Managing Quality of Services

Operation management (Gaither N., Frazier, Render Heizer)

Definitions of Quality
User-Based: What consumer says it is Manufacturing-Based: Degree to which a product conforms to design specification Product-Based: Level of measurable product characteristic

What is Quality?
The quality of a product or service is a customers perception of the degree to which the product or service meets his or her expectations.

Nature of Quality
Dimensions of Quality Determinants of Quality Costs of Quality

Dimensions of Product Quality

Performance relative to customers intended use Features special characteristics Reliability likelihood of breakdowns, malfunctions Serviceability speed/cost/convenience of servicing Durability amount of time/use before repairs

Dimensions of Product Quality

Durability amount of time/use before repairs Appearance effects on human senses Customer service treatment before/during/after sale

Safety user before/during/after use

protection

Service Quality Attributes

Reliability Tangibles Understanding Security
1995 Corel Corp.

Responsiveness Competence Access Courtesy

Credibility

Communication

Determinants of Quality
Quality of design products/service designed based on customers expectations and desires Quality capability of production processes processes must be capable of producing the products designed for the customers Quality of conformance capable processes can produce inferior product if not operated properly

Determinants of Quality
Quality of customer service a superior product does not mean success; must have quality service also Organization quality culture superior product and service requires organization-wide focus on quality

Costs of Quality
Internal failure - of producing defective parts or service, Scrap and rework rescheduling, repairing, retesting External costs - occur after delivery Defective products in the hands of the customer - recalls, warranty claims, law suits, lost business,

Costs of Quality
Appraisal costs - evaluating products detecting defects - inspection, testing, . Prevention costs: reducing the potential for defects through training, charting performance, product/process redesign, supplier development, .

Traditional Quality Management

Defective products will be identified and discarded Quality can be inspected into products Main decision is how many products to inspect (largely a question of economics)

Annual Cost ($)

Traditional View of How Much to Inspect

Optimal Level of Inspection Total Quality Control Costs
Cost of Scrap, Rework, and Detecting Defects Cost of Defective Products to Customers

% of Products Inspected

Modern Quality Management

Quality Drives the Productivity Machine Other Aspects of the Quality Picture

Quality Gurus
W. Edwards Deming
Assisted Japan in improving productivity and quality after World War II In 1951 Japan established Deming Prize US was slow in recognizing his contributions Introduced Japanese companies to the Plan-Do-Check-Act (PDCA) cycle (developed by Shewart) Developed 14 Points for managers

PDCA Cycle
4. ACT 1. PLAN Permanently Identify imimplement provements and improvements develop plan
3. CHECK Evaluate plan to see if it works 2. DO Try plan on a test basis

Demings 14 Points for Managers

1. Create constancy of purpose toward product quality to achieve organizational goals 2. Refuse to allow commonly accepted levels of poor quality 3. Stop depending on inspection to achieve quality 4. Use fewer suppliers, selected based on quality and dependability instead of price 5. Instill programs for continuous improvement of costs, quality, service, and productivity

Demings 14 Points for Managers

6. Train all employees on quality concepts 7. Focus supervision on helping people do a better job 8. Eliminate fear, create trust, and encourage two-way communications between workers and management 9. Eliminate barriers between departments and encourage joint problem-solving

Demings 14 Points for Managers

10. Eliminate the use of numerical goals and slogans to make workers work harder 11. Use statistical methods for continuous improvement of quality and productivity instead of numer. quotas 12. Remove barriers to pride of workmanship 13. Encourage education and self-improvement 14. Clearly define managements permanent commitment to quality and productivity

Quality Gurus
Philip B. Crosby Wrote Quality Is Free in 1979
Company should have the goal of zero defects Cost of poor quality is greatly underestimated Traditional trade-off between costs of improving quality and costs of poor quality is erroneous

Quality Gurus
Armand V. Feigenbaum
Developed concept of total quality control (TQC) Responsibility for quality must rest with the persons who do the work (quality at the source)

Kaoru Ishikawa Wrote Guide to Quality Control in 1972

Credited with the concept of quality circles Suggested the use of fishbone diagrams

Quality Gurus
Joseph M. Juran
Like Deming, discovered late by US companies Played early role in teaching Japan about quality Wrote Quality Control Handbook

Genichi Taguchi
Constant adjustment of processes to achieve product quality is not effective Products should be designed to be robust enough to handle process and field variation

ISO 9000 Standards

Quality management guidelines developed by the International Organization for Standardization Companies become certified by applying to third-party providers who assess the level of conformity to the standards More than 300,000 companies worldwide are ISO 9000-certified The US big three automakers have adopted a similar set of standards called QS-9000

ISO 9000 Standards

Standards based on 8 quality management principles Customer focused organization Leadership Involvement of people Process approach System approach to management Continual improvement Factual approach to decision making Mutually beneficial supplier relationship

Quality Management in Services

Since many services are intangible, it is difficult to determine their quality Customers set their own standards for services Perceived quality of service affected by the surroundings Performance of service employees determines in large part the quality of the services

Wrap-Up: World-Class Practice

Quality begins when business strategy is formulated Quality is the weapon of choice to capture global markets Quality drives the productivity machine Not depending on inspection to catch defects; concentrating on doing things right the first time Committing tremendous resources to put in place TQM programs aimed at continuous improvement

Continuous Improvement
Represents continual improvement of process & customer satisfaction Involves all operations & work units Other names
Kaizen (Japanese) Zero-defects Six sigma
1984-1994 T/Maker Co.

Employee Empowerment
Getting employees involved in product & process improvements
85% of quality problems are due to process & material

Techniques
Support workers Let workers make decisions Build teams & quality circles

1995 Corel Corp.

Quality Circles
Group of 6-12 employees from same work area Meet regularly to solve work-related problems

4 hours/month
Facilitator trains & helps with meetings

1995 Corel Corp.

Selecting best practices to use as a standard for performance Determine what to benchmark Form a benchmark team Identify benchmarking partners Collect and analyze benchmarking information Take action to match or exceed the benchmark

Benchmarking

Quality Loss Function

High Loss Unacceptable Poor

Loss

Fair Good Best

Low Loss

Target-oriented quality yields more product in the "best" category

Frequency

Conformance-oriented quality keeps products within 3 standard deviations

Lower

Target Distribution of Specifications for Products Produced

Upper

Tools of TQM
Tools for generating ideas
Check sheet Scatter diagram Cause and effect diagram

Tools to organize data

Pareto charts Process charts (Flow diagrams)

Tools for identifying problems

Histograms Statistical process control chart

Services and Their Customer Expectations

Hospital
Patient receive the correct treatments? Patient treated courteously by all personnel? Hospital environment support patient recovery?

Bank
Customers transactions completed with precision? Bank comply with government regulations? Customers statements accurate?

Products and Their Customer Expectations

Automaker
Auto have the intended durability? Parts within the manufacturing tolerances? Autos appearance pleasing?

Lumber mill
Lumber within moisture content tolerances? Lumber properly graded? Knotholes, splits, and other defects excessive?

TQM In Services
Service quality is more difficult to measure than for goods Service quality perceptions depend on
Expectations versus reality Process and outcome

Types of service quality

Normal: Routine service delivery Exceptional: How problems are handled

Determinants of Service Quality

Reliability consistency and dependability Responsiveness willingness/readiness of employees to provide service; timeliness Competence possession of skills and knowledge required to perform service Credibility can buyers trust what theyre told?