Quality and Productivity Improvement

1
Quality and Productivity Improvement
Check Do Act Plan
Quality level
Time
2
Learning Objectives

• Identify the stage of competitiveness for a
  service firm.
• Discuss the analogous roles of inventory and
  queuing.
• Perform a Walk-Through-Audit.
• Lead a Plan-Do-Check-Act (PDCA) process
  improvement initiative.
• Use quality tools for analysis and problem
  solving.
• Discuss the corporate programs for quality
  improvement.
• Conduct a data envelopment analysis (DEA).

3
Customer Value Equation
4
Four Stages in Service Firm Competitiveness

• 1. Available for service
  2. Journeyman 3.
  Distinctive competence 4. World-class
  service delivery
• 
  
  
  
• Customers patronize service
  Customers neither seek Customers seek
  out the firm The companys name is
  synonymous
• firm for reasons other than
  out nor avoid the firm. on the basis
  of its sustained with service
  excellence. Its service
• performance.
  
  reputation for meeting
  doesnt just satisfy customers it
• 
  
  customer expectations
  delights them and thereby expands
• 
  
  
  customer expectations to
  levels its
• 
  
  
  competitors are unable to
  fulfill.
• Operations is reactive,
  Operations functions in a Operations
  continually excels, Operations is a quick
  learner and fast
• at best.
  mediocre, uninspired
  reinforced by personnel innovator
  it masters every step of the
• 
  fashion.
  management and systems
  service delivery process and provides
• 
  
  that support an intense
  capabilities that are superior to
• 
  
  customer focus.
  competitors.
• SERVICE QUALITY
• Is subsidiary to cost,
  Meets some customer Exceeds
  customer Raises customer
  expectations and
• highly variable.
  expectations consistent
  expectations consistent seeks
  challenge improves
• 
  on one or two key
  on multiple dimensions.
  continuously.
• 
  dimensions.

5
Four Stages in Service Firm Competitiveness
(cont.)

• 1. Available for service 2. Journeyman
  3. Distinctive competence
  4. World-class service delivery
• BACK OFFICE
• Counting room. Contributes to
  service, plays Is equally valued with
  front Is proactive, develops its own
• an
  important role in the total office plays
  integral role. capabilities, and
  generates
• 
  service, is given attention,
  
  opportunities.
• but is still a separate
  role.
• CUSTOMER
• Unspecified, to be A market
  segment whose A collection of
  individuals A source of
  stimulation, ideas,
• satisfied at minimum cost. basic needs are
  understood. whose variation in needs is
  and opportunity.
• 
  
  understood.
• INTRODUCTION OF NEW TECHNOLOGY
• When necessary for When justified by
  cost When promises to enhance
  Source of first-mover advantages,
• survival, under duress. savings.
  service.
  creating
  ability to do things your
• competitors cant do.
• WORKFORCE
• Negative constraint. Efficient
  resource disciplined Permitted to select
  among Innovative creates
  procedures.
• 
  follows procedures.
  alternative procedures.
• FRONT-LINE MANAGEMENT
• Controls workers. Controls the
  process. Listens to customers
  coaches Is listened to by top management

6
Continual Improvement as a Competitive Strategy

• Analogy with Just-in-Time Manufacturing
• Inventory and Waiting Line Analogy
• Continual Improvement as a Service Organization
  Culture
• Management Implications

7
Inventory and Waiting Line Analogy

Feature Inventory
Waiting
line Costs Opportunity cost of
capital Opportunity cost of
time Space Warehouse
Waiting
area Quality Poor quality hidden
Negative
impression Decoupling Promotes
independence of Allow
division of labor and
production stages
specialization Utilization Work
in process keeps machines busy Waiting
customers keep servers busy Coordination
Detailed scheduling not necessary Avoids
matching supply and demand
8
Traditional vs World-Class Service Organizations

Dimension Traditional
World-class System assumption
Closed system Open system Job
design premise Division of labor
Flexibility Structure
Rigid
Fluid Relation to others Individual
Team player Employee orientation
Task
Customer Management Supervisor
Coach and facilitator Technology
Replace human effort
Assist service delivery Information
Efficiency
Effectiveness
9
Walk-Through-Audit

• Service delivery system should conform to
  customer expectations.
• Customer impression of service influenced by use
  of all senses.
• Service managers lose sensitivity due to
  familiarity.
• Need detailed service audit from a customers
  perspective.

10
Quality and Productivity Improvement Process

• Foundations of Continuous Improvement -
  Customer Satisfaction - Management by Facts -
  Respect for People
• Plan-Do-Check-Act (PDCA) Cycle
• Problem Solving (10 steps)

11
Quality Tools

• Check Sheet
• Run Chart
• Histogram
• Pareto Chart
• Flowchart
• Cause-and-Effect Diagram
• Scatter Diagram
• Control Chart

12
Check Sheet

• Month Lost Departure
  Mechanical Overbooked Other
• Luggage Delay
• January 1 2 3 3 1
• February 3 3 0 1 0
• March 2 5 3 2 3
• April 5 4 4 0 2
• May 4 7 2 3 0
• June 3 8 1 1 1
• July 6 6 3 0 2
• August 7 9 0 3 0
• September 4 7 3 0 2
• October 3 11 2 3 0
• November 2 10 1 0 0
• December 4 12 2 0 1
• Total 44 84 24 16 12

13
Run Chart
14
Histrogram of Lost Luggage
15
Cause-and-Effect Chart for Flight Departure Delay
(Fishbone Chart)
Equipment
Personnel

Gate agents cannot process passengers quickly
enough
Too few agents
Aircraft late to gate
Agents undertrained
Late arrival
Agents undermotivated
Gate occupied
Agents arrive at gate late
Other
Mechanical failures
Late cabin cleaners
Late pushback tug
Weather
Late or unavailable cabin crews
Air traffic
Late or unavailable cockpit crews
Delayed Flight Departure
Poor announcement of departures
Weight and balance sheet late
Delayed checkin procedure
Late baggage to aircraft
Confused seat selection
Late fuel
Passengers bypass checkin counter
Late food service
Checking oversize baggage
Issuance of boarding pass
Acceptance of late passengers
Cutoff too close to departure time
Desire to protect late passengers
Material
Desire to help companys income
Poor gate locations
Procedure
16
Pareto Analysis of Flight Departure Delay Causes
17
Flowchart
18
Scatter Diagram
19
Control Chart of Departure Delays
expected
Lower Control Limit
1998
1999
20
Corporate Programs for Quality Improvement

• Marriott Personnel Programs
• Zero Defects (Crosby)
• Demings 14 Point Program
• Malcolm Baldrige Quality Award
• ISO 9000
• Benchmarking

21
Topics for Discussion

• Could firms in the world-class service delivery
  stage of competitiveness be described as
  learning organizations?
• Contrast the philosophies of continuous
  improvement and process reengineering. Is
  there a role for both points of view in services?
• Compare the philosophies of Deming (i.e 14-point)
  and Crosby (i.e. Zero Defects).
• What are the limitations of benchmarking?

22
The Museum of Art and Design

• Critique the WtA gap analysis. Awareness of
  Exhibits Information Experience Visitor
  Habits Facilities Language
• Could there be other explanations for the gaps?

23
The Museum of Art and Design

• Make recommendations for closing the gaps found
  in the WtA.
• How can the servicescape help in self-selecting
  customers and employees?

24
Mega Bytes Restaurant

• How is the Seven-Step Method (SSM) different from
  Demings PDCA cycle?
• Prepare a cause-and-effect or fishbone diagram
  for a problem such as Why customers have long
  waits for coffee. Use Figure 18.17 as a guide.
• How would you resolve the difficulties that study
  teams have experienced when applying the SSM?

25
The Seven-Step Method

• Step 1 Define the project
• Step 2 Study the current situation
• Step 3 Analyze the potential causes
• Step 4 Implement a solution
• Step 5 Check the results
• Step 6 Standardize the improvement
• Step 7 Establish future plans