Customer SQE - Within Specification but too much Variance

[adickerson]

My company's quality culture and customer's quality culture are starting to clash and I wanted to get some advice on how to handle a recent issue. Actual product description and standards changed to protect privacy. I am going to use cakes as an example.

We promote our company as a low cost supplier. We do not make any claims that we are the absolute best in class but we do have a strong amount of customer satisfaction. If you wanted a complex best in class wedding cake we would pass on the business however if you wanted a birthday cake for a 5 year old's birthday party we can make a delicious cake for about 30% less because we don't have the same level of detail.

We recently picked up a new customer that is used to buying wedding cakes but wanted to expand into mass market so they decided to start buying some cakes from us. Of course before any work started we asked them for a bunch of specifications for what kind of cake they wanted. They gave us a good number of specifications and we went back and forth to clarify exactly what we needed to make.

So we set off making a bunch of low cost cakes that meet all the specifications. However our customer in now having problems at their customers - everyone was expecting wedding cake quality at birthday cake prices. The problem is that the designer of the birthday cake or marketing department did not adequately anticipate what the customer requirements would be. So the customer is coming back to us and issuing us quality complaints becasue the cakes did not meet their customers expectations. I just recently received a quality complaint that my cakes were 10inches round +/- .4 inches when the specification and agreements we made were for +/- .5 inches. So in terms of meeting agreed to requirements - we do that.

Now the SQE is trying to reject cakes that meet specifications because there is too much variation. He claims we need to make cakes at 10 +/- .1. I feel like they are changing the rules after the game has started, which is fine if it was simple but we don't have the fancy ovens that can make +/- .1 cakes. We only have +/- .4 ovens and new ovens cost more then the money we make from making all the birthday cakes.

So, this is where things get even more tricky. All of our customer's customers are making lots of complaints and our customer's reputation has suffered. The management at the customer is putting a lot of pressure on the SQE to make the problems go away. He is now trashing our reputation by playing loose with a bunch of statistics. He is presenting to his management Cpk measurements biased on non normal distributions and such. I don't think he outright lying...just making some mistakes. Anyway his charts are pretty and he carries some weight as a SSBB so his managers are impressed and blaming us for problems because that is what they want to hear. I understand the need for improvement but all our processes and pricing is structured under using our old ovens and not the new ones. The SQE wants us to invest in new ovens at our cost with out any customer support.

I feel like to fight this I am going to anger my customer's upper management. I was going to start with a focus on our actual performance but if I do fight that way I may end up giving a math lesson to explain the statistics problems. I expect most of this to fall on deaf ears at the customer and even if I did get the concepts across the SQE may take it personally and make more problems for us. What I want to do is have the SQE get a design change to modify the cake standards to 10 +/- .1 so we can make a slight price increase to cover the costs of investing in new equipment we didn't plan for. I don't know how to justify a price increase with our current "reputation" at that customer. I just don't know how to get there, any ideas?

 

[Jim Wynne]

Re: Customer SQE

First, two things:

Then, a quote from Andrew Lang, wrt your customer's SQE:
"An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination."

It looks to me that you have this big bear waiting for his cake, and he doesn't care what it was that he asked for, he just wants you to give him what he expects. If your company's reputation is being damaged by an unreasonable customer, this issue needs to be addressed quickly and decisively. The problem is that it won't happen at the level where you and the SQE are currently at odds. The executive management of your company needs to sit down with the top management of your customer's company and get this sorted out.

 

[Sturmkind]

Re: Customer SQE

adickerson;

Unless there was a capability requirement clause in the contract it does indeed sound as though the customer is changing the requirements mid-stream. Fighting a statistical battle, especially with a potential statistical terrorist, even if you are 'right' could result in this account being 'dead' right. The root cause may have been your customer's assumption that their customer's would be perfectly happy with lower prices and correspondingly lower quality. I would think that you could cheerfully suggest to re-quote the business and renegotiate the contract.

 

[SteelMaiden]

Re: Customer SQE

The problem is that it won't happen at the level where you and the SQE are currently at odds. The executive management of your company needs to sit down with the top management of your customer's company and get this sorted out.

Thank you for putting what I was trying to find the right words for, Jim. It is unfortunate that you did everything to meet the specifications that you were given and then the customer decided that he gave you specifications that were not stringent enough. The best thing is to get out from under this as soon as possible in order to limit the amount of time this company can do damage to your brand. You might (probably) will lose money on this contract, but hopefully you can cut your ties before they ruin your company. Good luck, don't let management put this off thinking that you and a buyer can iron this out.

 

[jasonb067]

I am afraid that this is quickly becoming a commerical issue and not a product quality issue. Maybe time for your in house experts in that area get involved.

 

[Bev D]

This is not a quality problem or a statistics problem; it is a Customer issue.

Your Customer made a choice that had unintended or unexpected but real negative consequences with their Customer. As long as your contract is clear, this issue should be resolved at the executive level. Not all Customers are right and some Supplier-Customer relationships are not beneficial for either party.

 

[BooleyJulie]

ask for an official engineering change, contact customer buyer and explain situation. This should at least generate some discussion.

If you still get no resolution - refuse to ship.

 

[Hodgepodge]

There is always a risk when going with the lowest bidder. It seems in your particular case, the customer did not lose anything. You gave them what they asked for. If the cakes you delivered were to “spec” as you say, the fault lies with what the customer asked for. Contrary to popular belief, the customer is not always right.

When you say your reputation is getting trashed, I hope there isn’t any trash talk with your other customers. That would be slander. That would be unacceptable. Don’t beat around the bush with the customer’s management. The customer issued a contract/purchase order and some supplementary conditions (specs) to your company. Your cakes either meet all the conditions of the contract/purchase order or they don’t. If all conditions are met, all the charts in the world are meaningless.

Participating in nonsensical arguments is a waste of your time. When you engage in such arguments, you give power to the party you are arguing with. As James Lehman says, “Stop the show.” The SQE is putting on a show. You don’t need to explain good business sense to this customer. Once you prove you have met all the conditions of the contract, you don’t need to talk any more about it. The only way to achieve customer satisfaction from this point forward is to have the customer redefine their requirements. You give them a quote and they buy from you or they don’t.