Reliability is a quality dimension that has large importance in most industries. The heavy-duty truck industry is one where its importance almost can not be overestimated. Reliability is in a major European customer satisfaction survey listed as the most important factor for customer retention, both as stated by customers and as a result of correlation studies between customer repurchase intentions and satisfaction with different factors2. Furthermore poor reliability is often mentioned as the main reason not to repurchase a truck of the same brand. Also in studies of the US market, the importance of reliability is emphasized. For instance, reliability has a large share of the customer satisfaction index constructed by JD Power and Associates, which is based on customer statements. According to Brian Etchells, senior research manager in the commercial vehicle group at J.D. Power and Associates3 “Performance and quality account for 65 percent of total product satisfaction, so it’s easy to see how problems quickly erode owner satisfaction”. He elaborates “Time is money in the trucking business, and when a truck is in for service, it impacts the fleet’s bottom line,”
In line with the great importance of reliability for a truck manufacturer, there are a lot of efforts in Volvo as well as its competitors to keep a good reliability that will make the customers satisfied and make them loyal to their brands. However, there are many and large areas in which the knowledge can be further extended.
2 Correlation between factors does not imply a cause-and-effect relationship, but it can support such hypotheses based on other arguments such as, in this case, statements by customers. A discussion about the use of
correlation studies to show importance can be found in Section 5.1.
3 Press Release: Class 8 Truck Quality Declines Due to More Problems with Low-Emission Engines (16 August 2006). Available: <http://www.jdpower.com/press-releases/pressrelease.aspx?id=2006136> (2007-08-17)
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Reliability and even more so durability are areas that need to be evaluated during a relatively long period of time and therefore they are not as well analysed as are features that can be evaluated more or less instantly, such as aesthetics or user-friendliness. Any added knowledge in these areas is therefore valuable, even if it might be on a seemingly basic level. During the warranty period, the monitoring of reliability is usually good, however, after this period the knowledge is limited. Also, there are still opportunities for improvements when it comes to connecting the reliability to the reactions of the customers. This thesis can provide benefits to Volvo, in terms of some added understanding of how customers respond to product reliability.
Being more specific, I will explain why I believe that the listed research questions are interesting. We know that reliability is a very important feature for trucks customers. The reliability of trucks has, when looking a few decades back improved tremendously. It is clear that technical progress can improve reliability in the long run. However, in the short run, it is commonly so that technical innovations can lead to deteriorated reliability due to new concepts and components being introduced. New technology causes uncertainties in both the development and in the production. When the root causes of the problems have been found, they can generally be solved and after a while the production becomes more stable, yielding more reliable products.
So we have a situation where technical development is generally positive for the reliability in the long run but often negative in the short run. Some innovations and improvements are necessary in order to be competitive at all, some might be necessary only if one wants to provide state-of-the-art technology. How innovative one chooses to be has an impact on reliability in both the short and the long run, and it would be interesting to know the impact better. One important aspect is whether the deteriorated reliability early after a new technology introduction can be compensated for with improved reliability later. The more specific question that we ask is if there is a difference in the size of the reactions in customer satisfaction from reliability changes between deteriorations and improvements (Research question 2). If there is no such difference, we can reason that even though our technological advances might have a negative effect on reliability in the short run, the satisfaction will recover when the better reliability as a result of the innovation is seen. If the reliability deteriorations have a much bigger effect on the satisfaction than the improvements do, then we might need to be careful with having a reliability that jumps up and down.
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It is also interesting to look at the same question for the image, which is done through research question 3. Do deteriorations and improvements have the same power in affecting image? One major difference between image and customer satisfaction is that only those who own a truck of a certain brand can be satisfied or dissatisfied with it, but everyone who has heard of a make can have their own image of it. Therefore, while looking also at image, it would be relevant to know how customers acquire information about other trucks than their own and how they discuss the reliability of trucks with others (Research question 5).
The first research question is necessary to facilitate research questions 2 and 3, where we need to have the best measure of reliability for which we study the effects in satisfaction. RQ1 also has relevance in itself. The commercial surveys that many manufacturers buy provide several measures of the product reliability. In many cases there is a relatively large correlation between these measures, but sometimes they give completely different pictures. It is then valuable to know which of these measures that generally best describe reliability in the sense that it has a high correlation with the satisfaction with reliability stated by the customers.
Research question 4 came up as something we wanted to test after hearing from one customer after another in our interviews that problems happen to everyone, the important thing is how they are solved. We interpreted this as if they were saying that quite a few problems can be acceptable as well as they are solved well and fast. It would be very interesting to test this hypothesis on a large sample.
7 1.4 Delimitations
Due to methodological reasons we make several delimitations concerning geographical coverage. Research questions 1-4 are all concerned with quantitative analysis of secondary data from commercial customer satisfaction surveys. Such studies available to the Volvo Group provide a good picture of the Western European and US markets, which together comprise about 70% of the sales of Volvo Trucks. In other markets, the sales are substantially lower and the coverage of detailed customer satisfaction surveys is limited. Therefore, we limit ourselves to the US and Western Europe. For research questions 3 and 4 we have furthermore excluded the US market, leaving only Western Europe. For RQ3, the reason is that there are no questions about image in the survey of the US market that could access and in the case of RQ4, there was a need to access the responses on an individual level rather than at a brand or model level as was the case for the data available to me for the US market. The time periods on which quantitative analyses have been made are 2000-2007 for Western Europe and 2002-2006 for the US. Research question 5 has been investigated through face-to-face interviews. Therefore we chose to limit ourselves to the Swedish market to satisfy the time constraint present.
The countries that in this thesis represent what we refer to as Western Europe are Germany, the United Kingdom, the Netherlands, Belgium, France, Spain and Italy. This list of countries is based on the scope of the customer survey that we have used for secondary data analysis and we have not had any possibility to affect it, except for the option to exclude countries. We believe that these countries give a fair representation of Western Europe.
The trucks that the secondary data, and thereby also my analysis is confined to is, for the US, Heavy Duty Trucks, more specifically Class 8 vehicles, i.e. less than five-axle tractor4/single trailer for medium-haul delivery5 The vehicle are of model year two years prior to the year that the survey is carried out. For Western Europe, the trucks are Heavy Duty Trucks with a
4 See Appendix 1: Abbreviations and Key for a verbal description of a tractor truck and Appendix 3: Basic types of trucks and trailers for a picture.
5 US Department of Transportation. FHWA Vehicle Classes (Electronic).
Available: <http://tmip.fhwa.dot.gov/clearinghouse/docs/accounting/appendix_e.stm> (2007-11-18)
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Gross Vehicle Weight6 of 16 tons or more that have been delivered during the last 6 - 24 months when survey is carried out.
1.5 Organisational presentation
“The Volvo Group is one of the world’s leading manufacturers of trucks, buses and construction equipment, drive systems for marine and industrial applications, aerospace components and services”7.
The group has approximately 82,000 employees and its net sales in 2005 amounted to 23 billion Euro8. Volvo Powertrain is a business unit in the Volvo Group and has about 8000 employees. They provide integrated powertrain systems comprising diesel engines, transmissions and drive shafts for the end products of the Volvo Group. In the 9–18 liter classes, Volvo Powertrain is the world’s largest producer of heavy diesel engines9.
Figure 1: The business areas and business units of the Volvo Group10
6 “The maximum loaded weight (including the vehicle itself, passengers, and cargo) for which a vehicle is
designed, as specified by the manufacturer. Often used as a criterion of vehicle size for the purpose of legislation;
the exact definition may vary depending on the jurisdiction”.
DieselNet, Glossary (Electronic). Available: <http://www.dieselnet.com/gl-e.html> (2007-11-18)
7 Volvo Homepage (2007)
8 Ibid.
9 Uniform Power (2006). Information leaflet. Available:
<http://www3.volvo.com/investors/finrep/ar06/eng/volvopowertrain/pops/printable/16_volvo_powertrain.pdf>
(2007-07-03)
10 Volvo Group (2006)
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The business areas are the divisions that provide products and services to external customers.
Volvo Powertrain, as indicated in Figure , providing driveline components for the four truck brands: Mack Trucks, Renault Trucks, Volvo Trucks and Nissan Diesel. It further delivers components to buses, construction equipment and marine applications through Volvo Penta.
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2 Theoretical Framework
2.1 Quality
Most companies of today recognise the importance of quality, whether they are providing products, services or both. However, what quality actually means is in many cases a matter of interpretation biased by the objectives of the observer. For instance, a common situation according to Garvin (1984) is that marketing departments focus on quality to satisfy customers and thereby increase sales. Manufacturing departments on the other hand, see the main benefits of quality as lowering costs of scrap and rework. We need to be aware that there are different views and that this affects our business. Garvin (1984) has identified five main approaches to quality, some with their own objectives.
The transcendent approach
Quality is ”innate excellence”. This view implies that there is no precise definition and Garvin draws parallels between the transcendent approach to quality and Plato’s discussion of beauty, where Plato says that one can understand beauty only by being exposed to a series of objects that have the characteristic.
The product-based approach
In this view quality reflects the quantity of some desirable ingredient. This view could for instance imply that a digital camera with many pixels is of higher quality than one with fewer pixels.
A problem with the product based approach is that one must know the desired ingredients that in many cases can differ greatly between different users. It is also common that an increased quantity of an ingredient can have a positive effect on the performance of a product only within some interval, and that it outside the interval have no effect at all or even a negative effect. A consequence of the product based approach is that increasing the quantity of some desirable ingredient is often costly and it therefore implies that quality improvements need to be costly.
The user-based approach
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There are many definitions of quality that fall into this category. One of them is that of Bergman & Klefsjö (2003). “The quality of a product is its ability to satisfy, or preferably exceed, the needs and expectations of the customers”. In this view quality is subjective. An important feature of this view is that quality can be improved by better understanding the needs and wants of the customers and it therefore does not necessarily have to be costly. If considering the potential for increased sales that a better understanding of the customers will yield, there is of course no cost at all; rather, quality improvements are sources of increased profitability.
The manufacturing-based approach
With this approach, the measure of quality is conformance to specifications. High quality products are those that are produced as specified and for which the variation between individual units are low. This view takes the customer into account to some extent, while it is assumed that products outside specifications generally perform less good than those within and that variation in itself can have a negative effect on customer satisfaction. The main focus, however is reducing costs of scrap and rework by doing things right the first time.
The value-based approach
The unique characteristic of this approach is that it takes price into account. A high quality product is one that performs well at an acceptable price. A problem with this view is that we equate quality with the extent to which it is worth its price. It makes practical considerations regarding quality improvements hard and it becomes hard to judge the difference in quality between two products. In some cases a small quality increase is irrelevant, but in some cases it is very important and worth paying extra for.
There appears not to be one definition that suits all products and conditions. Rather we should have different foci, depending on our current objective. The overall main concern for a corporation however, must however always be to satisfy their customers. In general, one can see a trend that companies are moving more and more towards customer focus. The marketing guru Philip Kotler (2003), puts the need of increased customer focus into words by saying that
“If your people are not thinking customer, they are not thinking. If they are not directly serving the customer, they'd better serve someone who is. If they don't take care of your customers, someone else will.”
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Or as someone at Ford supposedly once said (Kotler, 2003):
“If we're not customer driven, our cars won't be either”
Garvin (1984) furthermore names eight dimensions of quality. They are
• Performance,
• Features,
• Reliability,
• Conformance,
• Durability,
• Serviceability,
• Aesthetics,
• Perceived quality,
Whether this is an exhaustive group or not and whether these are more important dimensions than others can be discussed, but the list helps us to think about what aspects there can be of quality. Furthermore, this set of dimensions has been accepted by many and is generally considered a “seminal work in the area of strategic quality management” (Curkovic, 1999).
13 2.2 Reliability
It is important that we have a clear picture of what we mean by reliability. Most definitions are essentially in line with that of O’Connor (2001), stating that reliability is
“...the ability of an item or of items to keep operating, or to be available for operation, over a period of time without failing”.
The most common measures of reliability are mean time between failures, mean time to first failure and failure rate per unit time(Garvin, 1984), the latter which is a probability distribution rather than a deterministic number.
That reliability is important is commonly accepted and this usually holds also for people who are not actively working to promote prioritising of quality efforts on the manufacturer side. As consumers, we constantly experience the drawbacks of poor reliability. We expect our consumer electronics, our transportation, and our kitchen appliances etc. to work and when they do not, they often create large distractions and dissatisfaction. One side of it is that we often are burden with a cost when for instance our car breaks down. Another side is that we loose our trust in our products. When using them, we need to feel certain that they can provide us with the services that they are supposed to. Poor reliability can on top of cost also create risks to our safety, as in the case of car brakes loosing its function or the material defects making buildings or bridges collapse. For the manufacturer, poor reliability causes costs of scrap and rework in production, warranty costs and bad reputation among other things.
A concept with close ties to reliability is that of dependability. The factors that comprise dependability are (Bergman & Klefsjö, 2003): reliability, maintainability and maintenance support. Reliability is as defined above, the ability of a unit to keep operating without failing.
The maintainability describes how easy the problems in the unit can be found and fixed.
Finally, the maintenance support refers to the availability of a service organisation. Obviously, the worse the reliability is the greater is the need for the other two factors to be satisfactory.
For many customers in the truck industry, it is the time that the truck is not available for service that is the greatest problem, rather than the cost of the repairs themselves. Therefore, the concept of dependability is highly relevant for the studied topic.
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Figure 2: The concepts that constitute dependability. Adapted from Bergman and Klefsjö (2003)
2.3 The customer concept
In the case of the heavy-duty truck industry, the customer concept is multifaceted. There are people who pay for the trucks and there are people who use them; sometimes they are the same, sometimes not. Those who own and drive their own vehicles are commonly referred to as owner/operators, whereas trucks who are owned and driven by different people, in most cases belong to so called fleets. The lion’s share of all trucks are owned by fleets11. For the owner/operators businesses it is easy to know who to ask about satisfaction. In the case of fleets on the other hand, it is hard. Large fleets usually have a high number of drivers, a president of the business, one or several owners of the business, a manager of maintenance etc.
In the customer satisfaction studies made for Volvo on the US market, they ask what they call the principle maintainer. What they mean is the person that knows the most about the maintenance of the truck. In the case of fleets, it is usually the Manager of Maintenance or similar. An interesting aspect of this is that it means that in many cases, the one who is asked about his satisfaction with driving experience, repurchase intention etc. is neither the user, nor
In the customer satisfaction studies made for Volvo on the US market, they ask what they call the principle maintainer. What they mean is the person that knows the most about the maintenance of the truck. In the case of fleets, it is usually the Manager of Maintenance or similar. An interesting aspect of this is that it means that in many cases, the one who is asked about his satisfaction with driving experience, repurchase intention etc. is neither the user, nor