Quality and Productivity Improvement

Quality and Productivity Improvement

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Learning ObjectivesLearning Objectives

Identify the stage of competitiveness for a service firm.Identify the stage of competitiveness for a service firm. Discuss the analogous roles of inventory and queuing.Discuss the analogous roles of inventory and queuing. Perform a Walk-Through-Audit.Perform a Walk-Through-Audit. Lead a Plan-Do-Check-Act (PDCA) process improvement Lead a Plan-Do-Check-Act (PDCA) process improvement

initiative.initiative. Use quality tools for analysis and problem solving.Use quality tools for analysis and problem solving. Discuss the corporate programs for quality improvement.Discuss the corporate programs for quality improvement. Conduct a data envelopment analysis (DEA).Conduct a data envelopment analysis (DEA).

Customer Value EquationCustomer Value Equation

erviceuiringtheSCostsofAcqice

tyocessQualioducedsultsValue

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Four Stages in Service Firm CompetitivenessFour Stages in Service Firm Competitiveness

1. Available for service 2. Journeyman 3. Distinctive competence 4. World-class service delivery1. Available for service 2. Journeyman 3. Distinctive competence 4. World-class service delivery

Customers patronize service Customers neither seek Customers seek out the firm The company’s name is synonymousCustomers patronize service Customers neither seek Customers seek out the firm The company’s name is synonymous

firm for reasons other than out nor avoid the firm. on the basis of its sustained with service excellence. Its servicefirm for reasons other than out nor avoid the firm. on the basis of its sustained with service excellence. Its service

performance. reputation for meeting doesn’t just satisfy customers; itperformance. reputation for meeting doesn’t just satisfy customers; it

customer expectations customer expectations delightsdelights them and thereby expands them and thereby expands

customer expectations to levels itscustomer expectations to levels its

competitors are unable to fulfill.competitors are unable to fulfill.

Operations is reactive, Operations functions in a Operations continually excels, Operations is a quick learner and fastOperations is reactive, Operations functions in a Operations continually excels, Operations is a quick learner and fast

at best. mediocre, uninspired reinforced by personnel innovator; it masters every step of the at best. mediocre, uninspired reinforced by personnel innovator; it masters every step of the

fashion. management and systems service delivery process and providesfashion. management and systems service delivery process and provides

that support an intense capabilities that are superior tothat support an intense capabilities that are superior to

customer focus. competitors.customer focus. competitors.

SERVICE QUALITYSERVICE QUALITY

Is subsidiary to cost, Meets some customer Exceeds customer Raises customer expectations andIs subsidiary to cost, Meets some customer Exceeds customer Raises customer expectations and

highly variable. expectations; consistent expectations; consistent seeks challenge; improveshighly variable. expectations; consistent expectations; consistent seeks challenge; improves

on one or two key on multiple dimensions. continuously.on one or two key on multiple dimensions. continuously.

dimensions.dimensions.

Four Stages in Service Firm Competitiveness (cont.)Four Stages in Service Firm Competitiveness (cont.)

1. Available for service 2. Journeyman 3. Distinctive competence 4. World-class service delivery1. Available for service 2. Journeyman 3. Distinctive competence 4. World-class service deliveryBACK OFFICEBACK OFFICECounting room. Contributes to service, plays Is equally valued with front Is proactive, develops its ownCounting room. Contributes to service, plays Is equally valued with front Is proactive, develops its own an important role in the total office; plays integral role. capabilities, and generatesan important role in the total office; plays integral role. capabilities, and generates service, is given attention, opportunities.service, is given attention, opportunities.

but is still a separate role.but is still a separate role.CUSTOMERCUSTOMERUnspecified, to be A market segment whose A collection of individuals A source of stimulation, ideas,Unspecified, to be A market segment whose A collection of individuals A source of stimulation, ideas,satisfied at minimum cost. basic needs are understood. whose variation in needs is and opportunity.satisfied at minimum cost. basic needs are understood. whose variation in needs is and opportunity. understood.understood.INTRODUCTION OF NEW TECHNOLOGYINTRODUCTION OF NEW TECHNOLOGYWhen necessary for When justified by cost When promises to enhance Source of first-mover advantages,When necessary for When justified by cost When promises to enhance Source of first-mover advantages,survival, under duress. savings. service. creating ability to do things yoursurvival, under duress. savings. service. creating ability to do things your

competitors can’t do.competitors can’t do.WORKFORCEWORKFORCENegative constraint. Efficient resource; disciplined; Permitted to select among Innovative; creates procedures.Negative constraint. Efficient resource; disciplined; Permitted to select among Innovative; creates procedures. follows procedures. alternative procedures.follows procedures. alternative procedures.FRONT-LINE MANAGEMENTFRONT-LINE MANAGEMENTControls workers. Controls the process. Listens to customers; coaches Is listened to by top managementControls workers. Controls the process. Listens to customers; coaches Is listened to by top management

and facilitates workers. as a source of new ideas. Mentors and facilitates workers. as a source of new ideas. Mentors

works to enhance their career. works to enhance their career.

Continual Improvement as a Competitive StrategyContinual Improvement as a Competitive Strategy

Analogy with Just-in-Time ManufacturingAnalogy with Just-in-Time Manufacturing Inventory and Waiting Line Analogy Inventory and Waiting Line Analogy Continual Improvement as a Service Continual Improvement as a Service

Organization CultureOrganization Culture Management ImplicationsManagement Implications

Inventory and Waiting Line AnalogyInventory and Waiting Line Analogy

Feature Inventory Waiting line

Costs Opportunity cost of capital Opportunity cost of timeSpace Warehouse Waiting areaQuality Poor quality hidden Negative impressionDecoupling Promotes independence of Allow division of labor and production stages specializationUtilization Work in process keeps machines busy Waiting customers keep servers busyCoordination Detailed scheduling not necessary Avoids matching supply and demand

Traditional vs World-Class Service OrganizationsTraditional vs World-Class Service Organizations

Dimension Traditional World-class

System assumption Closed system Open systemJob design premise Division of labor FlexibilityStructure Rigid FluidRelation to others Individual Team playerEmployee orientation Task CustomerManagement Supervisor Coach and facilitatorTechnology Replace human effort Assist service deliveryInformation Efficiency Effectiveness

Walk-Through-Audit

Service delivery system should conform to Service delivery system should conform to customer expectations.customer expectations.

Customer impression of service influenced Customer impression of service influenced by use of all senses.by use of all senses.

Service managers lose sensitivity due to Service managers lose sensitivity due to familiarity.familiarity.

Need detailed service audit from a Need detailed service audit from a customer’s perspective. customer’s perspective.

Quality and Productivity Improvement Process

Quality and Productivity Improvement Process

Foundations of Continuous Improvement Foundations of Continuous Improvement - Customer Satisfaction- Customer Satisfaction

- Management by Facts- Management by Facts- Respect for People- Respect for People

Plan-Do-Check-Act (PDCA) CyclePlan-Do-Check-Act (PDCA) Cycle Problem Solving (10 steps) Problem Solving (10 steps)

Quality ToolsQuality Tools

Check SheetCheck Sheet Run ChartRun Chart HistogramHistogram Pareto ChartPareto Chart FlowchartFlowchart Cause-and-Effect DiagramCause-and-Effect Diagram Scatter DiagramScatter Diagram Control ChartControl Chart

Check SheetCheck Sheet

Month Lost Departure Mechanical Overbooked Other

Luggage Delay

January 1 2 3 3 1

February 3 3 0 1 0

March 2 5 3 2 3

April 5 4 4 0 2

May 4 7 2 3 0

June 3 8 1 1 1

July 6 6 3 0 2

August 7 9 0 3 0

September 4 7 3 0 2

October 3 11 2 3 0

November 2 10 1 0 0

December 4 12 2 0 1

Total 44 84 24 16 12

Run ChartRun Chart

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Histrogram of Lost LuggageHistrogram of Lost Luggage

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Occurrences per Month

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Cause-and-Effect Chart for Flight Departure Delay (Fishbone Chart)

Equipment Personnel

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Aircraft late to gateLate arrival

Gate occupied

Mechanical failuresLate pushback tug

WeatherAir traffic

Late food serviceLate fuel

Late baggage to aircraft

Gate agents cannot process passengers quickly enoughToo few agents

Agents undertrainedAgents undermotivated

Agents arrive at gate late

Late cabin cleaners

Late or unavailable cockpit crewsLate or unavailable cabin crews

Poor announcement of departuresWeight and balance sheet late

Delayed checkin procedureConfused seat selection

Passengers bypass checkin counterChecking oversize baggage

Issuance of boarding pass

Acceptance of late passengersCutoff too close to departure time

Desire to protect late passengersDesire to help company’s income

Poor gate locations

DelayedFlightDeparture

Pareto Analysis of Flight Departure Delay CausesPareto Analysis of Flight Departure Delay Causes

Cause Percentage of Incidents Cumulative Percentage

Late passengers 53.3 53.3

Waiting for pushback 15.0 68.3

Waiting for fuel 11.3 79.6

Late weight andbalance sheet

8.7 88.3

FlowchartFlowchart Passenger Arrives

Ticket No Wait for For Flight Appropriate

Flight

Yes

Check Yes Excess Luggage Carry-on

No

IssueBoarding Pass

PassengerBoards Airplane

Scatter DiagramScatter Diagram

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Late Passengers

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Control Chart of Departure Delays

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Lower Control Limit

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Corporate Programs for Quality Improvement

Marriott Personnel ProgramsMarriott Personnel Programs Zero Defects (Crosby)Zero Defects (Crosby) Deming’s 14 Point ProgramDeming’s 14 Point Program Malcolm Baldrige Quality AwardMalcolm Baldrige Quality Award ISO 9000ISO 9000 BenchmarkingBenchmarking

Topics for DiscussionTopics for Discussion

Could firms in the “world-class service delivery” stage of competitiveness be described as “learning organizations?”

Contrast the philosophies of “continuous improvement” and “process reengineering.” Is there a role for both points of view in services?

Compare the philosophies of Deming (i.e 14-point) and Crosby (i.e. Zero Defects).

What are the limitations of “benchmarking?”

The Museum of Art and DesignThe Museum of Art and Design

Critique the WtA gap analysis.Critique the WtA gap analysis.Awareness of ExhibitsAwareness of ExhibitsInformationInformationExperienceExperienceVisitor HabitsVisitor HabitsFacilitiesFacilitiesLanguageLanguage

Could there be other explanations for the gaps?Could there be other explanations for the gaps?

The Museum of Art and DesignThe Museum of Art and Design

Make recommendations for closing the gaps Make recommendations for closing the gaps found in the WtA.found in the WtA.

How can the servicescape help in self-How can the servicescape help in self-selecting customers and employees?selecting customers and employees?

Mega Bytes RestaurantMega Bytes Restaurant

How is the Seven-Step Method (SSM) different How is the Seven-Step Method (SSM) different from Deming’s PDCA cycle?from Deming’s PDCA cycle?

Prepare a cause-and-effect or fishbone diagram Prepare a cause-and-effect or fishbone diagram for a problem such as “Why customers have long for a problem such as “Why customers have long waits for coffee.” Use Figure 18.17 as a guide.waits for coffee.” Use Figure 18.17 as a guide.

How would you resolve the difficulties that How would you resolve the difficulties that study teams have experienced when applying the study teams have experienced when applying the SSM?SSM?

The Seven-Step MethodThe Seven-Step Method

Step 1: Define the projectStep 1: Define the project Step 2: Study the current situationStep 2: Study the current situation Step 3: Analyze the potential causesStep 3: Analyze the potential causes Step 4: Implement a solutionStep 4: Implement a solution Step 5: Check the resultsStep 5: Check the results Step 6: Standardize the improvementStep 6: Standardize the improvement Step 7: Establish future plansStep 7: Establish future plans