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Operations Management - Policy, Practice and Performance Improvement

Operations Management - Policy, Practice and Performance Improvement

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Published by Sarah Gogo
A very execellent Management Document for performance monitoring.
A very execellent Management Document for performance monitoring.

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Published by: Sarah Gogo on Jul 09, 2012
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04/14/2015

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Because of intangibility and customer contact, quality in services is
often defined differently to quality in manufacturing, although similar
considerations may be applied to the tangible output of a service (e.g.
the pizza rather than the entire pizzeria). Zeithaml et al. (1990, p. 26)
defined the dimensions of service quality as:

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9 • MANAGING QUALITY

Tangibles– the appearance of physical facilities, equipment, person-

nel and communication materials. The customer perceives that all
the tangible aspects of the service are fit for the task and customer-
friendly.

Reliability– the ability to perform the promised service dependably

and accurately.

Responsiveness– the willingness to help customers and provide

prompt service. The customer’s perception that the service provider
responds quickly and accurately to his or her specific needs and
demands. Customers are often held in long queues when trying to
reach call centres.

Assurance– the knowledge and courtesy of employees and their

ability to convey trust and confidence. The customer feels that he or
she is in courteous, able and competent hands.

Empathy– caring, individualized attention that the firm provides for

its customers. The customer feels that he or she is receiving caring
services and individualized attention.

Imagine that you have gone into a video store to rent a video. You
might judge the quality of the store on what you see and physically
experience. Is it neat and clean, or messy and disorganized? Does it
have the videos that you want to rent? How helpful are the counter
personnel? Could you trust their judgement in recommending a film?
Do they treat you as an individual? All of these, and more, will go into
your assessment of this service.
An important aspect to note is how these service quality aspects can
also be ranged from tangibles, which are measurable and observable
by the organization as well as its customers and clients, to empathy,
which is difficult to perceive except by the recipients of the service.
In some respects, the perception of a service is its reality. Service
providers must manage the technical aspects of the service process
carefully so that all technical requirements are met – for example,
delivering a package within 24 hours, or providing an edible meal. The
technical quality of results is the extent to which the results produced
for the customer are as good as the state-of-the-art in the field allows.
This means that objective measurements of service quality and
standards must be based on the customers and how they pass
judgement on important process dimensions – managing the evidence
(Berry and Parasuraman, 1991). For example, when the Body Shop
chooses its suppliers it is well known that part of the selection criteria
involves the supplier’s commitment to environmental issues. Perhaps
what is not quite so well known is that the Body Shop also insists upon

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OPERATIONS MANAGEMENT

high service quality levels. For example, the Lane Group delivers
products to the Body Shop and commits to do so within a 2-hour time
frame. They are expected to achieve this delivery performance at a
level of 99.7 per cent, which means that 997 out of every 1000
deliveries must be within this 2-hour time period. This is an example
of the ‘intangible’ nature of service quality being judged in a tangible,
measurable way – in this case, by performance delivery.
Customer satisfactionis the extent to which results produced for
customers and the process they went through to secure these results
meet their expectations. The relationship between expectations and
perceptions is often expressed as an equation:

Customer satisfaction=Perceptions – Expectations

As well as the actual service quality in a single service encounter,
customer expectations are influenced by other factors such as past
experience, word-of-mouth advertising, on-site signs, and need. The
zone of tolerance between expectations and perceptions of process
and results (Berry et al., 1994) is very small, especially after a service
failure. A ‘ratchet effect’ has been found to exist in services: exceed a
customer’s expectations slightly and he or she will be pleased or even
delighted. However, the next time the same customer will be merely
satisfied by the extra, or disappointed by its absence. Thus, system-
atically exceeding expectations is not enough to delight – especially
when those expectations have been raised unrealistically by marketing
and advertising.

The Servqual model

Service quality can be categorized into two broad components: those
dimensions that directly affect the results that customers want, and
those concerned with the process customers have to put themselves
through to get those results (process quality).
Most studies of service quality have been undertaken by researchers
in marketing rather than those in operations management, who have
concentrated more on product quality – probably because product
quality is more easily measured in objective terms and service quality
in perceptual terms, which involves psychology.
One of the best tools in understanding how perceptions of quality
differ between customers and producers is the ‘gaps model’ (Figure
9.10), which was developed by Parasuraman and his colleagues in
1985. This ‘gaps’ model shows different points where the service that

290

Consumer’s
perspective

Producer’s
perspective

Ideal
service

Perceived
received service

Perceived
deliveryservice

Communicated and
advertised service

Expected
service

Actual
delivered service

Designed
service

Selected
service

Perceived
serviceneed

Past
experience

9 • MANAGING QUALITY

is designed and delivered by the producer and the service actually
needed, expected and perceived by the customer differ. Some of the
gaps are on the producer’s side, whilst others are on the customer’s
side.

Servqual provides a structured approach to measuring customer
satisfaction through measuring the gap between what customers
expect and what they perceive of the service provided in a service
encounter. Customers fill out questionnaires that ask about their
perceptions and expectations, and the gap (or difference) between
the two is measured.
Based on Figure 9.10, Parasuraman and his colleagues (1985)
identified five gaps that can lead to service quality failures:

1Not understanding the needs of the customers
2Being unable to translate the needs of the customer into a service
design that can address them
3Being unable to translate the design into service expectations or
standards that can be implemented

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Figure 9.10The ‘gaps’ model of service quality.

OPERATIONS MANAGEMENT

4Being unable to deliver the services in line with specifications
5Creating expectations that cannot be met (gap between customer’s
expectations and actual delivery).

Resolving problems with service quality

Service failures will inevitably occur. Service recoveryinvolves making
amends to the customer, immediately taking action to alleviate the
consequences of the failure, and informing the customer of the
recovery activities taking place. Hotels, restaurants and other service
operations often overbook their rooms, because a certain number of
reservations will not be honoured. In such situations, front-line
personnel should be empowered to come up with on-the-spot
remedies and solutions for those clients left without rooms, such as
booking a room in another hotel. For service recovery to be effective,
it must be expected, facilitated, recognized and rewarded. Detection,
correction and learning are necessary for systematic learning from
service failure (Reichheld, 1996).
A process called the four ‘A’s of service recovery was developed at
Samaritan Health Services in the USA, and is described by Tax and
Brown (1998)

1Anticipate and correct problems before they occur
2Acknowledge mistakes when they occur without placing blame or
making excuses
3Apologize sincerely for the mistake even if you are not at fault
4Make Amends for the mistake by taking corrective action and
following up to make sure the problem is resolved.

Guarantees provide a way of communicating to customers and
employees specific benefits and expectations, and amends for service
failures. A service guaranteespecifies a tangible service performance
target or outcome, e.g. a maximum wait time for a service, and
provides compensation in case of failure. The Toronto Dominion
Bank offered a service guarantee when it began offering customers a
$5 bill if they had to queue for more than 5 minutes. Service
guarantees also makes it easier to quantify the effects of quality
failures, and provide the basis for continuous improvement.
As well as guarantees, organizations can also take steps to make sure
that potential causes of service failures are identified and eliminated
through process redesign. Service fail-safingis an idea that has been
adapted from just-in-time (JIT) operations to services by Professor

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9 • MANAGING QUALITY

Dick Chase of the University of Southern California. This takes the
idea of the pokayokefrom JIT management and applies it to services.
Service recovery can only take place when service failures are
identified so that they can be acted upon. Organizations can identify
service failures through customer complaints. These can be gathered
through complaints made to front-line personnel or management, via
customer complaint cards or hotlines, and so on. Effective complaints
gathering and resolution is a hallmark of high-quality organizations.
Customers who are dissatisfied with products or services have a new
weapon – the Internet – to publicize unresolved complaints (Oger,
2000). This ‘word of mouth’ approach to complaining has led to the
emergence of thousands of protest sites, targeting nearly every large
corporation. Some sites are even put up by disgruntled employees.
However, customers have unclear expectations about many services
and may not complain when they are dissatisfied. As Levitt (1980)
remarked about services versus tangible goods, ‘You don’t know what
you aren’t going to get until you don’t get it’. Good service providers
systematically listen to the ‘voice of the customer’ besides just listening
to complaining customers (Berry and Parasuraman, 1991).
First Direct, the telephone banking arm of Midland Bank, surveys
every new customer 3 months after opening an account. In addition it
surveys 15000 customers quarterly, conducts focus groups with 1000
customers annually, and sponsors independent research by MORI and
NOP. In addition, comments, suggestions and queries are logged after
each call. This was used to identify customer demand for PC banking
(Management Today, 1998).
Mystery shoppingallows service providers to experience their services
from the perspective of a customer, either through the use of
anonymous professionals or actual customers. Pizza Hut (UK) uses
mystery shoppers to gather data each month on each restaurant, as
well as using questionnaires, focus groups, market research and
complaints. The company has a central contact point for customers in
a customer care centre (Management Today, 1998, p. 92).

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