Logistionary: Kano model

  

The Kano model is a theory for product development and customer satisfaction developed in the 1980s by Noriaki Kano, a professor of quality management at the Tokyo University of Science.

It´s an approach to prioritizing features on a product roadmap based on the degree to which they are likely to satisfy customers. Product teams can weigh a high-satisfaction feature against its costs to implement to determine whether or not adding it to the roadmap is a strategically sound decision.

The model involves two dimensions:

1. Achievement (the horizontal axis), which goes from the supplier didn’t do it at all to the supplier did it very well.

2. Satisfaction (the vertical axis), which goes from total dissatisfaction with the product or service to total satisfaction with the product or service.

It also identifies three levels of customer expectations: that is, what it takes to positively impact customer satisfaction

1. Expected needs: These are the must haves, the requirements that the customers expect and are taken for granted.

These expectations are also known as the dissatisfiers because by themselves they cannot fully satisfy a customer. However, failure to provide these basic expectations will cause dissatisfaction.

Examples: In a hotel, providing a clean room is a basic necessity. In a call center, greeting customers is a basic necessity.

2. Normal needs: These are known as the wants or the satisfiers because they are the ones that customers will specify from a list. They can either satisfy or dissatisfy the customer depending on their presence or absence.

Examples: Time taken to resolve a customer's issue in a call center. Waiting service at a hotel.

3. Exciting needs: These are features and properties that make a supplier a leader in the market. These are the delighters or exciters because they go well beyond anything the customer might imagine and ask for. Their absence does not dissatisfy the customer, but their presence improves the likelihood of purchase.

Examples: In a callcenter, providing special offers and compensations to customers or the proactive escalation and instant resolution of their issue is an attractive feature. In a hotel, providing free food is an attractive feature.

How Does the Kano Model Work?

Using the Kano Model, product teams pull together a list of potential new features vying for development resources and space on the roadmap. The team will then weigh these features according to the two competing criteria:

1. Their potential to satisfy customers.

2. The investment is needed to implement them.

A deep dive into Cost to Serve

 
Cost to Serve or Cost to Deliver has been a concept that we have explored in the past, you can find the last post we published in this link: The importance of Cost to Serve in Supply Chain.

In this post, we are going to deep dive further on this concept and shed some light around the different components that can impact cost to serve.

First things first, a quick reminder of what is cost to serve; It is the total cost of providing a product or service to a customer including all direct and indirect costs.

Direct costs are those that can be directly traced to the production or delivery of the product or service, while indirect costs are those that are not easily traced to the specific product or service but are still incurred in the process of providing it.

Now onto why understanding your cost to serve is important.

By understanding how much it costs to serve each customer, companies can segment their customers and identify potential areas for cost savings. It can also be used to evaluate different pricing strategies and understand how changes in price may impact overall costs ultimately helping organizations to transform unprofitable customers into profitable ones.

But what is the best way to determine cost to serve, and what are the different elements that make up this metric?

There are several elements and categories that need to be captured to be able to analyse cost to serve and have some meaningful data to work with:

1- Customer: Customer services overheads, order management, customer specific services, presales costs etc

2- Sourcing and manufacturing: Sourcing and procurement, cost of goods, production costs, manufacturing costs etc.

3- Warehousing: Picking packing and storage cost.

4- Delivery/Transportation: Transport, last mile delivery, returns and reverse logistics etc.

Finally, how do we put everything together and calculate cost to serve?

This is the easiest part, providing you have managed to do the hardest part which is to identify all the different costs impacting your operations. Once this information is ready, it´s just a question of subtracting from the customer sale price all these different elements, leaving you with a data point that can be compared across all customers in your organization.

Retailer-Manufacturer Collaboration - Keys to success

It is not new news that customers have become more and more savvy and educated when it comes to in stores and online shopping. This has lead to increase competition as well as higher expectations from both customers and retailers.

It's clear that the retail game has changed however many retailers and manufacturers are still playing by the old rules and therefore missing out on sales and customer loyalty.

In the current landscape, retailers and manufacturers need to identify opportunities to work together. In the article that you can find clicking in the below link, we explore some examples and case studies of collaborative work between manufacturers and retailers and how this has impacted consumers for the better.

You can fin the article here, hope you enjoy it!

Until next time!