Diageo Scotch Producer

1.0 INTRODUCTION

Diageo Scotch Producer is multinational alcoholic beverage company which has its head office in London (United Kingdom). Guiness and Grand Metropoliton merge their companies and forms Diageo Scotch Producer. It is known as the world’s largest producer of spirits whose chief products are wine and beer, vodka, rum and whisky. Diageo is also the world’s largest producer of whisky which manufactures in 28 distilleries and also in two grain distilleries. Its products are sold in 180 counties. It has several offices in around 80 countries. It has approximately 25000 employees in the world which is huge in count . Diageo started treading on December 17, 1997 at the London Stock Exchange. As of now it is the 12th-largest company on the London Stock Exchange on the basis of market capitalization which recorded almost £34.5 billion on 2011. It has many famous alcohol brands like Johnnie Walker, Crown Royal, J&B, Ciroc and Ketel One vodkas etc. In Scotch production in the world Diageo holds the largest number of shares. In 2012, the accurate sell of Diageo was 10,762 £ million and its growth increased 6% compared to 2011.

2.0 PRODUCTS

Diageo has many brands that are very famous and acceptable by consumers. The products which are produced by Diageo which are given below-

SPIRITS- The Diageo brand areas is 17 of the famous 100 premium distilled spirits brands in the world, and seven of the top 20 premium spirits brands.

BEERS- It’s one of the second largest product is beer.

WINES-Chalone Vineyard, Blossom Hill, Justerini & Brooks, Vignobles Internationaux, Piat d'Or, Rosenblum Cellars, Dom Pérignon, Sterling Vineyards. These famous wines are produce by Diageo and they are very likable by consumers.

3.0 DIAGEO’S MISSION-

Diageo mission is customer centric. It understands the customers and their requirements and then researches, analyzes and develops new product as well as polishes its existing product.

INNOVATION- Innovation is the reason for the success and popularity of their brands among customer because they know how the customers taste is changing with generation to generation.

TRUST- Diageo one of the main factor in successful business is trust. They always focus to trust the customer taste. It is not only with new customers but also with existing customers. They maintain this factor with its research and development management and best services.

EMPLOYEE MANAGEMENT- It’s another mission is employee improvement because it believed that good employee is one of the basic factor of the successful organization so they improve their employees by time to time training and monitoring.

4.0 DIAGEO KEY PERFORMANCE INDICATORS

KPIs (key performance indicators) present a bunch of scope centralized on those conditions of organizational execution that are the most hard to do for the present and future goals of an organization (Carol Taylor Fitz-Gibbon 1990). There are only a few KPIs in an organization, and they have certain aspects. Diageo follow those KPIs to achieve their mission.

Financial summary2011/12£m

2010/11£m

Change%

Net Sales 10,762 9,936 8

Marketing spend 1,691 1,538 10

Operating profit before exceptional items 3,198 2,884 11

Operating profit 3,158 2,574 18.4

Basic earnings per share before exceptionalitems (pence) 94.2 83.6 11.2

Financial summary2011/12£m

2010/11£m

Change%

Basic earnings per share(pence) 77.8 76.2 2

Recommended final dividend per share (pence) 26.9 24.9 7.4

5.0 FISH BONE DIAGRAM SHOWS THE CAUSES OF A SPECIFIC EFFECT.

CAUSE EFFECT

Fish Bone diagram on the basis of Diageo services

6.0 FLOWCHART SHOWING CUSTOMER SALES ORDER FOR DIAGEO SCOTCH

Problem

Equipment Process People

Material Environment Management

Customer visits the liquor shop for Diageo products

Customer checks for his favorite Diageo liquor product

Is Product available?

Customer seeks for alternative Diageo product

Customer chooses the liquor

Purchase order generated

Customer pays the money

Home Delivery Required?

Customer collects the product

Customer details recorded

Customer leaves the store

Product is delivered

Inventory Updated

7.0 AFFINITY DIAGRAM

This is a technique that can be used to collect large amount of data and arranged in groups based on customer requirement ( Kawakita.j 1960). The below shown affinity diagram represents the Diageo’s activeness in customer expectation.

MAINTAING A SUCCESSFUL CI PROCESS

Understand customer requirement

Provide training

Establish comfort

Getting management commitment

Improve communication in all areas

END

8.0 FMEA Analyses of Diageo’s services

Failure Mode and Effects Analysis (FMEA) is a model used to find out defects based on their severity, frequentness and detection (Dyer, Morris K, 2001).

Consult customer

Interpret customer requirement correct t in speca& design

Provide operational definition of output

Identify customer

Know quality improvement tool

Investigate other continuous improvement effort

Establish measurement system

Develop effective connective action system

Make project by project improvement

Determine process capability

Define process

Involve middle mang. & top mang. Steering committee

Establish consistent reward system

Provide job security freedom to fail

Provide middle managers with staff support

Provide clear program goal

Provide the time for Middle Mgr. to participate

Create a steering committee with real power

Grant access to information

Employee involvement

Break down barriers is

It focuses on the impotence in the design or method currently followed, and prioritizes and makes consecutive efforts to improve the most risky areas.

In our case this test has been performed on our Diageo services and the following defects have been found and mitigated.

Product Functions or Process Steps

Potential Failure Mode

Potential Effects of Failure

Severity

(1-10)

Potential Causes of Failure

Occurrence

(1-10)

Current Controls

Detection

(1-10)

Risk Priority Number

RPN

Action Recommended

Mitigation /Responsibility

Diageo products

Bad quality of product

Production department not responding

8 Faulty production machine was used.

5 Monitor in once every 4 months

9 360 Quality of products should be improved so that customer is always satisfied.

The management of product quality must recheck the services

Responsibility – management Team.

Diageo products

Problem in distribution

Marketing department not responding

8 Effective marketing solution not provided

4 Monitor in once every 6 months.

7 224 Proper marketing strategy should be followed.

The system of marketing must be rechecked

Respons

ibility – management Team.

As it can be seen, that two potential failure modes have been found out. The highest RPN here in the two tests is 360 which denote the highest priority to improve the quality of services.

9.0 CUSTOMER REQUIREMENTS (WHATS)

Following are the Customer Requirements from Diageo in the four basis aspects in which it

provides its services

Whats Meaning1 Quality of Products The better the quality is the more the

customers will tend to buy that liquor.

2 Brand name Customers will definitely look for the better brands as they have of reputation for serving better quality of liquors.

3 Taste The taste of the liquor plays a great role for

the choice of Scotch selection.

4 Effect on Health If any liquor affects the health badly then

people will stop getting attracted to it.

5 Cost of Product Customers may compromise on very high

quality liquor having a high price and would

prefer medium quality liquor with a

comparatively reasonable price.

6 Product Makeover Makeover of the products also gives an impression to the customer.

7 Innovation Company must be innovative enough to

bring changes in its products which can

attract potential customers.

8 Variety of Products The company should have a various range of

products to satisfy the customer needs.

9 Globally Procurable Any parts of the world would be able to buy

the liquor of their favorite brand.

10 Age of the Product In order to store the liquor for a good

number of years the company should

preserve the liquors using proper

procedures.

11 Liquor Style The choice of drinks depends entirely on the choice of taste of the customer or the occasion.

12 Aftertaste flavors Customers favors that liquor which have a good aftertaste flavors and have a long lasting effect

13 Customer Satisfaction The company should always try to research

on constant innovation in taste and varieties

of products so that the confidence of the

customer grows.

14 Proper Concern The Company should be capable enough and rehearse assiduousness.

10.0 TECHNICAL REQUIREMENTS (HOWS)

Following are the methodologies which Diageo applies in order to fulfill the customer requirements.

How’s Meaning

1 Employee Training Employee training required so that they can work in a professional environment

2 Testing of Controls Mechanisms sketched out by its core management team over the various products in the market

3 Diversity in workforce Diageo consists of employees having diversified cultures and languages

4 Multitalented Employee Employees with several skills.5 Sales Skills Skills required to sale a product or service.6 Communication Skills Excellent communication skills.7 Analytical Skills Ability to analyze complex problems 8 Ability to Synthesize Synthesize business details from different

sources.9 Creative Ability Creativity10 Initiative Its initiatives throughout its operations,

clients, supply chain and association.11 Presentation skills Ability to represent well 12 Professional Team Able to perform all the jobs with a high

satisfaction rate.13 Knowledge of Industry Having experts with thorough erudition in

various industries 14 Environmental sustainability The investment done strategically in

environmental sustainability

11.0 HOUSE OF QUALITY

The attached excel file below shows the House of Quality designed using the above parameters (WHATS and HOWS).

12.0 DESCRIPTION OF THE HOQ

CUSTOMER REQUIREMENTS: In this section the customer requirements (WHATS) are analyzed and put into the left side of the House of Quality row-wise.

CUSTOMER IMPORTANCE: This section of the house of quality will compare the importance of the each WHAT to the other and give them a score. The score allocated to each WHAT is gotten from brain storming.

TECHNICAL REQUIREMENT: Here we analyze the methodologies which Diageo applies in order to satisfy the customer requirements. The methods are put as the (HOWS) in the House of Quality.

RELATIONSHIP MATRIX: This is the segment of the house of quality is where connection between the WHATS and HOWS are presented. The main aim of this matrix is to improve the quality of the product (Hauser.J,2009). The correlation is measured either by using symbols or numbers in the order of the strength of the relationship. A score of 9 portrays a strong correlation between the customer requirements and the operational requirements, a score of 3 portrays a medium relationship and a score of 1 means a small relationship. If the correlation slot is left blank it means that the particular WHAT and HOW are not interconnected. In our House of Quality it can be observed that the testing of control of the Diageo liquor products has a strong correlation with their effects on health. This is because the more controlling measures Diageo takes the health of the customers will be less affected. Taste of the Diageo liquors however shows no relationship to the sales skills. In other words if employee’s sales skill is enhanced it will have no effect on taste of the liquors, hence no relationship. Cost of Diageo liquors is found to have a medium relationship to industrial knowledge of its employee’s in the sense that if the employees have much knowledge of the ongoing liquor market they will be aware of the prices of their competitive products and can estimate the cost of their own product.

THE ROOF: This part of the house is similar to the relationship matrix however it depicts the relationship between the methods which Diageo applies to satisfy the customer requirements. It compares each process and scores how it relates to another process with symbols meaning strong positive correlation, positive correlation, negative correlation and negative correlation.

Sales skills have a strong correlation with the communication skills; this means that if an employee of Diageo has a good communication skill it also improves his sales skills.

Multitalented employee however depicts a positive and improved impact on the analytical skills of an employee of Diageo and hence it is shown to have a positive correlation.

IMPORTANCE WEIGHING: This section shows the total weight age of the each of the technical requirements against the customer requirements. The importance score multiplies

the scores from the relationships. The importance of processes can be ascertained from this matrix. It shows therefore that Professional Training of Diageo is the most important amongst the technical requirements with a score of 252 as to the Communication Skills of the Diageo employees that score lowest 51.

TARGET: This section of the house of quality will help us to determine and measure the amount of change needed for each process. The units of measure for each process are given in the table as follows.

How’s Measurement units1 Employee Training Number of trainings conducted in a year2 Testing of Controls Quality of the Controls considered3 Diversity in workforce Number of skilled employees from different

areas4 Multitalented Employee Talent quotient5 Sales Skills Number of Sales made throughout the year6 Communication Skills Ability of an employee to communicate

properly7 Analytical Skills Ability of an employee to analyze properly8 Ability to Synthesize Ability of an employee to synthesize

properly9 Creative Ability Number of employees adept in creative

skills10 Initiative Initiatives taken throughout the year11 Presentation skills Ability of an employee to give proper

presentations 12 Professional Team Number of teams involved in

professionalism13 Knowledge of Industry Knowledge quotient14 Environmental sustainability Ability of the company to sustain itself

12.1 Outcomes

Following are outcomes of the HOQAmong the methodologies which are used by Diageo to satisfy the customer needs, the most successful are

Professional Training (252 points)Ability to synthesize (213 points)Testing of Control (201 points)Analytical Skills (201 points)Knowledge of Industry (198 points)

12.2 Recommendations

It can be recommended from the above HOQ that Diageo should focus more on some of the methods namely Professional Training, Ability to synthesize, Testing of Control, Analytical Skills and Knowledge of Industry which are the most effective methods that can be used to convince the clients.

13.0 Conclusions

At this point, the customer requirement in the liquor market are taken in view while formulating the Customer Requirements (WHATS) by dividing the liquor sell of Diageo into three segments namely Spirits, Beers and Wines. Provisions are open so that modifications can be made due to any requirement in the upcoming years. The HOQ has been made based on the facts of Diageo Scotch that can be found in various websites. During the strategy making for the HOQ various concerns has emerged. For example, were the “customer requirements” properly identified in this case? Was the company methodologies provided are justified? How the individual requirements would be gauged? Is the HOQ format needed to obtain analogous custom? Nonetheless, it can be hoped that readers would find this to be a sagacious and constructive development. It will definitely be extended in the forthcoming days.

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