Chapter

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6
Service Management (5e) Operations, Strategy,
Information Technology By Fitzsimmons and
Fitzsimmons

• Chapter 6
• Service Quality

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Learning Objectives

• Describe the five dimensions of service quality.
• Use the service quality gap model to diagnose
  quality problems.
• Illustrate how Taguchi methods and poka-yoke
  methods are applied to quality design.
• Perform service quality function deployment.
• Construct a statistical process control chart.
• Develop unconditional service guarantees.
• Plan for service recovery.
• Perform a walk-through audit (WtA)

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Moments of Truth

• Each customer contact is called a moment of
  truth.
• You have the ability to either satisfy or
  dissatisfy them when you contact them.
• A service recovery is satisfying a previously
  dissatisfied customer and making them a loyal
  customer.

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Dimensions of Service Quality

• Reliability
• Perform promised service dependably and
  accurately.
• Example receive mail at same time each day.
• Responsiveness
• Willingness to help customers promptly.
• Example avoid keeping customers waiting for no
  apparent reason.
• Quick recovery, if service failure occurs

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Dimensions of Service Quality

• Assurance
• Ability to convey trust and confidence.
• Give a feeling that customers best interest is
  in your heart
• Example being polite and showing respect for
  customer.
• Empathy
• Ability to be approachable, caring, understanding
  and relating with customer needs.
• Example being a good listener.
• Tangibles
• Physical facilities and facilitating goods.
• Example cleanliness.

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Perceived Service QualityFigure 6.1 (pp 128)

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Service Quality Gap Model
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Gaps in Service Quality

• Gap1 Market research gap
• Management may not understand how customers
  formulate their expectations from past
  experience, advertising, communication with
  friends
• Improve market research
• Foster better communication between employees and
  its frontline employees
• Reduce the number of levels of management that
  distance the customer
• Gap 2 Design gap
• Management unable to formulate target level of
  service to meet customer expectations and
  translate them to specifications
• Setting goals and standardizing service delivery
  tasks can close the gap

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Continued.

• Gap 3 Conformance gap
• Actual delivery of service cannot meet the
  specifications set by management
• Lack of teamwork
• Poor employee selection
• Inadequate training
• Inappropriate job design
• Gap 4 Communication gap
• Discrepancy between service delivery and external
  communication
• Exaggerated promises in advertising
• Lack of information provided to contact personnel
  to give customers

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Continued..

• Gap 5 Customer expectations and perceptions gap
• Customer satisfaction depends on minimizing the
  four gaps that are associated with service
  delivery
• Companies try to measure the gap between expected
  service and perceived service through the use of
  surveys (ex. Fig. 6.2)
• SERVQUAL measures the five dimensions (table
  6.1)

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Scope of service quality

• View quality from five perspectives
• Content are standard procedures being followed?
• Process is the sequence of events in the
  service process appropriate?
• Structure are the physical facilities and
  organizational design adequate for the service?
• Outcome what change in the status has the
  service effected? Is the consumer satisfied?
• Impact what is the long-range effect of the
  service on the consumer?
• See table 6.3 ( pp 137) measuring service
  quality for a health clinic.

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Quality Service by Design

1. Quality service by design
2. Taguchi method
3. Poka-Yoke
4. Quality function deployment

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1. Quality in the Service Package

• Budget Hotel example (table 6.4 (pp. 138)
• Supporting facility
• Design of the building
• Facilitating goods
• Room furnishings like bedside tables, carpet
  cleaning
• Explicit services
• Maids are trained to clean and make up roooms
• Implicit services
• Pleasant appearances of individuals at front
  office

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2. Taguchi Method (Robustness)

• Robust designs to serve under adverse conditions
• Robustness concept also applied to the
  manufacturing process for example using online
  computer to notify the cleaning staff when the
  room has been vacated
• Taguchi emphasized that quality was achieved by
  consistently meeting the design specifications
• Cost to society of poor quality was measured by
  the square of the deviation from the target (see
  fig. 6.4 pp. 139)

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3. Poka-Yoke (Fail safing)

• Shigeo Shingo observed that errors occurred, not
  because employees were incompetent, but because
  of interruptions in routines or lapses in
  attention.
• He advocated adoption of Poka-Yoke methods
  foolproof devices to prevent employee mistakes.
• Example, hotel reservation employee is expected
  to make eye-contact with customer. So Poka-Yoke
  is to ask the employee to enter the eye-color of
  the customer.
• Since customers also play an active role in
  service-delivery so you need Poka-Yoke for them
  to prevent them from making errors.
• Example, frames at airport check-in counters to
  help customers determine if their bag can go in
  overhead bin as hand luggage.

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Classification of Service Failures withPoka-Yoke
Opportunities (table 6.5)

• Server Errors
• Task
• Doing work incorrectly
• Doing work not required
• Doing work in the wrong order
• Doing work too slowly
• Treatment
• Failure to listen to customer
• Failure to acknowledge the customer
• Failure to react appropriately
• Tangible
• Failure to clean facilities
• Failure to wear clean uniform
• Failure to control environmental factors
• Failure to proofread documents

• Customer Errors
• Preparation
• Failure to bring necessary materials
• Failure to understand role in transaction
• Failure to engage in correct service
• Encounter
• Failure to remember steps in process
• Failure to follow system flow
• Failure to specify desires sufficiently
• Failure to follow instructions
• Resolution
• Failure to signal service failure
• Failure to learn from experience
• Failure to adjust expectations
• Failure to execute post-encounter action

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4. Quality Function Deployment

• Allows to incorporate the voice of the customer
  into the design of the product/service by
  translating customer satisfaction into
  identifiable and measurable conformance
  specifications for product or service design
• 1. Establish the aim of the project assess
  Village Volvos competitive position
• 2. Determine customer expectations (rows)
  interviews etc.
• 3. Describe the elements of the service (columns)
• 4. Roof of the house - note the strength of
  relationship between the service elements
• 5. Body of the matrix relationship between
  service elements (columns) and customer
  expectations (rows)
• 6. Weighting the service elements rating
  customer expectations getting weighted scores
  for each column (basement)
• 7. Basement service element improvement
  difficulty rank
• 8. Assessment of competition
• RHS (comparison on customer satisfaction)
• Comparison on strength of the service elements

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House of Quality
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5. Benchmarking

• Compare your performance with other companies
  known for being the best in class
• For every quality dimension, some firm has earned
  the reputation for being the best in class
• Learn how the management has achieved to be the
  best in class to correct your process

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6. Walk-Through-Audit(Figure 6.7, pp. 145)

• Impressions about service quality are determined
  by both the outcome and the process (because
  customers are a part of service delivery)
• Walk through audit is a customer-focused survey
  to find the areas for improvement
• Entire customer experience is traced from
  beginning to end, and a flow chart of customer
  interaction with service system is made
• Customer is asked for his/her impressions on each
  of these interactions
• Customers can provide anew perspective to service
  they can notice things easily as they are new
  in the system
• Service managers and employees can get
  de-sensitize to their surroundings and also may
  not notice marginal decreases in service levels.

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Achieving Service Quality

1. Cost of Quality (Juran)
2. Service Process Control
3. Statistical Process Control (Deming)
4. Unconditional Service Guarantee

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1. Cost of Quality

• Products can be returned or exchanged if faulty
  but what recourse does customer have to faulty
  services?
• Legal recourse for example in medical may lead
  to more procedures and tests and more paperwork
  leading to higher cost
• Prevention cost
• Costs associated with activities that keep
  failure from happening and minimize detection
  cost
• Detection cost
• Costs incurred to ascertain the condition of a
  service to determine whether it conforms to
  safety standards
• Internal failure
• Costs incurred to correct nonconforming work
  prior to delivery to the customer
• External failure
• Costs incurred to correct nonconforming work
  after delivery to customer or to correct work
  that did not satisfy a customers special needs
• 1 in invested in prevention 100 in detection
  10,000 in failure cost (Juran)

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Costs of Service Quality(Bank Example, table
6.6, pp. 149)
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2. Service Process Control

• The control of service quality can be viewed as a
  feedback control system where output is
  compared with a standard.
• The deviation from the standard is communicated
  back to the input, and adjustments are made to
  the process to keep the output within the defined
  range.
• Difficult to implement an effective control cycle
  for service due to the intangible nature of
  service, which makes direct measurement difficult
  so we proxy or surrogate measures.
• Simultaneous nature of production and consumption
  prevents any direct intervention in the service
  process to observe conformance to requirements.
• Consequently, we ask customers to express their
  impression of service quality after the
  consumption by which time we are too late to
  avoid service failure.
• Instead, we try to focus on delivery process by
  employing SPC

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Service Process Control(Figure 6.9, pp 150)

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3. Service Process Control
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4. Unconditional Service Guarantee Customer View

• Unconditional (L.L. Bean) without exception
• Easy to understand and communicate (Bennigans)
  to the customer
• Meaningful (Dominos Pizza) it should provide
  compensation that is meaningful
• Easy to invoke (Cititravel) not to fill out
  cumbersome forms or go through a lengthy process
• Easy to collect (Manpower) should be given soon
  after the service lapse and after a significant
  time

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Unconditional Service Guarantee Management View

• Focuses on customers (British Airways)
• Sets clear standards (FedEx) knows when the
  service has failed
• Guarantees feedback (Manpower) gets data on
  service failure because dissatisfied customers
  have an incentive to complain
• Promotes an understanding of the service delivery
  system (Bug Killer) you will have a better
  understanding of your service delivery process
• Builds customer loyalty by making expectations
  explicit

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Customer Feedback andWord-of-Mouth (Table 6.9,
pp. 156)

• The average business only hears from 4 of their
  customers who are dissatisfied with their
  products or services. Of the 96 who do not
  bother to complain, 25 of them have serious
  problems.
• The 4 complainers are more likely to stay with
  the supplier than are the 96 non-complainers.
• About 60 of the complainers would stay as
  customers if their problem was resolved and 95
  would stay if the problem was resolved quickly.
• A dissatisfied customer will tell between 10 and
  20 other people about their problem.
• A customer who has had a problem resolved by a
  company will tell about 5 people about their
  situation.

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Service Recovery Framework (Figure 6.13, pp. 156)
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Service Recovery

• Disasters can be turned into loyal customers by
  proper and rapid service recovery
• Frontline workers, therefore, need to be properly
  trained and given the discretion to make things
  right.
• Approaches to service recovery
• Case-by-case addresses each customers complaint
  individually but could lead to perception of
  unfairness.
• Systematic response uses a protocol to handle
  complaints but needs prior identification of
  critical failure points and continuous updating.
• Early intervention attempts to fix problem before
  the customer is affected.
• Substitute service allows rival firm to provide
  service but could lead to loss of customer.

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INSPECTION

• Opinion surveys - about quality of service
• 100 percent inspection - every unit is checked
  fatigue error unless automated
• First article inspection - usually after the
  process is set up
• Destructive testing
• Acceptance sampling - based on statistical
  sampling table, the associate checks a random or
  stratified sample from a larger lot. If the
  sample is within the acceptable quality level,
  the lot passes inspection.

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Process focus

• Process capability means capable of meeting
  customer requirements or specifications.

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COMMON CAUSE vs SPECIAL CAUSE VARIATION

• Assignable-cause variation these can be assigned
  to specific causes
• Common cause variation random and harder to
  trace. This is system wide and requires
  management decision.
• Statistical Control when a process output is
  free of all special cause variation, it is said
  to be in statistical control or simply in
  control.
• A process in control may still have common cause
  variation. Continuous improvement aims at
  constantly working to reduce common cause
  variation.

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VARIABLES AND ATTRIBUTES

• In order to study process variation, we need
  process output data. This comes in two forms
  variables and attributes data
• Variables data result from measuring or computing
  the amount of or value of a quality
  characteristic. This data is continuous.
• Attributes data - measurement is not required,
  just a classifying judgment maybe yes or no for
  friendly service good or bad for a car wash
  small, medium, large melons.

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TOOLS FOR PROCESS IMPROVEMENT

• Coarse Grained Analysis
• Check Sheet historical record of observations
  and represents the source of data to begin
  analysis and problem identfication.
• Histograms - display frequency data collected
  over a period of time. It is more structured than
  a check sheet, has equal-interval numeric
  categories on the X-axis of an X-Y graph (see
  figure 6.18)
• Pareto Analysis (figure 6.19) helps
  differentiate between trivial and important
  causes by ordering problems by their relative
  frequency in a descending order focus efforts
  on the problem that offers the greatest potential
  improvement.
• Process flowchart it may show the steps that are
  unnecessary, or that need to be rearranged
• Fishbone chart (cause and effect diagram) here
  the team works backwards from the target for
  improvement on the spin bone, identifying causes
  down through the bone structure. The lowest
  level of detail may reveal root causes, which
  need to be worked upon. (5 whys) (figure 6.21)

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continued

• Fine Grained Tools
• Scatter diagram and correlation useful for
  complex processes where cause-effect
  relationships are unclear. It visually shows the
  relationship between two variables (figure 6.22)
• Run diagram it is simply a running plot of a
  certain measured quality characteristic. It could
  be number of minutes each successive airplane
  departs late. Or number of customers visiting the
  complaint desk of a store each day. The company
  may specify the upper limit and the lower limit.
  ( figure 6.17).

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Process control charts

• While the run diagram plots data on every unit,
  the process control chart, less precisely
  referred to as the quality control chart, relies
  on sampling. The method requires plotting
  statistical samples of measured process output
  for a quality characteristic. By watching the
  plotted points, the observer can detect unusual
  process variation, which calls for some kind of
  corrective action.
• Mean chart and range chart (figure 6.10)
• Central line for the mean and the range charts
• Upper and lower control limits for the mean chart
• Upper and lower control limit for the range chart
• Process capability Analysis
• Cp versus Cpk

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QUESTIONS TO PONDER

• 1. What is a transformation process? How might
  process performance be described in terms of
  quality characteristics?
• 2. How do special-cause variation and common
  cause variation relate to process control and
  process capability?
• 3. What are the roles of run diagrams and process
  control charts in improvement programs? What are
  the similarities and differences?
• 4. In control charting for variables why use two
  charts (e.g. mean and range)?
• 5. Inspection does not necessarily lead to
  quality. Discuss?
• 6. Quality is as good as the data is. Discuss?
  How do variables data differ from attributes data?

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Topics for Discussion

• How do the five dimensions of service quality
  differ from those of product quality?
• Why is measuring service quality so difficult?
• Compare the philosophies of Deming and Crosby.
• What are the limitations of benchmarking.
• Illustrate the four components in the cost of
  quality for a service.
• Why do service firms hesitate to offer a service
  guarantee?
• How can recovery from a service failure be a
  blessing in disguise?