1. Operations Management
Service Quality
This is a basic course blah, blah, blah…
Dr. Tai-Yue Wang
Department of Industrial and Information Management
National Cheng Kung University
Tainan, TAIWAN, ROC

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.

3. Learning Objectives Construct a statistical process control chart.
Develop unconditional service guarantees.
Plan for service recovery.
Perform a walk-through audit (WtA)

4. 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.

5. Dimensions of Service Quality
Reliability(可靠度):
Perform promised service dependably and accurately.
Example: receive mail at same time each day.

6. Dimensions of Service Quality
Responsiveness(反應度):
Willingness to help customers promptly.
Example: avoid keeping customers waiting for no apparent reason.
Quick recovery, if service failure occurs

7. Dimensions of Service Quality
Assurance(保證性):
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.

8. Dimensions of Service Quality
Empathy(同理心):
Ability to be approachable, caring, understanding and relating with customer needs.
Example: being a good listener.
Tangibles(感受性):
Physical facilities and facilitating goods.
Example: cleanliness.

9. Perceived Service Quality
Word of
mouth
Personal
needs
Past
experience
Expected
service
Perceived
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)

10. Service Quality Gap Model(服務品質缺口模式)

11. 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

12. Gaps in Service Quality
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

13. 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

14. Continued…. 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

15. 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
SERVQUAL – measures the five dimensions

16. 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?

17. Scope of service quality
View quality from five perspectives
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?

18. Quality Service by Design
Taguchi method
Poka-Yoke

19. 1. Quality in the Service Package
Budget Hotel example
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

20. 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

21. 2. Taguchi Method (Robustness)
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)

22. 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.

23. 3. Poka-Yoke (Fail safing)
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.

24. 3. Poka-Yoke (Fail safing)
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.

25. Classification of Service Failures with Poka-Yoke Opportunities
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

26. 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

27. 4. Quality Function Deployment
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)

28. 4. Quality Function Deployment
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

29. House of Quality

30. 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

31. 6. Walk-Through-Audit
Impressions about service quality are determined by both the outcome and the process (because customers are a part of service delivery)

32. 6. Walk-Through-Audit
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

33. 6. Walk-Through-Audit
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.

34. Methods for Measuring Service Quality
SERVQUAL
Mystery Shopping
Undercover agent
Undercover customer

35. Methods for Measuring Service Quality
Post Service Rating
Follow-up Survey
In-App Survey

36. Methods for Measuring Service Quality
Post Service Rating
Follow-up Survey
In-App Survey

37. Methods for Measuring Service Quality
Customer Effort Score
How much effort did it take you to have your questioned answered?
Social Media Monitoring
Facebook, twitter, …
Documentation Analysis

38. Methods for Measuring Service Quality
Objective Service Metrics
Volume per channel
First response time
Response time
First contact resolution ratio
Reply per ticket
Backlog inflow/outflow

39. Methods for Measuring Service Quality
Objective Service Metrics
Customer success ratio
Handover per issue
Thing gone wrong
Instant service/queueing ratio
Average queueing waiting time
Queueing hang-up

40. Methods for Measuring Service Quality
Objective Service Metrics
Problem resolution time
Minutes spent per call
………

41. Achieving Service Quality
Cost of Quality (Juran)
Service Process Control
Statistical Process Control (Deming)
Unconditional Service Guarantee

42. 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

43. 1. Cost of Quality Detection cost Internal failure
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

44. 1. Cost of Quality External failure $1 in invested in prevention
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)

45. Costs of Service Quality (Bank Example)

46. 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.

47. 2. Service Process Control
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.

48. 2. Service Process Control
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

49. 3. Service Process Control
Resources
Identify reason
for
nonconformance
Establish
measure of
performance
Monitor
conformance to
requirements
Take
corrective
action
Service
concept
Customer
input
output
process

50. 4. Unconditional Service Guarantee: Customer View
Unconditional (Costco, 萬客隆) – without exception
Easy to understand and communicate (Bennigan’s) – to the customer
Meaningful (Domino’s Pizza) – it should provide compensation that is meaningful

51. 4. Unconditional Service Guarantee: Customer View
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

52. Unconditional Service Guarantee: Management View
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

53. Unconditional Service Guarantee: Management View
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

54. Customer Feedback and Word-of-Mouth
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.

55. Customer Feedback and Word-of-Mouth
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.

56. Service Recovery Framework

57. 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.

58. Service Recovery 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.

59. Service Recovery Approaches to service recovery
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.

60. 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

61. Inspection
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.

62. Process focus
Process capability means capable of meeting customer requirements or specifications.

63. 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

64. Tools for Process Improvement
Coarse Grained Analysis
Pareto Analysis: 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

65. Tools for Process Improvement
Coarse Grained Analysis
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)

66. 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
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.

67. 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.

68. Topics for Discussion 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?