6
Service Management (5e)
Operations, Strategy, Information Technology
By
Fitzsimmons and Fitzsimmons
Chapter – 6
Service Quality
6-2
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
 Develop
 Plan
a statistical process control chart.
unconditional service guarantees.
for service recovery.
 Perform
a walk-through audit (WtA)
6-3
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.
6-4
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
6-5
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.
6-6
Perceived Service Quality
Figure 6.1 (pp 128)
Word of
mouth
Service Quality
Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Personal
needs
Expected
service
Perceived
service
Past
experience
Service Quality Assessment
1. Expectations exceeded
ES<PS (Quality surprise)
2. Expectations met
ES~PS (Satisfactory quality)
3. Expectations not met
ES>PS (Unacceptable quality)
6-7
Service Quality Gap Model
Customer
Perceptions
Managing the
Evidence
Customer Satisfaction
GAP 5
Customer
Expectations
Customer /
Marketing Research
GAP 1
Communication
GAP 4
Understanding
the Customer
Management
Perceptions
of Customer
Expectations
Service
Delivery
Conformance
GAP 3
Design GAP 2
Conformance
Service
Standards
Service Design
6-8
Gaps in Service Quality
 Gap1:

Management may not understand how customers formulate their
expectations from past experience, advertising, communication with
friends



 Gap

Market research gap
Improve market research
Foster better communication between employees and its frontline
employees
Reduce the number of levels of management that distance the customer
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
6-9
Continued….
 Gap

Actual delivery of service cannot meet the specifications set by
management
 Lack of teamwork
 Poor employee selection
 Inadequate training
 Inappropriate job design
 Gap

3: Conformance 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
6-10
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)

6-11
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?
table 6.3 ( pp 137) – measuring service quality for a
health clinic.
 See
6-12
Quality Service by Design
1.
Quality service by design
2.
Taguchi method
3.
Poka-Yoke
4.
Quality function deployment
6-13
1. Quality in the Service Package
Budget Hotel example (table 6.4 (pp. 138)
 Supporting

Design of the building
 Facilitating

services
Maids are trained to clean and make up roooms
 Implicit

goods
Room furnishings like: bedside tables, carpet cleaning
 Explicit

facility
services
Pleasant appearances of individuals at front office
6-14
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)
6-15
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 eyecontact 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.
6-16
Classification of Service Failures with
Poka-Yoke Opportunities (table 6.5)
Server Errors
Customer Errors
Task:
Preparation:
Doing work incorrectly
Failure to bring necessary materials
Doing work not required
Failure to understand role in transaction
Doing work in the wrong order
Failure to engage in correct service
Doing work too slowly
Encounter:
Treatment:
Failure to remember steps in process
Failure to listen to customer
Failure to follow system flow
Failure to acknowledge the customer
Failure to specify desires sufficiently
Failure to react appropriately
Failure to follow instructions
Tangible:
Resolution:
Failure to clean facilities
Failure to signal service failure
Failure to wear clean uniform
Failure to learn from experience
Failure to control environmental factors
Failure to adjust expectations
Failure to proofread documents
Failure to execute post-encounter action
6-17
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 Volvo’s 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
6-18
House of Quality
Relationships
*
Strong
Medium
O
Reliability
9
8
Responsiveness
7
3
Assurance
6
5
Empathy
4
Tangibles
2
Capacity
Attitude
Training
Customer Expectations
9
9
Equipment
*
*
Servic e Elements
Im
po
rta
nc
e
5
5
3
2
2
3
o
o
o
o
_
Improvement difficulty rank
+ Volvo Dealer
1 2 3 4 5
+ o
o
7
o
Weighted score
Customer Perc eptions
o Village Volvo
6
+
Comparison with Volvo Dealer
127 82
4
5
Weak
O
Informatiion
Relati ve
O
63 102
1
3
65
2
+
+
+
o
+
o
o
6-19
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
6-20
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.
6-21
Achieving Service Quality
1.
Cost of Quality (Juran)
2.
Service Process Control
3.
Statistical Process Control (Deming)
4.
Unconditional Service Guarantee
6-22
1. Cost of Quality

Products can be returned or exchanged if faulty; but what recourse does
customer have to faulty services?


Prevention cost


Costs incurred to correct nonconforming work prior to delivery to the customer
External failure


Costs incurred to ascertain the condition of a service to determine whether it conforms
to safety standards
Internal failure


Costs associated with activities that keep failure from happening and minimize
detection cost
Detection cost


Legal recourse – for example in medical may lead to more procedures and tests and
more paperwork leading to higher cost
Costs incurred to correct nonconforming work after delivery to customer or to correct
work that did not satisfy a customer’s special needs
$1 in invested in prevention = $100 in detection = $10,000 in failure cost
(Juran)
6-23
Costs of Service Quality
(Bank Example, table 6.6, pp. 149)
Failure costs
External failure:
Loss of future business
Negative word-of-mouth
Liability insurance
Legal judgments
Interest penalties
Internal failure:
Scrapped forms
Rework
Recovery:
Expedite disruption
Labor and materials
Detection costs
Prevention costs
Process control
Peer review
Supervision
Customer comment card
Inspection
Quality planning
Training program
Quality audits
Data acquisition and analysis
Recruitment and selection
Supplier evaluation
6-24
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
6-25
Service Process Control
(Figure 6.9, pp 150)
Customer
input
Service
process
Resources
Take
corrective
action
Identify reason
for
nonconformance
Service
concept
Customer
output
Monitor
conformance to
requirements
Establish
measure of
performance
6-26
3. Service Process Control
6-27
4. Unconditional Service Guarantee:
Customer View
 Unconditional
(L.L. Bean) – without exception
 Easy
to understand and communicate (Bennigan’s) – to the
customer
 Meaningful
(Domino’s Pizza) – it should provide
compensation that is meaningful
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
 Easy
6-28
Unconditional Service Guarantee:
Management View
 Focuses
on customers (British Airways)
clear standards (FedEx) – knows when the service has
failed
 Sets
feedback (Manpower) – gets data on service
failure because dissatisfied customers have an incentive to
complain
 Guarantees
 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
6-29
Customer Feedback and
Word-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.
6-30
Service Recovery Framework
(Figure 6.13, pp. 156)
6-31
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 customer’s 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.
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
 Acceptance
testing
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.
Process focus
 Process
capability means capable of meeting customer
requirements or specifications.
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.
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.
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)
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).
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
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?
6-40
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
 What
the philosophies of Deming and Crosby.
are the limitations of “benchmarking”.
 Illustrate
the four components in the cost of quality for a
service.
 Why
 How
do service firms hesitate to offer a service guarantee?
can recovery from a service failure be a blessing in
disguise?