Week 10 - Designing Quality Service (Ch.8) Service vs. Manufacturing, Customer wants, SERVQUAL, Customer benefits, Globalization, Supply chain in service operations SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Topics – (1) Differences between services and manufacturing What do services customers want? SERVQUAL Designing and improving the services transaction The customer benefits package SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Topics – (2) Globalization of Services Improving Customer Service in Government Quality in Health Care A Theory for Service Quality Management SJSU Bus. 142 - David Bentley

Manufacturing vs. “Service” Factor Manufacturing Service Output Tangible Intangible Customer interaction Limited Fairly high Labor content Fairly Low Input uniformity High Low Output uniformity Productivity measure Easy Difficult Quality improvement Fairly easy SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Employment by Economic Sector Adapted from: Metters, Service Operations Management, 2003 1800 1850 1900 1950 2000 Extraction 83% 60% 45% 10% 3% Manufacturing 7% 15% 25% 35% Service 20% 30% 55% 80% SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Key Differences Many service attributes are intangible. Customer contact Customer co-production Internal versus external services Voluntary versus involuntary services SJSU Bus. 142 - David Bentley

Quality Issue Differences How are service quality issues different from those of manufacturing? In manufacturing, dimensions are available for measurement In services, such measurable dimensions are often unavailable Simultaneous production and consumption means you have to get it right the first time Product liability SJSU Bus. 142 - David Bentley

Similarity of Quality Issues How are service quality issues similar to those of manufacturing? For both, the customer is the core of the business By focusing on the customer many manufacturers and services firms have come to view themselves as service providers SJSU Bus. 142 - David Bentley

Dimensions of Quality (Service) (Parasuraman, Zeithamel, and Berry) Tangibles Service Reliability Responsiveness Assurance Empathy What do customers want? Availability Professionalism Timeliness Completeness Pleasantness SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley SERVQUAL An off-the-shelf approach that can be used in many service situations Developed for assessing quality along the first five service quality dimensions. Standardized, reliable, simple tool Two parts (assess the gap between the two) Customer expectations Customer perceptions SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley SERVQUAL Survey The SERVQUAL survey has 22 questions: Tangibles – Questions 1 – 4 Reliability – Questions 5 – 9 Responsiveness – Questions 10 – 13 Assurance – Questions 14 – 17 Empathy – Questions 18 – 22 SJSU Bus. 142 - David Bentley

Gap Analysis (see Fig. 8-4) The SERVQUAL survey is useful for gap analysis Gaps in communication and understanding between the provider employees and the customer have a serious effect on customer perceptions of quality SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Gaps Gap 1: Management perceptions of customer exceptions and expected service Gap 2: Service quality specifications and managers perceptions of customer expectations Gap 3: Service delivery and service quality expectations Gap 4: Service delivery and external communications to customers GAP 5: Expected service and perceived service Key is to close gaps 1-4 first SJSU Bus. 142 - David Bentley

Map of Strengths & Weaknesses (Example 8.1) The SERVQUAL survey is useful for gap analysis By averaging the difference between perception and expectation a two dimensional map can be created identifying strengths and weaknesses SJSU Bus. 142 - David Bentley

Designing and improving the services transaction One way to improve perceptions of quality is … Improve the process of delivery through: Blueprinting Moment of truth concept Poka-yoke SJSU Bus. 142 - David Bentley

Services Blueprinting Identify processes Isolate fail points Establish a time frame Analyze profits SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley “Moments of Truth” Fail Points .. Moments of truth. These are times at which the customer expects something to happen. SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Poka-Yoke Also known as mistake-proofing or fail-safing Fail safe device classification Warning methods Physical contact methods Visual contact methods SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Poka-Yoke Fail safe devices – “The Three T’s” Tasks to be performed Treatment provided to customer Tangibles provided to customer SJSU Bus. 142 - David Bentley

Poka-Yoke (Mistake-Proofing) Developed by Shigeo Shingo An approach for mistake-proofing processes using automatic devices or methods to avoid simple human or machine error, such as forgetfulness, misunderstanding, errors in identification, lack of experience, absentmindedness, delays, or malfunctions SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Poka-Yoke Examples (from John Grout’s Poka-Yoke Page) (refer to www.campbell.berry.edu/pokayoke) mod. 09/15/02 DAB SJSU Bus. 142 - David Bentley

Customer Benefits Package Definition: Tangibles that define the service Intangibles that make up the service Four stages Idea/concept generation The definition of a service package Process definition and selection Facilities requirements definition SJSU Bus. 142 - David Bentley

Customer Benefits Package Objectives Make sure the final CBP attributes you are using are the correct ones Evaluate the relative importance of each attribute in the customers mind Evaluate each attribute in terms of process and service encounter capability Figure out how to best segment the market and position CBPs in each market Avoid CBP duplication and proliferation SJSU Bus. 142 - David Bentley

The Globalization of Services Economies in Europe and Asia are following the lead of the United States by transferring labor and GDP into the services sector SJSU Bus. 142 - David Bentley

Improving Customer Service in Government By1998 the federal government had established a searchable list of 4,000 customer service standards for 570 federal departments and agencies By 2002 - 41 states had established quality award programs SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Change driven by… People want and desire to do good work Quality management is associated with improved employee satisfaction Government leaders are mandating standards, strategic plans and new levels of performance Demand for government services is growing at a faster rate than funding for them Threat of privation in government has led to an improvement in service SJSU Bus. 142 - David Bentley

SJSU Bus. 142 - David Bentley Quality in Health Care Health care is facing the same “cost squeeze that government is facing A move to HMOs is causing hospitals to streamline operations There is increased diversity in health care Calls for a nationalized health care system SJSU Bus. 142 - David Bentley

A Theory for Service Quality Management (Sampson) 4 Propositions: Unified services theory The unreliable supplier dilemma Capricious Labor Everyone presumes to be an expert SJSU Bus. 142 - David Bentley

Strategic Quality Planning Designing Quality Service Summary Because services involve intangibles they are different from manufacturing Lack of hard measures, statistical Quality Control techniques are not always successful The bottom line is a satisfied customer SJSU Bus. 142 - David Bentley