Service Operations Management: The total experience Chapter Seven Service Operations Performance Quality

service operations quality improvement Re-engineering of the operations to improve key performance indicators, such as speed of response. Application of training to try to achieve learning organization status. Internal customer's requests which may or may not be focused upon the external customer's needs. Measure the current service operations quality and performance by using techniques such as SERVQUAL. Setting-up of quality circles or process improvement teams focused on critical processes.

A SWOT analysis (strengths, weaknesses, opportunities and threats) results in a summarized overview of the current organizational performance. The organization needs to define what the critical success factors (CSF) are. Excellent internal service quality (ISQ) is the result of satisfied employees; and these groups of employees can be termed ‘internal customers’. Internal service quality A critical success process (CSP) is one which allows the business to deliver the service needs to the customer and ensures the CSFs are achieved.

Fig.7.1 Relationship between internal and external quality & performance

Fig.7.2 Stages of implementing ISQ

Fig 7.3 CSP-CSF matrix

Fig 7.4 Process mapping using critical processes

Costs of quality Appraisal cost-the cost of evaluating the achievement of quality requirements including for example costs of verification and control performed at any stage of the quality loop. Prevention cost - the cost of any action taken to investigate, prevent or reduce the risk of nonconformity or defect. Internal failure cost - the cost arising within an organization due to nonconformities or defects at any stage of the quality loop, such as costs of waste, rework, retest, re-inspection and redesign. External failure cost - the cost arising from delivery to a customer or user due to nonconformities or defects which may include the costs of claims against warranty, replacement and consequential losses and evaluations of penalties incurred.

Fig 7.5 Quality iceberg effect

Fig 7.6 Quality continuous improvement

The House of Quality The underlying quest of organizations is how to focus the business on what the customer wants and accommodate the Voice of the Customer. Quality Function Deployment (QFD) is about translating the Voice of the Customer into design features or internal business processes. Developing from the Voice of the Customer to the House of Quality Quality Function Deployment (QFD) originates from Mitsubishi Heavy Industries in the 1970s, and was subsequently taken-up and became legendary by Toyota.

Fig 7.7 QFD Basic House of Quality

Fig 7.8 Example of House of Quality analysis

Table 7.1 Steps in applying QFD

Self-assessment and quality frameworks European Foundation for Quality Management's model (EFQM) Malcolm Baldrige National Quality Award Leadership Policy and Strategy People and Management Resources Processes Customer Satisfaction People Satisfaction Impact on Society Business Results

Fig 7.9 European Foundation for Quality Management's model (EFQM)

Balanced Scorecard The Balanced Scorecard is a performance management tool for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy. Organizations are encouraged to measure factors which influenced the financial outputs. For example, process performance, market share penetration, long term learning and skills development, and so on. Implementing the Balanced Scorecard typically includes four processes: Translating the vision into operational goals Communicating the vision and link it to individual performance; Business planning; index setting Feedback and learning, and adjusting the strategy accordingly.

Typical Measures (KPIs) Monitored in Balanced Scorecard Leadership: These measures capture the organization’s leadership system and senior leaders’ personal leadership style and approaches. Strategic Planning: Measures are required to show how the organization sets strategic directions and how it develops the critical strategies and action plans. Customer and Market Focus: How the company determines requirements, expectations, and preferences of customers and markets. Information and Analysis: The selection, management, and effectiveness of use of information and data to support key company processes and action plans, and the company’s performance management system. Human Resource Focus: How the company enables employees to develop and utilize its full potential, aligned with the company’s objectives. Process Management: How key processes are designed, implemented, managed, and improved. Business Results: The organization’s performance and improvement in key business areas.

Fig 7.10 Balanced Scorecard

Adopting ISO9000/BS5750 in services operations Service organizations must decide for themselves whether gaining ISO9000 accreditation and certification is a worthwhile process, and must thoroughly review their reasons for doing so. In some cases, companies are encouraged to do so by their B2B customers, and although they are understandably anxious to protect their business, they move along the ISO 9000 path somewhat reluctantly, often looking for the quickest solution.

Fig 7.11 Corrective action loop

Internal information flows with ISO9000 A particular challenge of implementing and maintaining ISO 9000 is how to manage the internal communication process and, in particular, how to ensure consistency of interpretation and application across all functions. A criticism of ISO 9000 is that it is bureaucratic and may stifle creative ways of doing things because it can result in too much paperwork. The question to be asked whenever this point is made, is why?

Statistical Process Control in Services Encourages managers to focus on variability and understand the difference between special causes and common causes of variation. Various eminent Japanese quality specialists such as Ishikawa were associated with the spread of the method and helped to dramatically simplify all the statistical tools of quality control, so that they were simple enough for everyone to use. There are various forms of Control Chart depending on the nature of the process being monitored and the data generated, as well as the purpose of application.

Benefits to service processes of SPC Understanding processes, what they involve, how they are made up and how they operate. The division of the process into serial steps. The identification of critical steps and process parameters. The removal of any special causes of variation or special effects, such as operational differences, which can distort the process. The establishment of the capability of the process to meet the requirement. The establishment of control of the process. The monitoring of the process and control as necessary by documented procedures.

Table 7.2 Seven tools of quality

Fig 7.12 Simple control chart

Fig 7.13

Benchmarking Service Operations Benchmarking helps businesses set credible targets by promoting an outward-looking focus and learning from others. There are two areas where external benchmarking takes place: Direct competitors Organizations in similar industries. Some reasons for benchmarking: to bring about a strategic change to identify a different direction for the business or to differentiate the service offering to seek improvements in the sequence of activities which lead to the delivery of a service to compare levels of customer satisfaction.

Fig 7.14 Benefits of benchmarking