Gap Analysis 156-74-1538 Gap Analysis Slide Presentation 02-19-01

Table of Contents Definition of Gap Analysis Service Gap Analysis SERVQUAL Gaps Model Dimension Model Real World Gap Analysis ISO 9001 2000 2

Definition of Gap Analysis Formal means to identify and correct gaps between desired levels and actual levels of performance Used by organizations to analyze certain processes of any division of their company Gaps are indicators of corrective action and improvements In manufacturing, it could be difference between desired and existing conformance levels 3

Service Gap Analysis Expected level of service vs. Actual level of service provided SERVQUAL - 5 gaps - 5 dimensions A good example where gap analysis is used for improvements in business is in the services field The most popular assessment tool used in service quality is called SERVQUAL, which involves a set of the 5 most important dimensions of quality according to rankings of customers Also involves a set of 5 gaps which represent the difference between customers’ expectations and perceptions 4

SERVQUAL A gap analysis research instrument created by Parasuraman, Zeithamel, and Berry Introduced in 1988 The marketing research team of Parasuraman, Zeithamel, and Berry created this service quality measuring tool in 1988 Has been used in a wide range of studies including fields such as health care, banking, appliance repair, and many other professions Five Gaps include Customer expectations vs. managerial perceptions Manager’s expectations of quality vs. quality specs Communication with customer at point of service or sale Service delivery vs. communication Perceived services vs. expected services SERVQUAL is not a measurement to compare and rank separate companies but only to provide a measure for managers to determine actions needed in their own services 5

SERVQUAL Model 6

SERVQUAL Model Gaps Gap 1 The difference between actual customer expectations and management’s idea or perception of customer expectations Managers and employees have a very internal process-oriented view of their business, it is tough to break this view and to see things the way the customer does This gap of the SERVQUAL Model can help management with customer service 7

SERVQUAL Model Gaps Gap 2 Mismatch between manager’s expectations of service quality and service quality specifications To implement a system to improve this gap, management must first understand exactly what the customer wants If this understanding is not present, it will be impossible for management to know whether their expectations are aligned with customer specifications. 8

SERVQUAL Model Gaps Gap 3 Poor delivery of service quality 9 Once the specifications from gap 2 are aligned the next step is to deliver these services in a perfect manner Quality of delivery must be perfected during the interaction with the customer The employees that are responsible for these actions are referred to as contact personnel Some reasons for a lack of quality include poor training, communication, and preparation 9

SERVQUAL Model Gaps Gap 4 Differences between service delivery and external communication with customer Customers are influenced by what what they hear and see about a company’s service Word-of-mouth publicity and advertising are main outlets which customers open their opinions to The difference between what a customer hears about a company’s service and what is actually delivered is represented by gap 4 This gap can lead to dangerously negative customer perceptions 10

SERVQUAL Model Gaps Gap 5 Differences between Expected and Perceived Quality This gap is directly related to everyone’s perception of service quality Customers expect certain things from certain companies When someone goes into a McDonalds to order their favorite meal – a Big Mac, they are expecting exactly what they are accustomed to getting (a quick, no hassle, tasty big burger with all the works). If it takes 15 minutes to get a Big Mac that doesn’t even have the famous special sauce on it the customer’s perceived service of McDonalds is going to plummet. If gaps 1 through 4 are closed to a minimum then gap 5 should follow, if there are any gaps left in steps 1 through 4 the perceived customer service quality will be negatively affected The way to make sure these gaps are closed is through thorough systems design, precise communication with customers, and a well-trained workforce. 11

Gaps Model 12

Gaps Model There are 22 items which can be rated i.e. modern looking equipment, prompt service, understanding of needs, etc. These items are broken up into 5 dimensions: Tangibles (Items 1-4) Reliability (Items 5-9) Responsiveness (Items 10-13) Assurance (Items 14-17) Empathy (Items 18-22) Tangibles: appearance of physical facilities, equipment, personnel, and communication materials Reliability: ability to perform the promised service dependably and accurately Responsiveness: willingness to help customers and provide prompt service Assurance: knowledge and courtesy of employees and their ability to convey trust and confidence Empathy: the caring, individualized attention the firm provides its customers Reliability is the most important dimension Tangibles is the least important dimension There is a shared importance between Reliability and Responsiveness 13

Gaps Model Perceptions and Expectations are given a rating for certain dimensions Ratings scale 1 (Strongly Disagree) to 7 (Strongly Agree) Average expectation rating is then subtracted from the average perception rating Average ratings should usually be taken from a sample size of at least 50 participants 14

Gaps Model High Training needed negative = in certain rating dimension If the average rating is negative there is a need for action As the rating gets lower below zero, the more stress must be placed on that process If the average rating is above zero, the requirements have been met and no action is needed High Dimension is OK, positive = no training rating needed 15

Gaps Model Example For Example: If a survey was taken which showed the averages for each dimension is as follows: Dimension Perception Average Expectation Average Tangibles 5.4 2.4 Reliability 5.6 4.6 Responsiveness 3.2 3.5 Assurance 6.2 3.4 Empathy 2.8 4.2 What dimension should be emphasized? 16

Gaps Model Example Perception – Expectation = Difference Tangibles: 5.4 - 2.4 = 3.0 Reliability: 5.6 - 4.6 = 1.0 Responsiveness: 3.2 - 3.5 = -0.3 Assurance: 6.2 - 3.4 = 2.8 Empathy: 2.8 - 4.2 = -1.4 Empathy has the lowest rating therefore it is the dimension where training should be emphasized the most. A focus should also be placed on Responsiveness because of its negative rating. 17

Applications of Gap Analysis ISO 9001 2000 Praxiom Research Group Limited Process Approach The Praxiom Research Group Limited has a gap analysis tool offered on the internet at http://praxiom.com/iso-gap.htm This tool helps an organization find out what they need to do to meet the new ISO 9001 2000 standard The tool is offered in a hardcopy edition or a digital edition (either in Word or PDF format) This tool uses a process approach to service quality, not only because this approach makes the most sense but the ISO 9001 2000 makes it mandatory to do so Clause 4.1 of ISO 9001 2000 makes it very clear that organizations must identify and manage the processes that make up their Quality Management Systems 18

ISO 9001 2000 Gap Analysis Tool Phase 1: Identify Gaps Phase 2: Fill Gaps The Praxion Research Group’s Gap Analysis Tools is made up of 2 phases: Identification of Gaps Filling of Gaps These Phases will be broken down in the next few slides 19

ISO 9001 2000 Gap Analysis Tool Identify Gaps: Tool lists the five sets of requirements from the ISO 9001 2000 as questions Systematic Management Resource Realization Analytical This list of requirements is usually in the form of statements but for this tool they are used to ask questions not to make statements 20

ISO 9001 2000 Gap Analysis Tool Identify Gaps: Three answers are possible for each question: Yes – organization has met one of ISO’s requirement No – points to a gap N/A – question is not applicable to situation No answers reveal gaps between ISO’s standard and the organization’s process No answers also tell the organization that a process needs to be modified, improved, or created 21

ISO 9001 2000 Gap Analysis Tool Identify Gaps: Each time “NO” is answered, there is a column to help organization identify which processes need to be fixed 22 total processes which can be fixed 22 Processes: Quality Management Process Resource Management Process Regulatory Research Process Market Research Process Product Design Process Purchasing Process Production Process Service Process Product Protection Process Customer Needs Assessment Process Customer Communications Process Internal Communications Process Document Control Process Record Keeping Process Planning Process Training Process Internal Audit Process Management Review Process Measuring and Monitoring Process Nonconformance Management Process Continual Improvement Process General Systemic Process 22

ISO 9001 2000 Gap Analysis Tool Fill Gaps: Preparation and Implementation of System Development Forms Each of the 22 processes listed in Phase One has a system development form After identifying the gaps and figuring out which processes need changing, the preparation and implementation of System Development Forms occurs 23

ISO 9001 2000 Gap Analysis Tool Fill Gaps: These system development forms are used to prepare System Development Plans The Gap Analysis questions are turned into action statements These action statements formulate remedial actions which will fill in the gaps To develop plans from the forms, an organization must turn their gap analysis questions into remedial action statements These remedial actions are used to fill the gaps that are found in the identification stage The placement of these actions into the gaps is called the System Development Plan All remedial actions must be assigned a Remedial Action Number These numbers must cross reference ISO clause numbers and gap analysis questions answered earlier Job responsibilities are then given out to make sure that the remedial actions are carried out 24

Quality Management System ISO 9001 2000 Gap Analysis Tool Fill Gaps: Once all actions are performed and gaps are filled, the organization will have a - After all remedial actions are set into motion and recorded in alignment with the ISO standards the date is recorded and after the actions take place the organization’s processes are soon on their way to becoming ISO 9001 2000 compliant. ISO 9001 2000 compliant Quality Management System 25

Summary of Gap Analysis Gaps can be found in any process of an organization’s operations Tools like SERVQUAL, Two-Dimensional Analysis, and ISO 9001 2000 can all be used to perform gap analysis Gap Analysis is one of the best procedures to help lead a company to not only improve their processes, but recognize which processes are in need of improvement. Bibliography Foster, S. Thomas, Managing Quality: An Integrative Approach. Prentice Hall, 2001: pg. 132-134, 231-234. Hiller, Steve, ARL SERVQUAL Survey Pilot. University of Washington Libraries. Nitecki, Danuta A., SERVQUAL: Measuring Service Quality In Academic Libraries, http://arl.cni.org/newsltr/191/servqual.html. “ISO 9001 2000 Gap Analysis Tool”, http://praxiom.com/iso-gap.htm. 26