Quality Function Deployment

Also called: matrix product planning, decision matrices, customer-driven engineering

Every organization has customers. Some have only internal customers, some have only external customers, and
some have both. When you are working to determine what you need to accomplish to satisfy or even delight your
customers, quality function deployment is an essential tool.

 QFD ensures “Voice of Customer” are met throughout the design process.
 Customer values are considered as input into the early stage of service conception.
 To develop a service as per customer’s requirements in less time and with less design cost.
 It is a planning, communication and documentation technique.

What is Quality Function Deployment (QFD) –

Quality Function Deployment (QFD) is a process and set of tools used to effectively define customer requirements
and convert them into detailed engineering specifications and plans to produce the products that fulfill those
requirements. QFD is used to translate customer requirements (or VOC) into measureable design targets and drive
them from the assembly level down through the sub-assembly, component and production process levels. QFD
methodology provides a defined set of matrices utilized to facilitate this progression.

QFD was first developed in Japan by Yoji Akao in the late 1960s while working for Mitsubishi’s shipyard. It was later
adopted by other companies including Toyota and its supply chain. In the early 1980s, QFD was introduced in the
United States mainly by the big three automotive companies and a few electronics manufacturers. Acceptance and
growth of the use of QFD in the US was initially rather slow but has since gained popularity and is currently being
used in manufacturing, healthcare and service organizations.

QFD Steps –

 Identify the customer and record customer requirements or attributes.

 Identify the service design elements and relate them with customer attributes.
 Determine the interrelationships between any pair of service design elements.
 Weighing service element to assess improvement requirements.
 Assessment of competition.

There are several additional benefits to using Quality Function

Deployment:

 Customer Focused
 VOC Competitor Analysis
 Shorter Development Time and Lower Cost
 Structure and Documentation

Service Recovery
 Service recovery involves what a service provider does in response to service failures.
 Resolving the problem quickly helps in retaining customers.
 Service recovery will also prevent losing customers to the competitors.

Service recovery is a company's resolution of a problem from a dissatisfied customer, converting them into a loyal
customer. It is the action a service provider takes in response to service failure. By including also customer
satisfaction into the definition, service recovery is a thought-out, planned, process of returning aggrieved/dissatisfied
customers to a state of satisfaction with a company/service Service recovery differs from complaint management in
its focus on service failures and the company's immediate reaction to it. Complaint management is based on
customer complaints, which, in turn, may be triggered by service failures. However, since most dissatisfied
customers are reluctant to complain, service recovery attempts to solve problems at the service encounter before
customers complain or before they leave the service encounter dissatisfied. Both complaint management and
service recovery are considered as customer retention strategies. Recently, some researches proved that strategies
such as value co-creation, follow up, etc. can improve the effectiveness of service recovery efforts.

Service recovery strategies –

 Encourage customers to complain when they are not satisfied with service. Ex Toll-free number
 Anticipate the potential failure points while designing service delivery process in service blueprint. Proper
procedures to handle such failure points and providing training to the employees will help in effective
service recovery.
 Training and empowering employees who are directly involve in handling the complaints.
 Close the loop from generation of complains to effective recovery of service failure.

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.
 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.

Closing the Loop –

 The service organization cannot solve the problem. Communicate….

 The service organization can solve the problem by bringing some change in the service delivery system.
Communicate…
 The service organization is ready to solve the problem but may not be aware of solution. Ask for suggestion…

GAP Analysis

Customer Customer Satisfaction Customer

GAP 5
Perceptions Expectations

Managing the Customer / Understanding

Evidence Marketing Research the Customer
Communication
GAP 4 GAP 1

Service Management
Perceptions
Delivery of Customer
Expectations
Conformance
Design GAP 2
GAP 3
Conformance Service Design
Service
Standards

What Is Gap Analysis?

Gap analysis is the process companies use to examine their current performance with their desired, expected
performance. This analysis is used to determine whether it is meeting expectations and using its resources
effectively.

Gap analysis is the means by which a company can recognize its current state—by measuring time, money, and labor
—and compare it to its target state. By defining and analyzing these gaps, the management team can create an
action plan to move the organization forward and fill in the performance gaps.

 Gap analysis is how organizations examine their current performance with its target performance.
 Gap analysis can be useful when companies aren't using their full resources, capital, or technology to their
full potential.
 By defining the gap, a firm's management team can create a plan of action to move the organization forward
and fill in the performance gaps.
The "gap" in gap analysis is the space between where an organization is and where it wants to be in the future.

Where Gap Analysis Is Used

Gap analysis can be used by organizations of varying degrees, from large corporations to small businesses. There is
no limit to which areas can benefit from using this strategy; these areas include the following:

 Sales
 Quality control
 Financial performance
 Human resources
 Employee satisfaction

4 Realms of an experience

Customer Participation

Passive Active

Absorption Entertainment Education

Environmental (Movie) (Language)
Relationship Immersion Esthetic Escapist
(Tourist) (ScubaDiving)

Service Process Matrix

The Service-Process Matrix is an analysis tool that examines the degree of labor intensity and the degree of
interaction and customization.
Application/Role of Technology in Services
Customer Service Provider
Human Machine
Employee selection Intuitive interface
Interpersonal skills Verification
Human Support technology Security
Engender trust Easy to access

Easy to access Compatibility

Fast response Tracking
Machine Verification Verification
Remote monitoring Security
Failsafe

For Yield Management (Whole PPT)

  Yield management is applicable to the service organisation with fixed capacity. (Justify your answer)
 Will applying yield management with the concept of market segmentation impact the customer relationship
(Justify your answer)

Incremental and Radical Approach

Incremental innovation This is a common approach in many established companies, which focus on creating new
products and services, with several goals:
1. To grow sales and profits for existing products and services.
2. To protect current business models.
3. To create new business models without cannibalizing current ones.

This approach is very popular because it reduces the risk that radical innovation usually takes. Moreover, companies
with great human capital, resources, and capital find that is much easy for them to follow this innovation path, which
brings clear advantages, such as:

1. Helps companies remain competitive. While profiting from a product they are already developing the next
generation.
2. Ideas are easier to sell. When customers are used to a type of product or service they find easier to
understand and buy new improvements.
3. Affordability. The development process is not unsurmountable, as long as the company already have all the
capital and infrastructure needed to keep innovating on the same kind of products and services.
Smartphone industry is a great example of this kind of innovation. When Apple designed the first iPhone helped to
create a new huge market. Following this track, many companies developed their own first smartphones, willing to
get some slices of the cake. From this first move, all tech companies in this sector started a race to deliver the next
generation of their models, profiting in the meanwhile from previous ones. Once they have the resources to do that,
is just about keep the wheel turning on, just improving step by step. This makes companies relevant to the
customers, reducing uncertainty and keeping costs under control. At least, until someone else disrupt the market
again!

Of course, this comes with some disadvantages. In mature markets, with many competitors, is much harder getting
notice. Huge marketing expenses became mandatory, as well as the R&D resources to remain competitive. Is not an
easy race, and Nokia gives us an example of a big player that clearly lost its market position as result of a failing
innovation strategy.

 Service Line Extensions: Augmentation of existing service line (e.g. new menu items).
 Service Improvements: Changes in features of currently offered service, such as web based check-in services
offered by airlines.
 Style Changes: Modest visible changes in appearances, such as changes in aesthetics.

Radical innovation Radical innovation is a much more complicated endeavor. Is a complex process, rather than a
discrete event, and implies a difficult, lengthy and risky process. We can define it in several ways, but probably will
be accurate to describe it as a “blue ocean strategy”, as Kim and Mauborgne understand this term.

A blue ocean strategy means that a company does not fight for a slice of the market cake. Rather that, it creates a
new market, stepping aside from the crowd. This strategy has many clear advantages:

 It gives the chance to get a huge win, as long as the innovator will be the pioneer in the field, with no
competitors. A significant advantage for any company.
  This advantage could give the chance to own an entire market, at least during the first stages, setting up the
rules for the own profit.  
 New markets are wide open to further development and innovations. Once you have created a new one, the
options for further innovations are usually very high. This means that capturing value will be much easier
than in mature markets.

Nevertheless, creating a new blue ocean is not easy, in fact, it is quite risky. Timing should be perfect, in order to
deliver your brand new product to the right people at the right time. Slow market adoption is a clear possibility,
hindering market growth, and the investment needed is usually quite big, without clear return perspectives.

A clear example for this kind of innovation is the digital camera. The history of this device resumes how this kind of
approach works. First digital sensors were invented in 1975, and mounted into cameras in 1976 in Japan, by the
company Nikon. At first, its adoption was slow and didn´t threaten the traditional industry. In fact, Kodak itself did
not consider digital cameras as a real competitor. The last chapter is already known: as long as digital cameras
improved their design and became cheaper, their adoption was growing exponentially, displacing former
technologies and all those companies that failed to adapt, including Kodak. A new huge market followed in a few
years, full of devices, products, and services attached to this technology.

But it is not only about technology. It is possible to achieve radical innovation through Business Model Innovation. If
you want to get a glimpse to this topic, download our Business Model Navigator Paper, an insightful material that
will help you to understand how radical innovation is not only about building new things, but about disrupting the
current business logic.

Radical Innovations (New to the world / new to the market)

 Major Innovation: New service driven by information and computer based technology, such as eBay
 Start-up Business: New services in a market that is already served by existing services, such as make-my-trip,
clear trip
 New Services for the Market Presently Served: New services to existing customers of an organization, ATMs
at Airport.

What do you mean by Service organisation? What are the various sources of service sector growth in India

Service is an economic activity that is intangible, cannot be stored and does not result in ownership. Services are
consumed at the point of sales

Services sector includes 'Trade, hotels, transport, communication and services related to broadcasting, Financial,
Real estate & professional services, Public Administration, Defence, IT and other services.

Services sector in future providing about 70 per cent of the new job opportunities in the economy.

New employment possibilities in the services sector are construction, trade, transport, logistics, storage, financial
services, communication, consultancy, IT services and personal services and many more.

Various Sources of service sector growth

 Economic Affluence
 Changing Role of Women
 Two-income families
 Cultural Changes
 Aging of the population
 Growth in number of single people
 IT Revolution
 Development of Markets
 Health care Consciousness
 Economic Liberalization
  Rampant Migration from rural to semi-urban and urban areas

Different characteristics of services? Select any service and analyse distinctive characteristics of that service?

Characteristics of Services –

 Intangible - It cannot be touched.

 Heterogeneity –A service is one-time generated, rendered and consumed and can never be exactly repeated.
 Inseparability - Services cannot be separated from the service providers.
 Perishability – services cannot be produced and stockpiled (inventoried) before consumption, they exist only
at the time of their production

Example – SPA, Bank etc.

Strategies to deal with Psychology of Queuing?

Perception is more important than reality.

Unoccupied time feels longer than occupied time.

• Operational Action: Distract and entertain with related or unrelated activity.

• Complaints about long waiting times for the elevators…. Instead of installing more elevators,
management changed the wall covering in the elevator lobby to mirrors.

• Deal with the psychology of waiting by installing televisions or newswires for waiting
customers.

Pre-process waits feel longer than in-process waits.

• Operational Action: Communicate as soon as possible and get customers “in process.”

• Restaurants can provide menus or drinks to waiting customers to make them feel in
process.

Uncertain or unexplained waits feel longer than known waits.

• Operational Action: Communicate frequently.

Unfair waits feel longer.

• Operational Action: Physically segment different markets.

• Any line that is not first come, first served is viewed as unfair.

• Some examples of “unfair”—or not first come, first served—systems that are tolerated by
customers include

• the separate check in lines for first class airline passengers,

• the “12 items or less” lines at grocers, and

• the “commercial accounts” lines at banks.

What is Service Blueprint? How does it Benefit the service provider?

Service blueprinting is a technique to design service delivery system.

 A customer focused approach for service innovation and service improvement.

 Helps in visualizing the service processes and hence provide a bird’s-eye view of the service system

 Identifying points of customer contact with service system.

 Physical evidence associated with services from customer’s perspective.

Blueprint for Services –

• Identify the process: Mapping the process that constitutes service.

• Isolate fail points: Determine points where the visible production system may fail.

• Establish a standard execution time for the process.

• Analyse profitability.

Some of the most important benefits of service blueprinting are as follows:

 1. Provides an overview so employees can relate “what I do” to the service viewed as an integrated whole, thus
reinforcing a customer-oriented focus among employees.

 2. Identifies fail points, that is, weak links of the chain of service activities, which points can be the target of
continuous quality improvement.

 3. Line of interaction between external customers and employees illuminates the customer’s role and
demonstrates where the customer experiences quality, thus contributing to informed service design.

 4. Line of visibility promotes a conscious decision on what customers should see and which employees will be in
contact with customers, thus facilitating rational service design.

 5. Line of internal interaction clarifies interfaces across departmental lines, with their inherent
interdependencies, thus strengthening continuous quality improvement.

 6. Stimulates strategic discussions by illuminating the elements and connections that constitute the service.
Those who participate in strategic sessions tend to exaggerate the significance of their own special function and
perspective unless a common ground for an integrated view of the service is provided.

 7. Provides a basis for identifying and assessing cost, revenue, and capital invested in each element of the
service.
 8. Constitutes a rational basis for both external and internal marketing. For example, the service map makes it
easier for an advertising agency or an in house promotion team to overview a service and select essential
messages for communication.

 9. Facilitates top-down, bottom-up approach to quality improvement. It enables mangers to identify, channel,
and support quality improvement efforts of grass roots employees working on both frontline and support teams.
Employee work teams can create service maps and thus more clearly apply and communicate their experience
and suggestions for improvements.

Impact of types of service on Servicescape

In what ways the service sector inventory problems are different from typical manufacturing
inventory problems?
a.       Setup/ordering costs
b.       Number of products
c.       Limited shelf space
d.       Lost sales versus back orders
e.       Product substitution
f.        Demand variance
g.       Information accuracy

What is service triad? Elaborate

 PROS CONS

attracting applicants from a wider employment pool may cause under-staffing at times

retaining valued employees who may not be able may create difficulty in scheduling meetings,
to, or want to, work full-time coordinating projects

could enable employer to reduce costs without difficulty in measuring working hours and performance
reducing staff of part-timers

could negatively affect employees income and

enables to cover busy periods efficiently
benefits

more free time, flexibility and work life balance for could negatively affect employees career
employees advancement

employee may be viewed as less committed by

enhances employee’s morale, productivity, and
colleagues or
commitment
supervisor

the rest of the employee’s job duties need to be

reduces absenteeism and tardiness
reassigned

Advantages and Disadvantages of Hiring Part time employee

Kinds of Challenges service organisation face while making facility location decisions

Long term commitments

Highly capital investment

Site availability

Convenience

Business profile