achieve this, companies work toward Six Sigma levels of high predictability. In addition to avoiding defects, also strive to maximise vehicle’s appeal along more perceived quality criteria such as design, aesthetics, touch and feel, and ease of use. An Agile Quality Operating Model (AQOM) can provide benefits for companies to deliver quality activities effectively and exceptional value, fulfil objectives and delivery of superior products/services to enhance customer satisfaction. Such a model is likely to enable the leadership to organise an effective management structure, deploy resources and the mechanisms by which governance is implemented. By the same token, the lack of a robust operating model and system may lead to an incomplete or faulty governance structure, or to inconsistencies, overlaps, and gaps among mechanisms. Such inadequacies may lead to failure to enact quality policies and the achievement of goals resulting in revenue loss. Agile delivery require a significant shift in behaviours that directly affect governance, human resources, risk management, internal controls and benefits management. Thus AQOM address both customer and business needs while also enhancing management’s capabilities and the controls to exercise proper oversight. SSCG AUTOMOTIVE INSIGHT |
The sheer complexity of quality governance and the huge number of related initiatives, procedures and other mechanisms in a global automotive industry indicate a need for an AQOM to support companies responding quickly to evolving markets. The elements of such a model may exist within many companies. However, those elements may not have been embedded, rationalised, and organised to provide the consistent guidance and incentives that the leadership, quality managers and quality engineers require. The AQOM has the potential of addressing the needs and thus enhance both the management’s and the assurance function’s oversight capabilities. To develop and deploy AQOM effectively, companies need to assess current state, define desired future state, and identify the steps required to achieve the latter, to effect implementation. An effective quality governance approach must starts by defining which requirements apply to the given products/services and business processes, and identifying where exactly in the process they occur (“breakpoint analysis”). Informed by the identified process breakpoints, can then define Key Quality Indicators (KQIs) that directly measure the performance and highlight residual quality risk exposure in the early phase of development. This approach will leads better understanding, reduced wastage and changes, far fewer product tests and much more robust insights into what the key controls and issues. Moreover, provides the essential fact base to guide and accelerate the remediation process and resource allocation.
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What is Distinctive About Agile Quality Governance and Delivery? An Agile Quality Governance and Delivery (AQGD) is based on four values which set the tone for successful quality achievement, especially at a company level:
People centric over process and tools
Embedded lean working over hierarchical structure and excessive documentation
Solution delivery and customer collaboration over targets
Quick response and delivery over rigid plans and decision making process
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Traditional vs. Agile View of Product Quality Delivery Process (PQDP) Traditional Sequential development process where all required activities in the phases is complete Planning
Design and Development
Industrialisation
Agile
Product development method based on iterative and incremental development encouraging rapid and flexible response to change
Plan Develop Product Plan Produce
Plan Product Concept Approval Gateway
Conceptualise
Evaluate
Launch readiness Gateway
Develop
Validate
START
Go to Market Approval
Manufacture
Test and Inspect
FINISH Quality Warning Indicators
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Risk management and review gateway
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The Benefits and Challenges of Business Transformation While the benefits of transformation can be great, they’re not without significant risks and not all companies achieve expected outcomes. When well deployed, agile quality delivery methodology and a characterised AQOM has the potential to deliver benefits in the following ways:
Agile delivery has the potential and benefits to:
Failure to implement Agile effectively can result in:
Alignment flexibility of quality activities and benefits Create and deliver business value Improve clarity and visibility on progress through the lifecycle Accelerate robust management coordination and collaboration Reduces complexity by breaking down long delivery cycle into
Misalignment between planned outcomes and strategic objectives Insufficient buy-in and acceptance Inadequate project organisation and governance Inappropriate deployment of the Agile techniques and tools
iterations, which increases effectiveness and efficiency Support improved automation of processes to reduce waste Support continuous improvement and quality checks Minimise quality risks by providing the opportunity to mitigate risks earlier in the delivery lifecycle through iterative delivery.
Ineffective risk controls tracking mechanisms Inadequate level of change management necessary for a successful Agile transition
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First time introduction of anarchy rather than structure Open to interpretation and the implementation.
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Illustrative Defined AQOM
QMS, Standards/Process/Processes
Management
Strategic Plans, Goals and Targets
Assurance Talent/Skills
Improvement Progs Insight, analytics & Data
Systems/Technologies
Engineering (Design & Development)
Industrialisation (Manufacturing & Assembly) Dealerships
Assembly Validation & EOL Tests/Inspections
Product Realisation
Marketing & Sales Orders
Infrastructures
Quality Performance & Risks
Resources Utilisation
Analysis and Improvement Customer Satisfaction
Quality Governance
Quality Policy and Statement
Business Management
Market Requirements/Customers (Needs & Expectations)
Customer Values
Control Inspection
Distribution
An effective QOM must embed Quality Management System (QMS) requirements into the process SSCG AUTOMOTIVE INSIGHT |
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Building AQGD Capability Points for consideration to harness maturity and relentless focus Vehicle development and quality assurance programmes are complex series of actions of which companies see quality as an ongoing process of continuous improvement as no vehicle is likely to be ever built right the first time without any deviations or remediation. Companies with mature quality models and execution rely on embedded processes, tight protocols and standard operating procedures customised for respective concerns. They are also known for extensive, systematic, and continuous learning that allows them to address emerging areas of concerns.
SSCG have identified four structural drivers of a unified “House of Quality” includes: Building quality into the product and into functional processes. Organising for quality in all functional areas and achieving compliance and solid governance. Factoring quality into strategy and performance management. And instilling a quality mind-set and behaviours by developing capabilities in everyone. Becoming Agile
L5 – Optimised • Focus on improvement • Prevention and control
L4 - Measured L3 - Defined L2 – Managed
L1 – Initial • Undefined processes, objectives, targets, poor controls and reactive
• Strategy, policy, procedures and objectives defined but not well communicated • Unstable characterised processes • Poor process integration
• Clear governance • Well characterised processes and objectives • Lifecycle and integrated processes
Agile Deployment SSCG AUTOMOTIVE INSIGHT |
Agile Automotive Quality Governance and Oversight
• Qualitative management and oversight • Organised evidence based quality reviews • Quality targets/QPIs
Maturity Dimensions: Capacity management Alignment with business lines Product and value oriented Autonomous process and teams Embedded processes Continuous improvement 13
Agility Framework Key Top-Down and Bottom-Up Company Approaches Becoming an Agile company is achieved through multifaceted business activities ranging from aligning delivery with strategy, enhancing capability, transforming peoples’ mind-set and accelerating process execution. Agile Quality Delivery (AQD) is effective when particular delivery controls are in place. Becoming an Agile company primarily requires top-down and bottom-up change to build new capabilities to mitigate risks early and often. SSCG recommends following few considerations to help companies reach each objective: Evaluate company readiness and culture Engage cross function team: Management, Quality, Risk Compliance, Operation and Technology teams Evaluate current delivery processes and controls Evaluate transformation opportunities to Agile maturity Identify Agile controls and effectiveness Establish right skills, tools and technologies
Top-Down Strategic
Rapid
Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Transform People Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Adaptive
Excellence
Bottom-Up SSCG AUTOMOTIVE INSIGHT |
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Transform People Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Companies that aim to becoming Agile must start with aligning quality delivery with strategic objectives and plans. However, key questions must be answered at the initiation phase are: Is the company ready to embrace an Agile transformation? Does the leadership style support it? Are the delivery team and Internal Audit ready to embrace Agile? Agile is about preparing a company for cross-team collaboration and quick response to fast paced business needs. Having an understanding of its readiness is an important first step. Here are a few considerations to help companies start preparation for agile transformation journey: Prioritise projects and stories based on business value in alignment with strategy. Decentralise decision making to reduce delays and achieve fast value delivery. Provide greater visibility through periodic monitoring of Velocity and burndown charts to assess delivery risks. Minimise risk through frequent demos and encourage stakeholder feedback. Empower the product owner to make the go/no-go decision for each product release.
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Functional built-in and integrated quality process can help companies accelerate agility Integrating the management and delivery of quality into the main operation processes, risk governance and regulatory affairs offers companies tangible benefits. • First, it ensures the company has a truly comprehensive view of customer requirements, performance and portfolio of risks and visibility into any systemic issues (cross-products and crossprocesses), and that no material risk is left unattended. • Second, it lessens the burden on the company (duplicative risk assessments and remediation activities) as well as on the control functions (no separate or duplicative reporting, training, and communication activities). • Third, it facilitates a risk-based allocation of resources and management actions on quality risks remediation and investment in cross-cutting controls. • Align quality assurance and risk management to address needs in an integrated, globally coordinated manner
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Transform People Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
The following practical actions can help the companies firmly integrate and manage product and service quality: • Establish clear governance processes and structures with mandates that span across quality management and support functions, and that ensure sufficient accountability, ownership, and involvement from all stakeholders, even if issues cut across multiple functions. • Develop a single and centrally integrated quality assurance and oversight system. • Develop and centrally maintain standards, process flow, procedure, product and service quality specifications, and control taxonomies. • Define clear roles and responsibilities between quality operation and assurance functions at the individual level to ensure there are no gaps or overlaps, particularly in “grey areas” where disciplines converge. • Develop and jointly manage integrated training and reporting programmes. • Consistently involve and timely align senior quality stakeholders in determining action plans, target end dates, and prioritization of issues and matters requiring attention.
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Developing Agile Quality Delivery and Assurance Team Capability Company capabilities are multidimensional and embodied in the values and norms, managerial systems, skills and knowledge, and techniques and tools. Changes can be expected to all of these dimensions when first embracing Agile Quality Delivery (AQD). In most cases companies need to transform the role of their quality assurance departments from that of an adviser to one that puts more emphasis on active quality risk management and monitoring. Redefining the role of Agile Quality Team to active ownership of the quality risk and control framework can deliver improved benefits. As a result, quality team are moving away from their old “policeman” role of inspection and playing a more integrated role in the design of the vehicles. They support product planning and defining required specifications by detailing quality deliverables. And with more than 60% of a car’s value coming from suppliers, much of the quality company’s focus is now on improving suppliers’ quality systems. Effective execution of these expanded responsibilities requires a much deeper understanding of the company processes by the Quality Delivery and Compliance Team.
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Transform People Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Given this evolution, responsibilities of Quality Delivery and Assurance Team are expanding rapidly may include the following: Generating practical perspectives on the applicability of quality standards, product design rules, and regulations across the company and processes and how they translate into operational requirements. Creating standards for quality risk materiality. Developing and managing a robust risk identification and assessment process/tool kit. Developing and enforcing standards for an effective riskmediation process to ensure it addresses root causes of quality issues rather than just “treating the symptoms. Establishing standards for training quality programmes and incentives tailored to the realities of each type of job or work environment. Ensuring that the front line effectively applies processes and tools that have been developed by compliance. Performing a regular assessment of the state of the overall compliance program. Understanding the bank’s risk culture and its strengths as well as potential shortcomings.
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Transform People Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Agile Quality Delivery (AQD) Team
Agile Companies Should Incorporate Tools and Techniques to:
When properly established, AQD team includes dedicated members and stakeholders who fully Understand Agile Delivery culture, governance, product quality, tools and techniques. Will best deliver value when they are cross-functional, e.g. leadership, engineering, quality, operation and marketing. Cross-functional teams are more resilient and increase efficiency by reducing hand-offs. Demands a high level of personal interaction and frequent informal communication, teams are most likely to succeed when members are co-located. Clearly establish and allocate roles and responsibilities is important.
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Continuously prioritised backlog. Clearly define and socialise (enterprise) ‘Definition of Done’. Define clearly a set of acceptance criteria prior to the start of vehicle programme development. Facilitate daily review of quality to enable expedited code deployments. Efficiently ceremonies to support and enhance AQD. Ensure structured review, approval and prioritisation of user stories/ requirements by the product owner. Support automated testing and continuous integration - This ensures that the features are developed in accordance with priorities, minimising risks and increasing business value. Continuously prioritises, consumes and delivers the most valuable stories (requirements) during each iteration.
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Measuring progress and delivery confidence- Outcomes that Matter Automotive companies can maximise the impact of the
transformation by rigorously measuring progress against desired outcomes. Most companies track common production metrics such as first-pass yield, deviations, rejects and rework, compliance failures, recalls, as well as customer complaints. These metrics are often lagging, not leading indicators, and are often followed inconsistently across sites. More important, companies generally lack reliable systems for measuring the true cost of quality and tend to miss or underestimate costs. That leads to decisions on quality investments that are made without understanding either the full cost or the financial value of improving quality. Transformation assurance is an essential aspect of effective Agile Quality Delivery. It provides with unbiased visibility, forward looking issue and risk warnings to help quality activities stay on track to deliver expected business benefits. Specific control mechanisms can provide touch points during Agile Quality Delivery. These must concentrate on key aspects on the programme lifecycle.
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Transform People, Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Accelerate AQD Team Excellence The key principles outlined imply a multifaceted transformation of quality assurance function. Assuming one point for each of these requirements, companies with inadequate quality management infrastructure or poor customer satisfaction may require a significant transformation. Applying following point scorecard can help companies accelerate AQD team excellence: Demonstrated focus on the role of quality and its stature. Integrated view of customer needs with operational behaviour. Clear tone from the leadership and strong quality culture, including evidence of senior-management involvement and active board oversight. Robust quality operating model and system with shared horizontal coverage of key issues and a clear definition of roles versus the first line of defence. Comprehensive definition of quality objectives, goals, rules, standards and compliance requirements in place to drive a riskbased quality-risk-assessment and transformational programmes. Use of quantitative metrics and specific qualitative risk markers to measure quality risks. Quality management-information systems providing an integrated view of performance and business risks taxonomy. Evidence of early cycle programme quality prevention actions taking, ownership allocation and control issues. Adequate talent and capabilities to tackle key requirements, risk areas and a working knowledge of core-business processes.
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Align Quality Delivery with Strategy
Accelerate Process Transformation and Integration
Control and accelerate risks assurance early and often Regardless of the delivery method used, AQD programmes are prone to risks. Mitigating risk upfront and continuously throughout the programmes is what makes AQGD and AQDM methodologies the right approaches. AQD is effective when particular delivery controls are in place. Thus becoming an Agile company requires top-down and bottom-up company change to build new capabilities to mitigate risks early and often. Specific control mechanisms provide touch points during AQD. These concentrate on key aspects on programmes lifecycle, as outlined: Strategy and governance planning review Requirements review/s Build and test review/s Readiness and release review/s Post implementation reviews/Project retrospective Agile portfolio maturity assessments
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Transform People, Cultural Mind set and Behaviour
Strengthen Quality Assurance and Oversight
Successful AQD requires a highly-disciplined and focused management and governance approach that provides near real time risk assurance through a range of Agile ceremonies, such as: Release planning and iteration planning, daily stand-ups reviews, retrospectives and product backlog refinement. In order for these controls to be effective, changes must occur top-down by leadership and bottom-up by the programme and operation teams. A company will need to assess and revise its programme delivery controls, including: Creating a modular approach to governance procedures to align with increment, release and roadmaps. Updating the change management process and defect management process to align with product backlog and risks maintenance. Treating Agile meetings as a form of a self-organising team approval to move forward periodically with programme activities. Updating reports that tracks progress for budget and schedule estimations. Ensuring that the stakeholders and the Agile team are receiving the proper training to be effective. Frequent audit will play an important role in this process, providing an independent view of quality programme status and effectiveness with respect to commonly agreed-upon transformation objectives.
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Customer-Centricity
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Agile Automotive Quality Governance and Oversight
What is and Why Customer-Centricity Customer-centricity focuses on defining and considering products from the customer’s viewpoint. Most of companies understand that customer expectations and requirements are firmly key competitive and driving factors when defining product quality attributes as customers pay close attention to quality and often weigh it equally with price and performance. Winning companies also understand that treating their customers with respect, with great service, and built a relationship is also important. For automotive customers, quality is much more about product appeal, performance and reliability than complying with regulation. As vehicles suffer wear and tear over a period of many years, customers expect safe and reliable operation, low maintenance costs, and infrequent repairs. Because of these competitive concerns, automotive companies excel in understanding the voice of the customer. They have become adept in defining quality strategies, establishing targets to achieve them and implementing strong functional quality processes along the value chain—design, development, engineering, production, supplier management, sales, and after-sales. Companies design for reliability over the life cycle so that buyers of second-hand vehicles have a positive experience as well. With quality a priority for more than 10 years, it has become an entrenched part of management at all levels.
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As market becomes more complex and competitive, likewise customers are becoming more selective in brand choices. Acquiring new customers is also becoming more difficult. Therefore, more companies are investing more in retention instead of acquisition as: New acquisition can cost up to 5x more than retention. 2% increase in retention has the equal effect on profits as 10% in cost cuts. On average, companies lose approx. 10% of its customer base each year (customer churn). Companies with a high retention rate grow faster. The challenges of becoming a customer centric companies range from: Functional silos prevention of customer data sharing. Misalignment of culture around customer needs. Inadequate customer insight and data management technology platforms. Lack of standardised definition of customer and centricity. Inadequate support and empowerment to manage customer issues. Insufficient expertise. High focus on sales than customer satisfaction.
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Evolving Customer Dynamics These experiences are shaping customer expectations across the automotive industry:
Consumer demands and expectations
• Customers are looking for value to be clearly demonstrated, reflecting a balance of price, product features and service tailored to their needs. They prefer to buy more products from companies they trust.
Influencing persistency and retention
• Recognising the value of the customer relationship is vital.
Auto companies and products failing to meet customers’ expectations
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• Product performance and reliability, service quality and product transparency.
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Customer Experience Analysis and Design Framework
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Developing Customer Centricity Strategy to Transform and Eliminate Blind Spots - Best practices to get it right A successful customer centricity strategy starts with an aspiration centred on what matters to customers and empowering frontline team to deliver. Company must anticipate customers’ needs and delighters to able to provide the right products, experience and meet expectations. To build internal momentum for initiatives to develop this unique customer experience, a company must understand how that helps it perform distinctively in the market. The conviction and shared aspiration that stem from understanding customer experience and company wants to deliver can not only inspire, align, and guide it but also bring innovation, energy, and a human face to what would otherwise just be strategy. The shift towards becoming a truly customer centric company is both complex and long due to evolving markets and customer dynamics. Being a customer centric company is the Holy Grail towards unlocking the true potential of customer value. Speed, quality, prioritisation, discipline and adaptability are all key qualities that will engage customers and other stakeholders to use products or services and build lasting relationships.
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Becoming Customer-Focused A customer-centric company builds an operating model around a deep understanding of its customers, what they value and the contribution each makes to the profitability of the company. This requires: Designing business processes that recognise different customer segment needs. Delivering a positive and seamless customer experience at every touch point across the customer life cycle. Maintaining an active dialogue with customers (and acting on feedback). Fostering a culture that places the customer at the heart of the decision-making process. Our research found that several key questions commonly underpin successful strategies: Company’s appetite for change in the near term? Is the goal to change the customer experience fundamentally or simply to improve it at the margins? The gap between the needs and wants of customers and what they actually experience? How can the company gain a customer-experience advantage against competitors? At which point in the experience should the company concentrate to have a real impact? How do the overall capabilities of the team support the customer experience the company wants to provide?
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A Customer-Centric Company Build a Virtuous “Customer Wheel” Strategy to Align Process, Products and People Market Insights and intelligence • Customer dynamics • Target customers, requirements and expectations • Standards/Legislation • Anticipate customer changes in life stage Focus - Royalty and Share Of Wallet (SOW)
Customer point of sale feedback SSCG AUTOMOTIVE INSIGHT |
Define - Deep Understanding of the Customer
Develop - Value Propositions
Integrated systems and platforms to facilitate successful delivery on promise and best in class customer care
Customer Focused Leadership Shift from acquisition to retention share Experience design Feedback Drives Continuous Improvement Empowered Frontline Metrics that matter Experience and Learn
Generate Customer Engagement Programmes across Lifecycle
Start - Customer Acquisition
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Instilling Customer-Centric “Mind-set and Behaviour” Best Practices Into the Company Fabric Customer centric companies creates products, processes, policies and a culture that are designed to support customers with great experience as they work towards their goals. The required change in culture must be driven from the top down. Senior management must instil and clearly communicate a corporate strategy focused on customer-centric innovation and recognise and reward efforts to deliver this. Collaboration and empowerment of teams to spot customer improvements and act upon them must become the new norm, as well as physical spaces such as customer excellence centres to help develop and incubate ideas. Protecting the core is about getting the basics right, becoming more customer centric and, where appropriate, adopting the leading practices that competitors or other industries have demonstrated. Some of the key practices that can assist companies advance customer-centric thinking and considerations amongst their teams includes: • Passion and true believe in customer first. • Focus on what the customer wants and needs, and develop products and services around that. • Focus on building relationships designed to maximise the customer’s product and service experience. • Analysis, planning and implementation of carefully formulated customer strategy that focuses on creating and keeping profitable and loyal customers.
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Companies that put customers first are 60% more profitable that their competitors Customer Service • • • • • • • • •
Profit Driven Customer is Right Product is the Focus Design Starts with features Service = Frontline Friendly Reactive Make it Right Test New Ideas with the Customer
Agile Automotive Quality Governance and Oversight
Customer Centric • Purpose Driven • Anticipate Customer Needs • Customer Experience is the Focus • Design Starts with the Customer • Experience = Everyone • Real • Anticipatory • Get it Right • Design New Ideas with the Customer
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Value Creation
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Agile Automotive Quality Governance and Oversight
Best Economics Product Development Creating Company and Customer Value through AQD To survive in today’s environment of competitiveness, low growth and rapid product life cycles, companies need to consistently deliver products that provide both the greatest total value to customers and the most attractive economics over the entire life cycle. Through design thinking, creativity and innovation companies can enhance product lifecycle management to solve complex strategic issues while also delivering high level value. Focus their innovation efforts on the features that customers are willing to pay for and to select cost optimisation approaches that will improve and protect long-term profitability. A collaborative approach to concept definition, design and development steers the creation of new products and services. Companies should consider deploying approaches which combines customer, technology, operations and market insights early in the development cycle. Create exciting portfolios of new products and services that deliver superior quality products and the right experience for customers.
Poor Quality
Time
Cost
Scope Change
High Cost
Slow Delivery
Quality
Methodologies for Optimising Cost and Increase Value Design for Excellence (DfX)
Quality by Design (QbD)
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Value Driven Design (VDD)
Agile Automotive Quality Governance and Oversight
Design to Value (DtV)
Design-to-Cost (DtC) 29
Design for Excellence (DfX)
Quality by Design (QbD)
Value Driven Design (VDD)
Design for Excellence (DfX) methodologies focuses at optimising quality, value and reduce cost in product design/redesign phase. Companies deploy DfX for its proven effectiveness to systematically examine the whole product value chain to identify areas for improvement in return on investment and margins. The DfX methodology focuses and consider each and every factor that can influence a product’s value or cost – from concept to delivery – and identifying the ‘golden’ combination that will deliver the very best results at the lowest possible investment.
Design to Value (DtV)
How is Design for Excellence Performed? Integrated and interconnected work streams
Quality
Design for Excellence
Supply Chain
DfX is an extremely multidisciplinary and collaborative exercise. The focus is on tapping into the insights – and stimulating the creative ideas – of people within the company who are involved in bringing the products or services to the market.
Increase value and margin and reducing costs
Design
Marketing
The DfX approach ensures that optimal product architecture decisions are made from the very start. Deploying DfX in the earliest concept and design phases can pave the way to creating the easiest and most ideal business situation: maximum simplicity in design with as few building blocks as possible – but can still be segmented without much difficulty.
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Design-to-Cost (DtC)
Procurement
+ Value/Benefits
- £ Cost
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Design for Excellence (DfX)
Quality by Design (QbD)
Value Driven Design (VDD)
Quality by Design (QbD) is a systematic approach of building quality into a product and throughout its life cycle by understanding Critical Quality Attributes (CQAs) and optimizing Critical Process Parameters (CPPs). QbD begins with predefined objectives and emphasises product and process understanding and process control, based on sound science and quality risk management. QbD support companies to improves safety and efficacy, increases manufacturing efficiency and reduces cost. QbD is a multidisciplinary and collaboration exercise. The implementation will lead to a better understanding of the process. QbD elements includes: Quality target product profile (QTPP) that identifies product CQAs. Product design and understanding including identification of critical material attributes (CMAs). Process design and understanding including identification of CPPs, linking CMAs and CPPs to CQAs. Control strategy that includes product specifications as well as controls of the manufacturing process. process capability and continual improvement
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Design to Value (DtV)
Market Insights and Requirements • QTPP • Regulatory • Standards Continuous Improvement
Quality by Design (QbD) Manufacturing • CP, CPk, Yield, FTT)
Agile Automotive Quality Governance and Oversight
Design-to-Cost (DtC)
Product Design • CQA • QMA • DFMEA
Process Design • CPP (DoE, PFMEA, Process Validation, Control Plans)
Control Strategy/Plan • Risk Assessment and Oversight • DoE, DVP&R
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Design for Excellence (DfX)
Quality by Design (QbD)
Value Driven Design (VDD) strategy approach can be integrated in the product development to help companies obtain clarity on multiple perspectives: Customers insights Competitors offering insights Manufacture and distribution cost VDD approach: Prioritise high-level needs (or system features) based on the perceived business value each would deliver. Improve the development of complex engineering programmes and systems such as vehicle development by reducing or eliminating cost overruns which are a major problem Enable the assessment of a value for every design option so that options can be rationally compared and a choice taken. Facilitate design optimization by providing designers with an objective function (attributes) and eliminating those constraints which have been expressed as performance requirements. Ensures design choices are made to maximize system value rather than to meet performance requirements.
Value Driven Design (VDD)
Evaluate
Design-to-Cost (DtC)
Optimise
Value Competitor Offering Insights • Global markets • Tear-down analysis (Deformulations of products, comparative performance and packaging analysis)
Attributes
Consumer Insights • Attributes values • Willingness to pay for comparative • Ethnography and sensory
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Design to Value (DtV)
Manufacturing and Distribution Insights • Clean sheet analysis • Activity based costing • Cost, attributes and delivery trade-offs
Configuration
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Design Variables
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Design for Excellence (DfX)
Quality by Design (QbD)
Value Driven Design (VDD)
Design to Value (DtV) help companies identify product features that consumers value most, as well as those that generate little market interest. With this knowledge, they can redesign their products, adding features that promote sales while eliminating unnecessary attributes that only serve to drive costs. DtV also helps companies optimise efficiency in product design and manufacture by highlighting areas for improvement. By using the DtV methodology, many companies have optimised their product portfolios and uncovered significant savings—often in unexpected areas. Across sectors, DtV stimulates growth, improves customer satisfaction, and optimises brand positioning by keeping the focus on product features that customers value. This results in impressive financial benefits—on average, our clients achieve a 10 - 40% increase in gross margin and a 10 - 40% reduction in product and supply chain cost. DtV also helps products reach consumers faster by reducing design complexity and time-to-market, and the improved positioning typically helps them gain additional market share as well.
Design to Value (DtV)
Design-to-Cost (DtC)
Making DtV critical for optimisation can deliver multiple benefits early in the design phase while generating significant value: Holistic View • Understanding of customer and competition requirements • Holistic view on lifecycle costs Lifecycle cost optimisation • Simplification, standardisation, cost-effective substitution to reduce production/implementation costs without impacting quality value • Optimisation of post-production lifecycle cost including operating costs, maintenance, modernisation and disposal costs. Value generation • Increase of customer value through pricing optimisation • Lead time reduction due to design changes • Increase of customer retention/royalty Extended Know-how • Stimulate creativity • Leverage all possible sources of knowledge base
+Value/Benefits - Design Complexity
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Design for Excellence (DfX)
Quality by Design (QbD)
Value Driven Design (VDD)
Design to Value (DtV)
Design-to-Cost (DtC)
Design-to-Cost (DtC) provide a systematic approach to optimise product portfolios that uncover cost savings and increase margin. As part of cost management techniques, DtC describes a systematic approach of controlling costs of product development and manufacturing. DtC ensures that costs are designed "into the product“ from the earliest concept decisions. Thus costs are seen as an equally important parameter besides feature scope and schedule, the three taken together yielding the well-known project triangle.
Product Requirements & Market Analysis
Design & Cost Estimates
Continuous Cost Reduction
Manufacturing
• Design Alternatives & Costs Analysis • Process Design & Cost Estimates • Make & Buy Analysis • Supplier Costs & Estimates • Quality and feature attributes
+ Benefits/Value Over Time - £ Design/Product Cost
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Conclusion Many companies are not keeping pace with changing markets and consumer dynamics and are far behind in adopting Agile Quality Delivery methodologies and meeting customer expectations. To succeed in this fast-changing environment and achieve sustainable top-line growth, companies need to focus on redefining quality strategies, customer relationships, transforming business models to embrace agility and introducing an innovative culture in support of strategic decision-making. Achieving superior customer centricity is less about implementing a grand vision than about building cadence today, and in the future. But the time has come when the journey is a strategic necessity, and all automotive companies need to be clear about current position and future priorities.
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Discover how we're helping the automotive industry transform to win tomorrow’s customer
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Agile Automotive Quality Governance and Oversight
Learn More About SSCG's Global Automotive Practice SSCG provides a wide range of quality management consulting and advisory services globally, to the automotive, manufacturing, business services and engineering sector. Throughout industries and entire value chains, we help clients drive productivity, growth and operational excellence. In a time of rapid disruption, consumer transformation and market evolution, We help our clients shape and deliver transformation programmes across their operations from strategy, product planning, development, manufacturing complexity to operating model re-structuring and aftermarket quality improvement.
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Our quality consulting services can help you Agile quality transformations are complex. Successfully development, adopting and executing an Agile transformation requires significant planning, review and company readiness. We guide the creation of a streamlined next-generation agile quality operating model, characterised by customer journeys. By designing agile processes, we help clients reduce leakages and to sustain performance to meet future needs, achieve significant and sustainable improvement in their quality performance, customer satisfaction, and regulatory compliance.
Here's how we can support your company on this journey: Redefine business positioning in competitive markets and unprecedented time of change
Define strategies for growth and profitability
Define Voice of Customers (VoC) , quality vision, objectives, standards and goals
Access current programme lifecycle maturity to perform risk assessment
Establish Quality Management System(QMS) and control framework
Develop and deploy quality system, process, procedures and tools: QMS, FMEA, Kano Model, APQP, PPAP, TQM, Six Sigma
IATF 16949/ISO9001 compliance and audit oversight
Quality project management assistance
Help control product quality management: Planning, prevention, detection and risk oversight
Cost of poor quality reduction and return on investment
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Contact Us
Eugene Nizeyimana
Principal Consultant, Automotive Products, Process and Programmes Quality, SSCG Consulting Phone: +44 7879150562/+44 1902 752758 Email: Eugene.Nizeyimana@sscg-group.com
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Advisory | Consulting | Engineering About SSCG SSCG is global management consulting and professional firm. We provide engineering and management advisory across business services, automotive, industrial manufacturing and emerging markets sectors. We provide informed perspective on the issues faced by our clients. The insights and quality solutions delivered to support our clients to build trust and confidence in the markets and in economies. We combines our multidisciplinary approach with deep, practical industry knowledge to support our clients meet market dynamic challenges and respond to opportunities. info@sscg-group.com www.sscg-group.com @ SSCG Copyright 2019, All Rights Reserved