4. managing quality of services

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Managing Quality ofServices

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


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Definitions of Quality

User-Based: What consumer says it is

Manufacturing-Based: Degree to which

a product conforms to designspecification

Product-Based: Level of measurable

product characteristic


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What is Quality?

The quality of a productor service is a customersperception of the degree to whichthe product or service meets his orher expectations.


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Nature of Quality

Dimensions of Quality

Determinants of Quality

Costs of Quality


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Dimensions of Product

Quality

Performance relative to customersintended use

Features special characteristics

Reliability likelihood ofbreakdowns, malfunctions

Serviceability

speed/cost/convenience of servicingDurability amount of time/usebefore repairs


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Dimensions of Product

Quality

Durability amount of time/use beforerepairs

Appearance effects on human sensesCustomer service treatmentbefore/during/after sale

Safety user protectionbefore/during/after use


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Under-standing

Tangibles

Reliability

CommunicationCredibility

Security

Responsiveness

Competence

Courtesy

Access

1995 Corel Corp.

Service Quality Attributes


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Quality of design products/servicedesigned based on customersexpectations and desires

Quality capability of production processes processes must be capable of producingthe products designed for the customers

Quality of conformance capableprocesses can produce inferior product ifnot operated properly


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Quality of customer service a superiorproduct does not mean success; must

have quality service alsoOrganization quality culture superiorproduct and service requiresorganization-wide focus on quality


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Costs of Quality

Internal failure - of producing defectiveparts or service, Scrap and rework -rescheduling, repairing, retesting

External costs - occur after deliveryDefective products in the hands of thecustomer - recalls, warranty claims, law

suits, lost business,


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Costs of Quality

Appraisal costs - evaluating productsdetecting defects - inspection, testing, .

Prevention costs: reducing the potential fordefects through training, chartingperformance, product/process redesign,supplier development, .


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Traditional Quality

Management

Defective products will be identified anddiscarded

Quality can be inspected into products

Main decision is how many products to

inspect (largely a question of economics)


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Traditional View of How Much

to InspectAnnual Cost ($)

% of Products Inspected0

Optimal

Level of

Inspection

Cost of Scrap,Rework, and

Detecting Defects

Cost of DefectiveProducts toCustomers

Total QualityControl Costs


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Modern Quality Management

Quality Drives the Productivity Machine

Other Aspects of the Quality Picture


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Quality Gurus

W. Edwards DemingAssisted Japan in improving productivityand quality after World War II

In 1951 Japan established Deming PrizeUS was slow in recognizing hiscontributions

Introduced Japanese companies to the

Plan-Do-Check-Act (PDCA) cycle(developed by Shewart)

Developed 14 Points for managers


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PDCA Cycle

2. DO

Try plan on

a test basis

1. PLAN

Identify im-provements and

develop plan

3. CHECK

Evaluate plan

to see if itworks

4. ACT

Permanentlyimplement

improvements


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Demings 14 Points for

Managers

1. Create constancy of purpose toward productquality to achieve organizational goals

2. Refuse to allow commonly accepted levels of

poor quality3. Stop depending on inspection to achieve

quality

4. Use fewer suppliers, selected based on qualityand dependability instead of price

5. Instill programs for continuous improvementof costs, quality, service, and productivity


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Managers

6. Train all employees on quality concepts

7. Focus supervision on helping people do abetter job

8. Eliminate fear, create trust, and encouragetwo-way communications betweenworkers and management

9. Eliminate barriers between departmentsand encourage joint problem-solving


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Managers

10. Eliminate the use of numerical goals andslogans to make workers work harder

11. Use statistical methods for continuousimprovement of quality and productivityinstead of numer. quotas

12. Remove barriers to pride of workmanship

13. Encourage education and self-improvement

14. Clearly define managements permanentcommitment to quality and productivity


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Quality Gurus

Philip B. Crosby

Wrote Quality Is Freein 1979

Company should have the goal of zerodefects

Cost of poor quality is greatlyunderestimated

Traditional trade-off between costs ofimproving quality and costs of poor qualityis erroneous


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Quality Gurus

Armand V. Feigenbaum

Developed concept of total quality control(TQC)

Responsibility for quality must rest with thepersons who do the work (quality at thesource)

Kaoru IshikawaWrote Guide to Quality Controlin 1972

Credited with the concept of quality circles

Suggested the use of fishbone diagrams


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Quality Gurus

Joseph M. JuranLike Deming, discovered late by US companies

Played early role in teaching Japan aboutquality

Wrote Quality Control Handbook

Genichi Taguchi

Constant adjustment of processes to achieve

product quality is not effective

Products should be designed to be robustenough to handle process and field variation


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ISO 9000 Standards

Quality management guidelines developed bythe International Organization forStandardization

Companies become certified by applying tothird-party providers who assess the level ofconformity to the standards

More than 300,000 companies worldwide areISO 9000-certified

The US big three automakers have adopted asimilar set of standards called QS-9000


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ISO 9000 Standards

Standards based on 8 quality managementprinciples

Customer focused organization

LeadershipInvolvement of people

Process approach

System approach to management

Continual improvementFactual approach to decision making

Mutually beneficial supplier relationship


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Quality Management in

Services

Since many services are intangible, it isdifficult to determine their quality

Customers set their own standards forservices

Perceived quality of service affected by thesurroundings

Performance of service employeesdetermines in large part the quality of theservices


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Wrap-Up: World-Class

Practice

Quality begins when business strategy isformulated

Quality is the weapon of choice to capture global

marketsQuality 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 placeTQM programs aimed at continuous improvement


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Continuous Improvement

Represents continual improvement ofprocess & customer satisfaction

Involves all operations & work units

Other names

Kaizen (Japanese)

Zero-defects

Six sigma

1984-1994 T/Maker Co.


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Employee Empowerment

Getting employees involved in product& process improvements

85% of quality problems are due toprocess & material

Techniques

Support workers

Let workers make decisions

Build teams & quality circles

1995 Corel Corp.


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Quality Circles

Group of 6-12 employees from samework area

Meet regularly to solve work-related

problems

4 hours/month

Facilitator trains & helps

with meetings

1995 Corel Corp.


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Benchmarking

Selecting best practices to use as astandard for performance

Determine what to benchmark

Form a benchmark teamIdentify benchmarking partners

Collect and analyze benchmarking

informationTake action to match or exceed thebenchmark


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Quality Loss Function

Frequenc

y

Target Upper Lower

Target-oriented quality

yields more product in

the "best" category

Distribution of Specifications for Products Produced

Conformance-oriented

quality keeps products

within 3 standard

deviations

Loss

High Loss

Low Loss

Unacceptable

Poor

Fair

Good

Best


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Tools of TQM

Tools for generating ideasCheck sheet

Scatter diagram

Cause and effect diagramTools to organize data

Pareto charts

Process charts (Flow diagrams)

Tools for identifying problems

Histograms

Statistical process control chart


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Services and Their Customer

Expectations

Hospital

Patient receive the correct treatments?

Patient treated courteously by all personnel?

Hospital environment support patientrecovery?

Bank

Customers transactions completed withprecision?

Bank comply with government regulations?

Customers statements accurate?


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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?


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Service quality is more difficult to measurethan for goods

Service quality perceptions depend onExpectations versus reality

Process and outcome

Types of service quality

Normal: Routine service delivery

Exceptional: How problems are handled

TQM In Services

f S


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Determinants of Service

Quality

Reliability consistency and dependability

Responsiveness willingness/readiness of

employees to provide service; timelinessCompetence possession of skills andknowledge required to perform service

Credibility can buyers trust what theyretold?

4. managing quality of services

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