Chapter 6

Service Quality
6
Service Management (5e)
Operations, Strategy, Information Technology
By
Fitzsimmons and Fitzsimmons
6-2
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)

Learning Objectives
6-3
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.
Moments of Truth
6-4
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
Dimensions of Service Quality
6-5
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.
Dimensions of Service Quality
6-6

Word of
mouth
Personal
needs
Past
experience
Expected
service
Perceived
service
Service Quality
Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles
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)

Perceived Service Quality
Figure 6.1 (pp 128)
6-7
Service Quality Gap Model
Customer
Perceptions
Customer
Expectations
Service
Delivery
Service
Standards
Management
Perceptions
of Customer
Expectations
Managing the
Evidence
Conformance
Service Design
Understanding
the Customer
Customer Satisfaction
GAP 5
Customer /
Marketing Research
GAP 1
Conformance
GAP 3
Communication
GAP 4
Design GAP 2
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
6-8
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

6-9
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)
6-10
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.
6-11
Quality Service by Design
1. Quality service by design
2. Taguchi method
3. Poka-Yoke
4. Quality function deployment
6-12
6-13
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
1. Quality in the Service Package
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)


6-14
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.
6-15
6-16
Classification of Service Failures with
Poka-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
6-17
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

4. Quality Function Deployment
6-18
House of Quality
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1 2 3 4 5
Customer Expectations
Reliability
Responsi veness
Assurance
Empathy
Tangi bles
Comparison with Vol vo Dealer
Weighted score
Improvement di fficulty rank
O O
O Weak

Medium
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Strong
9
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6 6
5 5
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4
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3 3
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+
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Customer Perceptions
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+ Vol vo Dealer
Service Elements
Rel ationshi ps
127 82 63 102 65
1
* *
6-19
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
5. Benchmarking
6-20
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. Walk-Through-Audit
(Figure 6.7, pp. 145)
6-21
1. Cost of Quality (Juran)
2. Service Process Control
3. Statistical Process Control (Deming)
4. Unconditional Service Guarantee

Achieving Service Quality
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)

6-22
6-23
Failure costs Detection costs Prevention costs
External failure:
Loss of future business Process control Quality planning
Negative word-of-mouth Peer review Training program
Liability insurance Supervision Quality audits
Legal judgments Customer comment card Data acquisition and analysis
Interest penalties Inspection Recruitment and selection
Supplier evaluation
Internal failure:
Scrapped forms
Rework

Recovery:
Expedite disruption
Labor and materials

Costs of Service Quality
(Bank Example, table 6.6, pp. 149)
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
6-24
6-25

Resources
Identify reason
for
nonconformance
Establish
measure of
performance
Monitor
conformance to
requirements
Take
corrective
action
Service
concept
Customer
input
Customer
output
Service
process
Service Process Control
(Figure 6.9, pp 150)
3. Service Process Control

6-26
6-27
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
4. Unconditional Service Guarantee:
Customer View
6-28
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
Unconditional Service Guarantee:
Management View
6-29
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.
Customer Feedback and
Word-of-Mouth (Table 6.9, pp. 156)
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 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.


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.
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 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?