Quality Service Management

A Guide to Improving Business Processes

John Maleyeff

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000587777
• Edition: 1
• Topic: Business
• Subtopic: Decision Making
• Index: Business

Providing clear guidance for anyone servicing internal or external customers, this book offers a framework for analyzing and managing quality using a comprehensive closed-loop approach.

This book cuts through the complexities of the mantra 'better, cheaper, faster' (BCF) and offers procedures for the evaluation of customer needs, the determination of performance metrics, and the design of effective customer satisfaction surveys. It details basic statistical techniques and packages the framework, procedures, and methods into a management construct that includes external quality certification systems and internal performance management systems. Importantly, the book also describes how these systems can be implemented in a virtual workplace.

This quality management book will be essential to service-oriented firms (financial, government, healthcare, hospitality, etc.), as well as any firm with internal customer service processes such as human resource management, purchasing, and accounting. Professionals at all levels, corporate trainers, and students will welcome this book's common set of principles and tools, accompanied by many case studies that illustrate how they are applied in various environments.

1Introduction to service quality management

DOI: 10.4324/9781003199014-1

Introduction

The management of quality constitutes a complete system including a philosophy, a framework, and a set of methodologies for analysis and improvement. This system should support decision making at leadership, management, and operational levels. Its intent is to evaluate performance, maintain customer satisfaction, identify the root causes of quality-related problems, operate an improvement methodology that maintains quality as defined by constantly evolving customer needs. A quality management system is unique in its integration of decision-making processes, analysis methodologies, and the psychology of how humans behave in the context of the incentive systems within which they work.

This chapter introduces two definitions of quality, one evaluated objectively from the firm’s perspective and the other evaluated subjectively by the customer. It lists and describes the contributions of five key leaders whose teachings underlie the book’s content: Walter Shewhart, Joseph Juran, W. Edwards Deming, Kaoru Ishikawa, and Leonard Berry. It describes a process thinking approach that seeks to address quality at its source rather than relying on inspections. The state of contemporary quality management is discussed with a focus on Six Sigma and its define-measure-analyze-improve-control (DMAIC) construct. The focus is on both core processes that provide services to external customers and business processes that provide services to internal customers.

Definition of quality

The scope of service quality management encompasses all business processes that work together to create the firm’s products and services, including supporting processes that serve the needs of internal customers in service or manufacturing firms. Quality is defined from two perspectives, and the quality system would include mechanisms for measuring quality with respect to both perspectives. They are:

Provider perspective: Quality is defined as the degree to which process output meets its specified performance standard. This standard is either externally imposed (e.g., by contracts, established criteria, or government regulations) or internally imposed (e.g., by leadership dictates, competitor performance, or improvement targets). The measurement of quality based on this definition is accomplished using an inspection system that should provide unbiased and precise performance data.

Customer perspective: Quality is defined as the degree to which a service satisfies customers. Customer satisfaction is influenced by their individual expectations, which are based on service provider information as well as customers’ related experiences. Quality derived from this definition is subjective but important to monitor as customer needs evolve. The main mechanism for measuring quality based on this definition is a customer satisfaction survey that should be provide unbiased and precise data.

Both perspectives should be considered equally important to a process manager. The provider perspective provides more timely and comprehensive information. The customer perspective can suffer from delays and can be less comprehensive, although it is more relevant to the firm’s success. Together, these perspectives provide all the information needed to measure quality while maintaining close contact with customers to ensure that their evolving needs are met.

Consider a troubleshooting call center where the firm targets a maximum hold time of 10 minutes. Accordingly, a relevant performance metric is the percentage of calls with a 10-minute or less hold time, which constitutes the provider perspective. Many customers, however, may consider a 10-minute wait to be unacceptable, which constitutes the customer perspective. In this case, customer surveys will show dissatisfaction with the hold time, even when the internal 10-minute standard is reliably met. Good performance to the internal standard coexists with poor customer satisfaction. An effective quality analysis approach would encompass both perspectives and clearly delineate this conflict.

Performance dimensions

Both perspectives of quality should be applied to the way customers define the value of the service they receive. This robust value definition should be based on the entirety of how a customer evaluates quality. It should avoid the potential for measuring quality based on narrowly focused contractual agreements or easy-to-collect performance metrics. Consider an insurance firm that outsources claims processing. The service provider may be flawless in processing claims accurately, but they may be inconsistent at processing claims quickly because they may ask many questions when claims have unusual requirements. The client firm likely defines value based on factors such as accuracy, timeliness, and competency, among others.

Performance dimensions (also called discriminators or drivers) are categories that span all of the ways in which a customer evaluates service quality. The list of performance dimensions should be tailored to customers of the business process under study. A banking customer who applies for a mortgage may be concerned with six performance dimensions: (1) a convenient application process; (2) an accurate analysis; (3) a fast decision; (4) knowledgeable service providers; (5) courteous interactions; and (6) information security. The need to establish performance dimensions extends to business-to-business services where contractual agreements exist. Although a contract may be narrowly focused (e.g., on cost and delivery), a sustainable relationship may depend on other factors that make the relationship fruitful for both parties.

Historical evolution and influencers

The industrial revolution and interchangeable parts manufacturing (circa 1800) created a need for companies to control the quality of manufactured items. The first quality departments focused almost entirely on postproduction inspections with the intent to separate good items from bad items. When inspecting 100% of products was not practical (financially or practically), a random sample of items was inspected. The first formal quality control sampling plans were developed by Harold Dodge (1893–1976) during World War II. These plans, called acceptance sampling, required the inspection of a specified number of items from each batch of manufactured items. On the basis of the inspection results, the entire batch was either accepted and sent to customers or rejected and returned to the manufacturer.

The Dodge approach has also been applied to services, albeit less formally and not as commonly. For example, a natural tendency of many service process managers is to review (i.e., inspect) process output prior to delivery to customer. Consider the following examples: (1) product designs are reviewed by the engineering manager before delivery to the manufacturing department; (2) architectural projects proposals are reviewed by a partner before submission to the client; (3) in-hospital patient pharmaceutical plans are reviewed by the lead pharmacist before initiation; and (4) analytical calculations are checked for accuracy by a senior technical expert before presentation. Some form of sampling may be employed, although often sampling is subjective based on perceptions, such as when the work of first-year employees is checked.

It has become clear that assuring quality with inspections, reviews, or checks has many drawbacks, including: (1) they place the responsibility for quality in the hands of inspectors who were often not process experts; (2) they add time to the service; (3) they use valuable resources inefficiently; (4) they do not identify many noncompliant characteristics; and (5) they are ineffective at facilitating improvements. The last drawback is important to highlight – inspectors focus on identifying nonconformances (i.e., errors) rather than carefully recording their occurrences. This approach precludes the creation of data sets that can be analyzed for root causes of poor quality.

In summary, a system of service QA based on inspections is ineffective. The goal of a process manager should be to maintain quality levels that satisfy customers. This goal is achieved by understanding customer needs, designing a superior process, collecting relevant performance data, identifying (and removing) the root cause of problems, and making improvements when conditions warrant. Inspections whose intent is to separate good from bad are ineffective at helping the process manager achieve these goals. A better approach is described later in this chapter, based on the foundational philosophies and methodologies introduced by five key leaders in quality management.

Walter Shewhart’s influence

Walter Shewhart (1891–1967) was a scientist at Western Electric and an important quality management pioneer. His most important contribution was the development of methodologies for statistical quality control that used performance data to improve quality. These methods are included in Economic Control of Quality of Manufactured Product (Shewhart, 1931). Shewhart’s intent was to analyze quality-related data so that evidence was preserved that would be helpful for root cause analysis (RCA). His methods aim to develop a detailed understanding of a process’s behavior in the context of the statistical variations expected in its outcomes. Shewhart’s most important contribution was the development of statistical control charts. These graphical representations, covered extensively in this book, are designed to apply a process thinking approach to quality analysis. Control charts have statistical underpinnings that form a set of decision rules that remove the subjectivity from their interpretation.

Shewhart’s second contribution was the creation of a quality improvement framework called the Shewhart cycle or plan-do-check-act (PDCA). A similar approach is called plan-do-study-act (PDSA). Although PDCA is often called the Deming Cycle, Deming credits Shewhart with the development of the approach. PDCA provides an important foundation that has spawned many current process improvement approaches, most notably the Six Sigma DMAIC framework detailed later in this book.

W. Edwards Deming’s influence

W. Edwards Deming (1900–93) is the most important figure in the history of quality management. In 1950, at the invitation of the Japanese Union of Scientists and Engineers, Dr. Deming introduced his philosophy of management to Japanese industrialists. Deming’s teachings became popular in the United States (U.S.) after a 1980 NBC television broadcast If Japan Can … Why Can’t We, which introduced Deming and his philosophies to a U.S. audience. Through the 1980s, Deming was a sought-after conference speaker and corporate consultant. His teachings emphasized management’s responsibility for creating a process thinking quality system. He pleaded with managers to stop blaming employees for quality problems, which he explained were caused mainly by the system within which the employees worked. Deming railed against many traditional management ideas, such as the misconception that improving quality would increase costs (he emphasized that if quality improved, costs would decrease).

Although he was educated as a statistician, Deming was highly critical of acceptance sampling. In his landmark book Out of the Crisis (Deming, 1986), Deming listed his 14 Points for Management. Among them, he stated: “Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.” He taught that acceptance sampling, with its goal of separating good from bad, was ineffective principally because it was not designed to find the root cause of poor quality. Deming advocated the use of Shewhart’s statistical control charts, which shifted quality analysis from a passive to an active endeavor that sought to understand and improve processes.

Deming’s Deadly Diseases of Management addresses what he saw as problems with traditional methods of management (Deming, 1986, p. 97). The five deadly diseases are as follows:

1. Lack of constancy of purpose to plan product and service that will have a market and keep the company in business and provide jobs.
2. Emphasis on short-term profits: short-term thinking, fed by fear of unfriendly takeover and push from bankers and owners for dividends.
3. Evaluation of performance, merit rating, or annual review.
4. Mobility of management; job hoping.
5. Management using only visible figures, with little or no consideration of figures that are unknown or unknowable.

Joseph Juran’s influence

Joseph Juran (1904–2008) was influential in creating the profession of quality management. He promoted quality-related training and education of managers, and he advocated for a new role of the quality department. Its role would be changed to include responsibility for the development and implementation of quality systems. Juran’s trilogy (quality planning, quality control, and quality improvement) helped to promote a professional emphasis on the field of quality by shifting the emphasis from inspections to a more broad focus on quality improvement. Juran, along with Deming, was among the American business leaders sent to Japan after World War II to consult with Japanese business leaders. After his retirement from Western Electric, Juran became a sought-after consultant and highly regarded author. Juran’s Quality Control Handbook is among the most important works in the field of quality management (Juran, 2010).

Juran (and others) also quantified the cost of quality (COQ), which includes four categories: (1) prevention costs (e.g., planning and training for quality); (2) appraisal costs (e.g., performing inspections and auditing); (3) internal failure costs (e.g., correcting defects or mistakes found within the firm); and (4) external failure costs (e.g., correcting defects or mistakes identified by customers). Some practitioners refer to the latter two categories as the cost of poor quality (COPQ). Some organizations routinely collect data on internal failures (often called turnbacks) and external failures (often called escapes). Juran was active in promoting a concept called quality circles based on Kaoru Ishikawa’s work in Japan, which (along with the Shewhart cycle) has influenced more recent quality improvement systems.

Kaoru Ishikawa’s influence

Kaoru Ishikawa (1915–89) was a leader in the implementation of new quality theories in Japan during the years after 1945, including those espoused by Deming and Juran. He was a practicing e...