Taguchi loss function
Taguchi showed that the further something varied from its nominal value,
the greater the cost to the system.
This is why quality companies work on continually reducing variation - making things
more and more alike rather than making to a standard.
The Taguchi loss function was first developed in manufacturing
organisations where variation in product quality could be measured and related to the
economics of the system.
The same thinking applies in service
organisations, although it is more helpful to think outside-in, i.e. the customer sets
the nominal value. Anything just away from what the customer expects may incur a small
cost while anything a long way away from what he/she expects will incur a large cost.
Cost is only one way to look at it. The failure to meet a customer need,
however small, will inform his/her view of the organisation. The purpose of any service
organisation is to understand and meet a customer need. |
