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Service QFD Example of Florida Power and Light

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"It is important for today's business to understand the distinctiveness of service process and transaction, whether you are a producer of physical products or provider of intangible services. Because the chances are that your customers will have to go through some types of service process in order to get the final output which may or may not be tangible," points out Glenn Mazur, executive director of QFD Institute [1995].

In the early 1980s when QFD was still a foreign concept of Japan, some American companies learned through trial and error by piecing snippets of translated literature and lectures that were limited in number, variety, and information. Despite some misunderstanding and misapplication, those who tried hard succeeded in developing a corporate culture of "customer-oriented" thinking.

One such example was Florida Power and Light (FPL), winner of the 1989 Deming Prize. Below is an excerpt from their initial QFD journey presented at the 1990 Symposium on QFD.

Where possible, we have added annotations in [purple square brackets] to provide readers with more up-to-date QFD techniques that was not available at the time of this case study.

Company Background

The quality effort began at Florida Power & Light in 1981 with the introduction of teams. Resembling Japanese quality circles, they were met with success but did not carry enough influence to change the way the company operated.

After a thorough investigation of many management styles and systems, the Quality Improvement Process was born. Bearing a remarkable likeness to Japanese Total Quality Control, QIP placed customer satisfaction as the focal point for company activities. To achieve customer satisfaction, it was necessary to move from supplier oriented thinking to customer oriented thinking; from a power generation company to a customer service company.

The primary motivation in introducing QIP was to establish a management system and corporate culture that would assure customer satisfaction. We would experience a fundamental change and listen to the 'voice of the customer.' It would be necessary to identify their needs and expectations.

Learning through Trials and Errors

To prepare for full implementation, we began working to better understand the needs of the customer in all of the customer groups including residential, commercial, industrial, government, etc.

Linking the customer needs to our business functions would inevitably become a very challenging yet interesting journey. A variety of methods for determining customer requirements were utilized which ranged from in-house expert judgment to customer surveys. We also used our field representatives to relay their experiences as well as several focus groups comprised of various customer groupings. After establishing the requirements of the customer, we surveyed the customers to determine the importance of each requirement. We also needed to translate these requirements into functions of the company. These became our quality elements.

The sum of all these activities culminated in our first Customer Needs Table. At the time, it was somewhat complex and revolutionary. It also resulted in the questionable results. When this first table was circulated, several problems arose. First, it did not reflect the actual business experience of our senior officers. Second, certain questions regarding the process of constructing the table could not be answered.

After an investigation, we found that our samples contained bias and were not statistically valid. We also had not analyzed the open ended questions where a great deal of what the customer wants can be found. In short, we did not understand how to develop a quality table.

[QFDI Annotation: The "customer needs table" referred here is equivalent to a "voice of customer table"; the "quality table" is often called a "House of Quality" matrix today.]

Fine-tuning understanding of QFD and better understanding customer experience

We revised the process to correct the existing table. The steps included:

  1. Identify and weight the requirements of the direct and indirect customer groups.
  2. Translate the requirements into quality elements.
  3. Rank the quality elements based on the strength of the customers' voice.

Our "Table of Tables" is dynamic. Since the market changes, it is necessary to construct a new table yearly. To achieve this we survey for importance once a year and we survey for satisfaction quarterly to measure whether or not we are meeting the needs of the customer.

The quality improvement process was introduced in three major sections. They are: Policy Deployment, Quality in Daily Work, and the aforementioned Teams. Each area has used the Table to establish priority for targeting areas for improvement.

For Policy Deployment, high priority concerns of customers, i.e., highest ranking quality elements, are a major contributor to the formation of company goals. As an example, let us examine the goal to improve the continuity of electric service.

Prior to QIP, we used the industry index of reliability of electric service and traditionally were ranked very high in performance. When we began using the Table, we noticed that the quality element "continuity of electric service" was ranked very high in importance to our customers. This surprised us, given our record of high reliability.

We changed our approach and began to measure not how reliable we were, but how long our customers went without service. After approaching the issue from this angle, we formulated a major policy to reduce service unavailability which was the impetus for many company-wide activities.

Our process of Quality in Daily Work begins with the selection of your top priority job. To assist the selection, a matrix was developed using the quality elements to establish priority from the customers' perspective. By having the entire organization use the same method for determining priority, we began to drive the required quality from the 'voice of the customer' throughout the organization.

The Team area has also used portions of the Table of Tables to select themes for improvement. Of course, this is only one input for local problem selection, but has provided the mechanism for teams to align with and utilize the 'voice of the customer.'

[QFDI annotation: The "Table of Tables" refers to a tailored QFD process.]

Lessons Learned

After applying the 'voice of the customer' to our business functions, we noticed some problematic situations. Ascribing to the principle of 'plan-do-check-act,' we were afforded the opportunity to further improve the process. We learned several key lessons in each area of our quality improvement process.

In the area of Policy Deployment, we learned that the customer will not always tell you everything. Certain areas for improvement considerations will never be realized through analyzing the explicit 'voice of the customer' alone. Business considerations, and in our case obligations, are also of fundamental importance and require attention in the Policy arena

[QFDI: This underscores the importance of sound analysis of the 'voice of the customer' and extracting 'unspoken' customer needs through application of the up-to-date QFD methods and tools.]

An example of this occurs when we continually receive comparatively low importance ranking for the quality element "capacity." Having adequate capacity to produce electricity is of paramount importance in our business; however, customers do not rank this very high. Does this mean we do not issue policies regarding capacity issues? Of course not! The very core of the business must also receive attention in Policy Deployment.

[QFDI: "Capacity" was not ranked high in customer importance perhaps because it is an 'expected quality' for public utility customers.]

Using the quality elements for priority in Quality in Daily Work proved too generic for specific processes as well as for different customer segments. We have learned to use the individual tables (i.e., residential, commercial, industrial, etc.) as well as the data behind these tables, to assist in the selection of top priority jobs. This has allowed us to focus on customer segments in an effort to describe the required quality and make the necessary improvements to achieve customer satisfaction.

Our Quality Improvement Teams also found the Table of Tables useful. However, due to the broad range of activities depicted by the quality elements, further analysis is necessary to assist in translating the associated elements into line-level activities. As a communication tool, the Table of Tables assisted in focusing our quality improvement teams on the essential area necessary to achieve customer satisfaction. Once this focus was achieved, further work was necessary to define the customer value requirements and to finalize problem selection.

This case study was presented at the 2nd Symposium on QFD (1990). The detailed tables and charts were not included in the transactions but, like many presentations, were available at the Symposium - illustrating the importance of live attendance over remote viewing.

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