CH-5-6 Supporting Facility and Process Flows – Service Management: Operations, Strategy, Information Technology : Book Guide

This Document Contains Chapters 5 to 6 Chapter 5 Supporting Facility and Process Flows TEACHING NOTE The environment of the service facility is referred to as a servicescape that influences the behavior of both customers and employees. The design of the facility needs to consider several issues including nature of the organization, land availability, security, flexibility, and the neighborhood community. Being able to draw a process flow diagram is central to an understanding of service performance as measured by metrics such as throughput time. A distinction is made between a flow- and a job-shop process layout. The work allocation problem is shown as an opportunity to increase capacity in a product layout without a need to add personnel. The relative location problem is treated as a central issue in the design of a job-shop process layout. We have found that students enjoy applying the simple graphical techniques for work allocation and relative location problems, because good solutions require some imagination on their part. SUPPLEMENTARY MATERIALS Case: Shouldice Hospital Limited (HBS case 683-068) A hospital located in a Canadian suburb of Toronto provides the limited service of repairing inguinal hernias using a unique surgical technique developed by Dr. Earle Shouldice. The surgery, which is accompanied by an active recovery regimen at the resort-like facility, has proved very successful. Case: Transforming Singapore’s Public Libraries (HBS case 9-802-009) A reengineering effort has transformed Singapore’s public libraries to create a new experience for visitors to facilitate learning, exploring, and discovering in support of the national aim of becoming a “learning nation.” The success of the effort is quantifiable in terms of low capital cost, a modest increase in operating budget, a doubling of membership, and dramatically improved service standards (e.g. waiting lines, material availability, ease of access, and librarian help). LECTURE OUTLINE 1. Environmental Psychology and Orientation 2. Servicescapes (Figure 5.1) Behaviors in Servicescapes (Figure 5.2) Environmental Dimensions of Servicescapes 3. Facility Design Nature and Objectives of Organizations Land Availability and Space Requirements Flexibility Security Aesthetic Factors The Community and the Environment 4. Process Analysis Types of Processes (Table 5.1) Flowcharting (Figure 5.3 and Figure 5.4) Gantt chart (Figure 5.5) Process Terminology 5. Facility Layout Flow Process Layout and the Work Allocation Problem (Table 5.2, Figs. 5.6, 5.7) Job Shop Process Layout and the Relative Location Problem (Table 5.3, Figs. 5.8, 5.9, 5.10) TOPICS FOR DISCUSSION 1. Compare the attention to aesthetics in waiting rooms that you have visited. How did the different environments affect your mood? [This response was submitted by student Roger Bhalla] Answer: Waiting rooms tend to fall into two broad categories: ones that were designed specifically with the customer in mind and those that were installed solely out of necessity or as an afterthought. In fact some waiting rooms might be designed to keep people from wanting to wait in them! In every case, however, the aesthetics of the waiting area do affect the customer's mood. Some service providers do as much as possible to make the customers "feel at home" while they wait. Two examples of this situation that I have had were in professional offices. My dentist's office is designed with soft-colored wood paneling, green plants and pictures of peaceful settings that help the patient to relax. The dentist sees patients in an area far removed from the reception area to minimize the possibility of waiting patients hearing disturbing sounds. The second example is an office for a corporation of psychologists where I worked as a consultant. The waiting room is separated from the receptionist/sign-in area so that new patients are not overwhelmed immediately when several patients are already waiting. Pastel paper covers the walls and the chairs are very comfortable. The walls of another waiting area are covered with cartoons and the place is equipped with toys and child-sized furniture so children can enjoy an appropriate environment. Clearly, the goal of these practitioners is to minimize anxiety as much as possible, which is particularly laudable given the fragile mental state of many of their patients. On the other hand, I have had the oil in my automobile changed at two businesses that were not oriented toward the comfort of customers; a condition that I think might be intentional. At Kmart, four rigid plastic chairs are located behind a rail at the side of the service bays. The area is loud, dirty, and very unpleasant. In fact, the surroundings make you want to go into the store where it is cool and relatively quiet ... and where you can browse. This fact surely is not lost on the store managers. My other experience was at Qwick Lube which had three hard plastic chairs located in front of the store just 20 feet from the road. Qwick Lube's goal is to do the oil change within 15 minutes so perhaps the comfort of customers who wait such a short time is not important to the company. Perhaps management thinks the lack of a comfortable waiting space projects the appearance of a speedy operation. In waiting rooms I've visited, aesthetics varied significantly. A well-designed, comfortable waiting area with pleasing decor and amenities generally improved my mood by creating a more relaxing atmosphere. In contrast, a stark, outdated environment often felt stressful and uncomfortable, negatively impacting my overall experience and patience. 2. From a customer perspective, give an example of a servicescape that supports the service concept and an example that detracts from the service concept. Explain the success and failure in terms of the servicescape dimensions. [This response was contributed by student Mads G. Damstrup.] Answer: The airport in Copenhagen, Denmark, is laid out in a hub and spoke fashion that effectively groups services in much the same way that Shouldice Hospital in Toronto is able to do by grouping its operating theaters. The physical arrangement at Copenhagen Airport minimizes the distance that passengers will have to traverse between the various "fingers" and "ports." This factor is especially important for an airport that serves as a major hub for domestic flights and many international flights. The use of moving sidewalks minimizes the time and difficulty of moving around the facility. Copenhagen Airport's hub-and-spoke design allows all of the main services, such as information desks and the duty free shopping area, to be located centrally and in conveniently-accessible areas. The airport is designed with high ceilings and large windows that allow for natural light and a view of the airport operations. It is somewhat difficult to find examples of services where the servicescape is a failure because these services have an uncanny habit of disappearing! However, the best examples I can describe to illustrate failures are some of the old hospitals in Denmark. They tend to have long dark hallways connecting wings of the building and that were added incrementally as needs arose and finances permitted. Consequently, the distances from patients’ rooms to the central units, such as x-ray rooms and laboratories, increased with each new addition. Currently, several hospitals in this situation have been closed, razed, and replaced with new facilities that are brighter inside with windows overlooking trees and gardens. A well-designed, upscale hotel lobby supports its service concept by creating a luxurious, inviting atmosphere that aligns with high-quality guest expectations, enhancing overall satisfaction. Conversely, a cluttered, poorly maintained medical office detracts from the service concept by creating a stressful, unprofessional environment, undermining patient trust and comfort. The success or failure hinges on dimensions like aesthetics, layout, and cleanliness. 3. Select a service and discuss how the design and layout of the facility meet the five factors of nature and objectives of the organization, land availability and space requirements, flexibility, aesthetics, and the community and environment. [This response was contributed by student Ronald Anderson.] Answer: A visitor to Caesar's Palace in Las Vegas, Nevada, can see that every aspect of service design has been exploited. Caesar's objective is to attract customers to its casino and shops, to entertain them, to keep them there so that they leave as much of their money as possible, and finally return when they have refilled their pockets. The Caesar's complex has been designed to fill that mission. The exterior appearance is very inviting. The building has several entrances and moving sidewalks that transport customers inside as if they were parts on an assembly line. Customers are welcomed in several languages. A sign posts the day's winning up-to-the-second. Inside, the casino is laid out radially with a bar in the middle to minimize the distance between the bar and all of the gambling areas. Aisles form spokes out from the bar and they are lined with slot machines, game tables, and game machines. No space is wasted. Machines have buttons that allow customers to call for (more) change and bar-service without interrupting their gambling activities. Magnetic card readers that are mounted on the machines can track the number of games played by frequent guests and award them gift credits. Change booths that can handle special tasks, such as cashing travelers' checks, and restaurants are located around the perimeter. Careful attention also has been given to managing the departure of guests. First, leaving the premises is very inconvenient. The massive complex has only one nonemergency exit and most customers must traverse the entire casino to reach it. The doors are heavily tinted so that outside lights do not catch the attention of the people inside and lure them out. Outside, an attendant has a cab ready for the departing visitor as if to suggest that he or she doesn't need to go anywhere else on the strip. Caesar's is located on prime property in the center of the strip. Because available land on the strip is scarce, most of the establishment's expansion has been upward and it still has room for more development and flexibility. Changes in the attitudes of customers have reduced the demand for gambling, so Caesar's has added an upscale shopping mall to its complex. The stores, as well as the casino, are open 24 hours each day. The aesthetic environment has received much attention. The decorative theme of the casino was developed to make the customer feel like Roman royalty. Statues are positioned around the facility, live models pose in Roman garb, the red carpets are plush, and the high ceilings produce an illusion of an outdoor setting. Consider a modern fitness center. Its design meets the five factors as follows: Nature and Objectives: It supports health and wellness goals with state-of-the-art equipment and functional spaces. Land Availability and Space: Utilizes available space efficiently with dedicated areas for cardio, weights, and classes. Flexibility: Features movable partitions for adaptable workout spaces. Aesthetics: Incorporates contemporary design and natural lighting to create a motivating atmosphere. Community and Environment: Provides eco-friendly amenities and community programs, aligning with local values and promoting sustainability. 4. For Example 5.3, the Ocean World theme park, make an argument for not locating popular attractions next to each other. Answer: Ocean World deliberately avoids locating popular attractions next to each other in order to create a queue of customers walking between the exhibits. This avoids much congestion by dispersing the visitors around the whole park. Furthermore, the more area the visitors must cover in order to see their favorite attractions, the more likely they are to visit all of the attractions. Ocean Park's strategy might result in increased revenue because the visitors are induced to extend their time at the park. Locating popular attractions apart from each other in Ocean World can help distribute visitor flow more evenly throughout the park, reducing congestion and wait times. This layout encourages guests to explore different areas, enhancing their overall experience and preventing overcrowding in specific sections. It also allows for better crowd management and improves safety by avoiding bottlenecks. 5. The CRAFT program is an example of a heuristic programming approach to problem solving. Why might CRAFT not find the optimal solution to a layout problem? Answer: Heuristic programming is a systematic application of a simple rule of thumb to the solution of a problem. The idea is to search for better solutions in a sequential fashion. CRAFT exchanges departments in an effort to find improved layouts. However, only pairs of departments are exchanged and then not all possible combinations of layouts are investigated. The lack of a complete search means that the improved layout might not be the best layout possible. INTERACTIVE CLASS EXERCISE The class divides into small groups. One-half of the groups produce examples based on work experience with supportive servicescapes in terms of job satisfaction and productivity. The other one-half of the groups provide examples of poor serivcescapes in terms of job satisfaction and productivity. An overhead of Figure 7.2 from the text should be the focus for explaining the effect of servicescapes on job satisfaction and productivity. The analysis should begin from the left with Environmental Dimensions (i.e., ambient conditions, space/function, and signs, symbols & artifacts). Based on a “perceived servicescape,” the next stage is Psychological Moderators (i.e., cognitive, emotional, and psychological). Worker behavior should be noted (affiliation, exploration, stay longer, commitment, carry out plan). My own experience teaching at a California state college illustrates the effect of servicescape on job satisfaction and productivity. At this school, business faculty were given offices in a World War II wooden army barracks with a stand-alone restroom reminiscent of a state park facility. Teaching and administrative support (e.g., copying) were located a 100 yard walk up a hill. The weather generally was pleasant and everyone left office doors open, because the closed offices became small cells. The perceived servicescape was depressing even though the physical location was beautiful. This situation might have been one factor accounting for a relatively high faculty turnover. EXERCISE SOLUTIONS 5.1 Departure gate process flow diagram Delays could be avoided in the departure gate process, if passengers were required to test the size of carry-on luggage prior to their row being called. Some airlines use a metal frame for this purpose but seldom require the passenger to conduct the test. 5.2 Mortgage Service Process Revisited (now CT=60 min. for Title Search) (a) The bottleneck operation remains “Property Survey” with CT= 90 min. and, thus, system capacity of (60 minutes/hour)(1/90 minutes) = 2/3 applications per hour as before. (b) Rush order flow time follows the new critical path, Credit Report, Title Search, and Final Approval for a sum of 120 minutes. (c) If the same person performs both Credit Report and Title Search, then the combined CT= 105 min. This person now becomes the bottleneck and the system capacity is (60 minutes/hour)(1/105 minutes) = 0.57 applications per hour. 5.3 Automobile Driver’s License Office Revisited Question Figure Total Labor Content (Seconds) Process CT (Seconds) No. Workers Direct Labor Utilization (%) a 9.4a 195 60 6 54 b 9.4b 195 30 7 93 c 9.5 195 30 7 93 (d) Adding one worker and reallocating the tasks has almost doubled the labor utilization. 5.4 (a) Automobile Driver’s License Office Revisited Bottleneck activity is Activity 4, Conduct Eye Test Maximum capacity is 90 customers/hour (b) The bottleneck is shared by Activities 2, 3, and 6, and has a capacity of 120 customers/hour. This solution will require 3 cameras and 3 eye testing machines, because the first stage has 3 workers in parallel doing identical jobs that consist of 3 activities (1, 4, and 5). 5.5 (a) Physical Examination Bottleneck activity is Activity 2, Medical History Maximum capacity is 3 patients/hour (b) Improved layout: New capacity is 4 patients/hour Capacity is 4 patients/hour, provided we have a queue of patients, because for this arrangement, Activity 2, Medical History, is self-service and, also, only two nurses are required. Best layout New capacity is 4 patients/hour Note: For this arrangement, Activity 2, Medical History, can be self-service. 5.6 (a) School Cafeteria Bottleneck is Activity 3, Serve entree. Maximum capacity is 60 people/hour. (b) Capacity is increased to 90 people per hour and requires only 4 servers. (c) Make Activity 1, Serve salad and dessert, and Activity 2, Pour drinks, self-serve. 5.7 (a) Flu Vaccine Shots Bottleneck is Activity 4, Administer vaccination. Maximum capacity is 40 people/hour. (b) Bottleneck is Activity 2, Drug allergy consultation. Maximum capacity is 60 people/hour. (c) All activities are perfectly balanced with capacity is 80 people/hour. 5.8 (a) Ocean World Theme Park Revisited (b) A layout that maximizes the flow-distance for a theme park could lead to impulse visits to attractions located between major draws. For example, visitors might stop by the dolphin exhibit (C) on their way from visiting the sea lions (B) enroute to water skiing (D). The extra travel by visitors will keep people in the park for longer periods of time and lead to increased consumption of food and purchase of souvenirs. (c) The data in Table 5.2 was obtained from an existing theme park in San Diego, California, and thus, might not represent the visitor attraction flows for Waco, Texas, residents who live farther from the ocean. Furthermore, the hot-humid climate of Texas might result in visitors spending more time in sheltered attractions (e.g., killer whale) than visitors do at the California site. Also, water skiing might not have much attraction for central Texas residents, because they have ready access to many nearby lakes. 5.9 Second Best Discount Store Triangularized flow matrix 5.10 Convenience Store This layout has a negative six flow distance index that will place highly associated products next to each other. 5.11 Community College CASE: HEALTH MAINTENANCE ORGANIZATION (A) 1. Beginning with a good initial layout, use operational sequence analysis to determine a better layout that would minimize the walking distance between different areas in the clinic. Answer: 2. Defend your final layout based on features other than minimizing walking distance. Answer: The final layout shown below has many appealing features, the most obvious being the adjacent locations of “reception” and “waiting room.” Furthermore, “radiography” and “minor surgery” are placed appropriately in isolation at the opposite end of the building. CASE: HEALTH MAINTENANCE ORGANIZATION (B) 1. Identify the bottleneck activity, and show how capacity can be increased by using only two pharmacists and two technicians. Answer: Activities 1. Receive prescriptions 2. Type labels 3. Fill prescriptions 4. Check prescriptions 5. Dispense prescriptions Flow capacity is 30 patients/hour Flow capacity is 50 patients/hour Staff: 2 clerks, 2 pharmacists 2. In addition to savings on personnel costs, what benefits does this arrangement have? Answer: This solution allows the pharmacy to be staffed at half capacity by assigning only one team of clerk/pharmacist during low demand periods. During high demand periods another clerk/pharmacist team can be scheduled and paid on a part-time basis. CASE: ESQUIRE DEPARTMENT STORE 1. Use CRAFT logic to develop a layout that will maximize customer time in the store. Answer: Esquire is attempting to stimulate sales by changing the present layout in order to expose customers to more products. A layout that would encourage customers to walk through several departments on their way to a particular location might increase impulse buying. The cost of the move per unit per unit distance for all departments was set equal to 1. This effectively removes cost from the total cost calculation, which will then yield the total move-distance as the measure of customer exposure. The initial and final layouts are shown below and use the options of exchanging departments by pairs in order to maximize the move-distance. The solution was obtained using the personal computer software developed by Yih-Long Chang found in WinQSB: Software and Manual, John Wiley & Sons, 2002. 2. What percentage increase in customer time spent in the store is achieved by the proposed layout? Answer: The percentage increase in the aggregate time for customer exposure that results from the final layout is calculated below: 3. What other consumer behavior concepts should be considered in the relative location of departments? Answer: The marketing concept that increased exposure to products increases sales should be used in conjunction with other consumer behavior concepts that are determined by characteristics and attitudes of the consumer group to which the store caters. The way in which a particular layout affects the attitudes of customers is important and the customers' expectations must be considered. Several examples illustrate this point: • In an exclusive store that caters to an upscale clientele, related departments might need to be located near each other because these customers expect such a convenience. However, thrifty customers might be happy to do extra walking in exchange for bargain prices. • If the store caters to an elderly population, convenience might take priority over an increase in customer exposure. • The customer behavior trait of noticing other products while waiting at the checkout counter suggests that several check-out counters could be preferable to just one. • Management can use customers' needs for seasonal items to advantage by placing those items at the back of the store. • The attitudes and characteristics of customers who frequent stores in different locations should be considered. People who shop in a downtown store might be in a hurry because they need to return to work, whereas those who shop in a suburban mall might prefer a more leisurely experience. Such a factor affects the tolerance of customers for inconvenience. • Customers sometimes seem to buy more in a moderately crowded store where others also are buying items. Management can capitalize on this behavior by dispersing popular departments throughout the store and placing them in clear view of less popular departments. An exception to this strategy might occur in an exclusive department store where privacy and personal attention are highly valued features. • The number of floors and the customers' behavior patterns that are related to changing floors might affect the placement of departments. Other factors that influence the layout of the store include the number and locations of exits and entrances and the customers' needs for order, logic and a grasp of the spatial elements around them. CASE: CENTRAL MARKET 1. How do the environmental dimensions of the servicescape explain the success of Central Market? Answer: The environmental dimensions of “ambient conditions,” “space/function,” and “signs, symbols, & artifacts” can be found in Figure 5.2 the servicescape framework. Ambient Conditions: Central Market is an enclosed “cool” shopping environment unlike an outdoor farmers’ market that would be hot and uncomfortable in the Texas summer. Thus, shoppers tend to remain longer and purchase more. Food is kept at appropriate temperature to ensure quality and minimize spoilage. The aroma of fresh coffee and baked goods encourage impulse purchases. The large and colorful displays attract shoppers to stop and sample. Space/function: The “force flow” layout found in Figure 5.12 requires shoppers to visit every corner of the market with many opportunities to purchase more than intended. The sequence of the “force flow” also allows for memory jogging because items are placed in order of meal consumption. Signs, symbols, & artifacts: There are few signs, but the style of décor reinforces the feel of a European city market complete with concrete floors and stall-like displays. The experience of shopping becomes an escape to an older and simpler time and results in return trips and longer stays. 2. Comment on how the servicescape shapes the behaviors of both customers and employees. Answer: The servicescape framework of Figure 5.2 is applied to Central Market to explain its impact on customers and employees. For customers the environmental dimensions, in particular, the forced flow subtly directs shoppers through the market in a logical sequence. The perceived servicescape is an organized European city market resulting in a nostalgic and slow-paced shopping experience. Exploration, discovery, and staying longer is the desired behavior resulting in larger grocery sales. For employees, the environmental dimensions create a cool and colorful environment in which to work with many opportunities to interact directly with customers. Working at Central Market is less hurried and oriented more to fresh food rather than canned goods. Commitment to Central Market as a unique concept is strong leading to lower turnover of personnel. Chapter 6 Service Quality TEACHING NOTE The intangible nature of the service package requires a comprehensive approach to quality control that begins with service design and includes the attitudes, training, and motivation of service personnel. Our discussion begins with defining and measuring service quality using the SERVQUAL instrument. Students should be challenged to think imaginatively about devising measures of service performance. The idea of designing quality into the service process includes tools such as Poka-yoke or failsafing, and quality function deployment. A Walk-through Audit quality assessment tool is developed with an example. Achieving service quality begins with understanding the cost of quality and the use of statistical process control techniques. The chapter concludes with the topic of service recovery planning. SUPPLEMENTARY MATERIALS Cases: Club Med (A) and (B) (HBS case 9-687-046) (HBS case 9-687-047) Used together, these cases can stimulate a discussion of service quality measurement; cost of service quality; and they provide a basis for an analysis of ways to achieve quality. Case: Federal Express: The Money Back Guarantee (A) (HBS case 9-690-004) This case involves a professor who is unable to conduct an executive seminar at an island resort because the overnight package containing her presentation materials did not arrive. Distributing supplements (B), (C), and (D) sequentially during class provides an opportunity for student role-playing. Case: A Measure of Delight: The Pursuit of Quality at AT&T Universal Card Services (A) (HBS Case 9-694-047) As part of its overall strategy for “delighting” customers, Universal Card Services, a wholly owned financial services subsidiary of AT&T, has created a comprehensive quality measurement and compensation system. Through multiple measures of both internal process performance and external customer satisfaction, and by linking employee compensation to overall organizational performance, Universal Card Services attempts to achieve rapid identification of process problems, ongoing assessment of customer satisfaction, and motivation of employees to sustain high levels of customer service. Despite the company’s success, its management continues to struggle to balance the basic tensions that arise from linking compensation to performance measurement. Case: Westlake Cinemas: Designing a Service Guarantee (HBS Case 9-689-004) The CEO of a small chain of movie theaters grapples with the design of a service guarantee. She is faced with the following issues: assessing customer needs, defining the service offering, determining current organizational capabilities, and determining the role that a guarantee would play in competitive strategy. Deming’s Bead Experiment (see instructions at end of instructor’s manual) The Bead Experiment is a role-playing exercise that W. Edwards Deming devised to illustrate the extent of variability in a process that is beyond the control of the participants. The game also can be used to demonstrate the construction of a control chart for proportions. Instructions for this game are included in a separate section in this manual. LECTURE OUTLINE 1. Defining Service Quality Dimensions of Service Quality (Figure 6.1) Gaps in Service Quality (Figure 6.2) 2. Measuring Service Quality SERVQUAL (Figure 6.3) Walk-Through-Audit (Table 6.1 and Figures 6.4-6.6) 3. Quality Service by Design Incorporation of Quality in the Service Package (Table 6.2) Taguchi Methods (Figure 6.7) Poka-yoke (failsafing) (Table 6.3) Quality Function Deployment (Figure 6.8) 4. Achieving Service Quality Cost of Quality (Table 6.4) Statistical Process Control (Tables 6.5, 6.6, 6.7 and Figs. 6.9, 6.10) Unconditional Service Guarantee (Figure 6.11) 5. Stages in Quality Development (Figure 6.12) 6. Service Recovery (Table 6.8 and Figure 6.13) Approaches to Service Recovery Complaint Handling Policy TOPICS FOR DISCUSSION 1. How do the five dimensions of service quality differ from those of product quality? [Student Lisa Wildes submitted this response.] Answer: The five dimensions of service quality are tangibles, empathy, assurance, reliability, and responsiveness. Tangibles are the appearance of physical facilities, equipment, personnel, and evidence of care and attention to detail. Empathy refers to caring and individualized attention, while responsiveness refers to the willingness to help and the prompt delivery of service. Assurance deals with knowledge and courtesy of employees and their ability to convey trust and confidence. Reliability refers to service that is provided properly the first time and every time thereafter. The dimensions of quality that are associated primarily with products are performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality. The latter consideration, perceived quality, can be considered as encompassing all of the dimensions of quality related to service. Service quality is measured by comparing a customer's expected service, which comes from word-of-mouth, personal needs, and past experience, with his or her perceptions of the service. The measurement of satisfaction is based on whether the expectations were met, not met, or exceeded, so service qualities are difficult to measure individually or by collecting data. Product quality is different because many of the dimensions are tangible and, thus, can be measured directly or by collecting data. The assessment of service quality is made during the delivery of the service. The assessment of product quality, however, usually is made after the purchase. Customers of a service are the sole judges of its quality, but because many of the dimensions of product quality are tangible, the manufacturer can measure some of those dimensions for features and conformance even before the customer sees them. In general, the main differences between service and product quality arise from the variance in ability to measure the dimensions based on their tangibility, on who can judge the quality, and when the quality is judged. There is some overlap, however, as shown below: The middle section represents the overlap where quality can be assessed during and after the process and where the measurement is more tangible than in the top section. The five dimensions of service quality—reliability, assurance, tangibles, empathy, and responsiveness—focus on the service experience, emphasizing aspects like consistency, staff competence, and customer interaction. In contrast, product quality dimensions—such as durability, performance, and features—focus on the physical attributes and functionality of the product. Services are more subjective and reliant on human interaction, while products are assessed based on measurable characteristics and performance. 2. Why is measuring service quality so difficult? Answer: Service quality is difficult to measure because the outputs of many services are intangible or subject to individual judgments. Ultimately, the measure of service quality is a measure of customer satisfaction. But, customer satisfaction is a measure of the discrepancy between the customer's expectations before the service is delivered and his or her perceptions of the service that is delivered, which are both subjective evaluations. A measurement tool called SERVQUAL attempts to deal with this difficulty by tracking service quality trends by measuring the gaps between customer expectations and perceptions. Surrogate measures such as customer waiting times and the number of customer complaints can also be used to assess customer satisfaction and service quality. In addition to the difficulties in measuring the quality of outputs, service organizations face another important problem related to quality. Because services usually are provided and consumed simultaneously, there seldom is enough time to remedy an incidence of poor service before the customer is involved in the process. 3. Illustrate the four components in the cost of quality for a service of your choice. [Student Ron Chovanec provided this answer.] Answer: Service firms face four costs of quality: internal failure, detection, prevention, and external failure. The United Way*Capital Area is an Austin, Texas, human service organization that must deal with combinations of these costs. The costs of internal failure cause the organization to lose valuable time, which otherwise could be used for more productive activities. At the United Way, these costs include the time to rework tasks that had previously been done improperly by staff members and volunteers. Detection costs might be termed quality control costs and are necessary and prevalent in all industries. At the United Way, peers, superiors, or volunteers review all work before it is sent out of the office. These reviews are designed to ensure that only quality work makes it into the public realm in order to avoid external failures. Prevention costs arise from the effort to avoid making mistakes more than once. Two costs of prevention involve the implementation of a quality system and the examination of materials brought in by outside sources. United Way incurs additional prevention costs by conducting evaluations of continuing programs as a way of preventing repetition of problems. External failure costs occur when mistakes are made outside of the company walls. Such mistakes can be very expensive and sometimes devastating to an organization. External failures cost United Way in three ways: a reduction in contributions, dissatisfaction among the member agencies, and a reduction in numbers and satisfaction of the volunteers. For a restaurant, the four components of the cost of quality are: 1. Prevention Costs: Training staff in food safety and service standards to prevent errors. 2. Appraisal Costs: Inspecting and taste-testing dishes to ensure they meet quality standards. 3. Internal Failure Costs: Costs incurred from re-making dishes due to mistakes or quality issues. 4. External Failure Costs: Expenses related to handling customer complaints or refunds due to unsatisfactory service or food. 4. Why do service firms hesitate to offer a service guarantee? [Student Iain Burchell contributed this response.] Answer: There has been a great deal of hesitation in offering guarantees within the service sector. The concerns of management are based largely on naive assumptions that, in practice, generally are not true. First, the main concern of management seems to be that if a guarantee were offered, the organization would be cheated out of its livelihood. Such sentiment assumes that all customers are inherently dishonest and would take unfair advantage of the guarantee. In practice, however, that fear has not been supported. In fact, although some customers have abused a guarantee policy, the increased customer confidence and goodwill that have been generated have outweighed the cost of the abuses. A second major concern is that a guarantee will lead to a large increase in costs. Organizations are likely to incur modest additional costs when a guarantee is first offered, but generally these costs are offset quickly by the increased business that results from repeat customers and customer referrals. Third, some managers who overlook the costs of service quality failures think that guarantees are unnecessary. But, a service guarantee forces management to improve the quality of the service, which will reduce the incidence of failures and their costs. A fourth area of concern arises when management believes that most failures are beyond its control, and therefore, a guarantee would serve no purpose. The classic example of this situation can be seen in the airline industry where weather and traffic controllers cause most delays. However, for many travelers it is not the delay itself that causes distress, but how the airline personnel treat them during the delay. Passengers who are kept informed of the reasons for the delay and are treated well by airline representatives will be less likely to invoke a guarantee than will passengers who are ignored or abandoned by their carriers. Some firms that have established a reputation for delivering "perfect" service believe a service guarantee would be counterproductive. They think a guarantee would imply that they "might" make a mistake. A final concern arises particularly in organizations that have a large number of employees. In these cases, management may believe that because the employees are fallible, it would be suicidal to offer a guarantee. However, Deming's view is that it is the company's processes that fail, not the employees. Properly trained employees will enhance the value of a service guarantee. A well-run and quality-oriented service firm should regard a service guarantee as a tool to improve its quality and its profits. Service firms often hesitate to offer a service guarantee due to concerns about increased liability and the potential for abuse by customers. They may fear that guarantees could lead to higher costs from refunds or service adjustments. Additionally, it can be challenging to ensure consistent service quality across all interactions, making it difficult to uphold the guarantee effectively. 5. How can the recovery from a service failure be a blessing in disguise? [Student Roger Bhalla provided this response.] Answer: Recovery from a service failure can have several rewards. First, as part of the recovery process, management can reassure the customer that "if anything ever goes wrong in the future, we will take care of you." After such reassurance, the customer might be even more loyal to the organization and this could mean additional business in the form of referrals by the satisfied customer. Second, the recovery process lets management identify and correct weaknesses in its delivery system. Most dissatisfied customers do not report problems, so management should regard feedback from unhappy customers as a source of valuable information. The feedback allows management to satisfy the customer, prevent similar failures in the future, and to train employees in facilitating future recoveries. If a failure results from a discrepancy between the customer's expectations and his or her perceptions of the service, a recovery from the failure can be approached in different ways. One way is to educate the customer and another way might be to change the method of delivering service. For example, a hotel might place self-service luggage racks in its lobby, but unless customers are made aware that the racks are available, the customers might be upset by the lack of assistance from bellhops. The hotel management can create a recovery simply by posting signs that the carts are available for the customer's convenience. Management that handles the recovery process properly can lower the cost of delivering a quality service by reducing failure costs. Prevention costs might also decline, because well-trained employees require less supervision. Recovery from a service failure can be a blessing in disguise by offering an opportunity to demonstrate exceptional customer service and rebuild trust. Effective resolution can turn a negative experience into a positive one, potentially enhancing customer loyalty and satisfaction. Additionally, addressing failures constructively provides valuable insights for improving overall service quality and operational processes. INTERACTIVE CLASS EXERCISE The class breaks into small groups. Each group identifies the worst service experience and the best service experience that any member has had. Return to class and discuss what has been learned about service quality. First have the student groups report on their worst and best experiences. Then focus the discussion on the general observations they can make about service quality. The five dimensions of service quality should surface. Display Figure 6.3 the service quality gap model and discuss its relevance to the quality experiences. Finally, the importance of service recovery should be identified. EXERCISE SOLUTIONS 6.1 Expectation Importance Training Attitude Capacity Information Equipment Reliability 5 8 5 5 Responsiveness 5 3 9 3 2 Assurance 5 5 9 6 Empathy 5 7 Tangibles 5 2 3 Score 90 80 45 70 50 Training remains the most important service element. 6.2 For a sample size of 8, the following -chart control limits are determined: A run of seven observations falling above the average of 5.0, three of which are above the UCL, suggests that the process is out of control. Evaluate the situation and take corrective action. 6.3 (a) Service time, sec. Maid Sample 1 Sample 2 Sample 3 Ann 120 90 150 Linda 130 110 140 Marie 200 180 175 Michael 165 155 140 153.75 133.75 151.25 R 200-120=80 180-90=90 175-140=35 Control limits for mean: Control limits for range: (b) Sample mean: = (185 + 150 + 192 + 178)/4 = 176.25 Sample range: R = 192 - 150 = 42 Process is in control, no action is needed. 6.4 (a) Service time, sec. Service person Sample 1 Sample 2 Sample 3 Sample 4 1 200 150 175 90 2 120 85 105 75 3 83 93 130 150 4 68 150 145 175 5 110 90 75 105 6 115 65 115 125 116 105.5 124.17 120 R 200-68=132 150-65=85 145-75=70 175-75=100 Control limits for mean: Control limits for range: (b) Sample mean: = (180 + 125 + 110 + 98 + 156 + 190)/6 = 143.17 Sample range: R = 190 - 98 = 92 Process is in control, no action is needed. 6.5 6.6 Month Congestion Incidence Rate per Month J 14 .014 F 18 .018 M 14 .014 A 12 .012 M 16 .016 J 8 .008 J 19 .019 A 12 .012 S 14 .014 O 7 .007 N 10 .010 D 18 .018 Total 162 .162 (a) (b) The system is in control because congestion rates of .015, .009, and .011 are within the quality control limits. 6.7 (a) (b) The expected number of wrong test results (c) p = .10 is above the UCL, therefore the system is out of control. 6.8 (a) (b) p = 4/20 = .2, therefore, the service quality is within the required limits. CASE: CLEAN SWEEP, INC. 1. Prepare an -chart and R-chart for complaints, and plot the average complaints per building for each crew during the 9-month period. Do the same for the performance ratings. What does this analysis reveal about the service quality of CSI’s crews? Answer: For a sample size of 10 buildings, the following -chart control limits for complaints are determined: The following R- chart control limits for complaints are: Figure1 Control Chart for Complaints We can see from Table 1 and the complaint control chart shown in Figure 1 that the overall quality of Clean Sweep's service is poor, particularly in the first four months and for crews 2 and 3. The average monthly complaint rate, however, is declining, beginning with a 3.5 average for the first month and ending with a 1.4 average for the nine-month period. For a sample size of 10 buildings, the following -chart control limits for performance ratings are determined: The following R- chart control limits for performance ratings are: Figure 2 Control Chart for Performance Rating We can see from Table 2 and the control chart for performance rating in Figure 2 that the overall performance of Clean Sweep's service is poor, particularly in the first four months and for crews 2 and 3. The average monthly performance rating, however, is improving beginning with a 5.3 average for the first month and ending with a 6.4 average for the nine-month period. 2. Discuss possible ways to improve service quality. Answer: The quality of Clean Sweep's service is not consistent for all of the crews. As indicated in Tables 3 and 4, crews 1 and 4 have average rating and complaint rates that are far superior to those of crews 2 and 3. This inconsistency compromises Clean Sweep's contract with the building management because the poor performance of some of the crews might draw complaints from the building tenants. Clean Sweep's quality problems can be divided into three categories: • Lack of consistency among the crews • Unbalanced division of work among the crews • Little positive incentive for quality work The nature of Clean Sweep's work is routine and simple. Although some activities might require practice, operating a floor polisher for example, it is reasonable to expect that lack of skill is not an important component of the quality problem. Clean Sweep can be regarded as a functionally specialized organization, so it can use control methods that center on decision rules, policy, standard operating procedures (SOPs), and work scheduling. Techniques such as developing specific cleaning procedures and standards, devising cleaning schedules, establishing policies on the amount of employee involvement in break and lunch decisions, assigning crew members to specific jobs may improve the consistency and quality of the service. Table 5 suggests a reallocation of the floor space and a reassignment of crews to particular work locations. The new assignments offer several advantages. First, the floor space-to-worker ratio is much more equitable. The total workload for crews 2 and 3, which have had the lowest performance ratings and highest number of complaints, has been reduced from 55 percent of the total floor space to 44 percent. This factor alone might increase the quality of service that those two crews deliver. The new arrangement also reduces the number of workers needed by one person, but this does not mean an inevitable reduction in quality. We see that the present assignment for crew 4 is almost the same as its original assignment when it had the highest quality rating of all the crews. Assuming that crewmembers are paid a minimum wage of $4.25 per hour, the annual savings of reducing the staff by one member would be $8500 (excluding the savings from the company contributions for taxes and benefits). This money that is saved could be used as an incentive to the crews for improving the quality of their work. For example, a monthly bonus could be awarded to the members of the crew that had the highest rating-to-complaints ratio with the caveat that such a plan also has some disadvantages. Consider the impact if a particular crew regularly out-performs the other crews. 3. Describe some potential strategies for reducing CSI's staffing problems. Answer: Several elements of the recommended design should improve Clean Sweep's staffing problems: • Consistent procedures for cleaning • Fair division of work load • Potential for earning bonuses • Reduction of work load for the two crews that received the lowest ratings and highest number of complaints A regular bonus system and the redesigned job descriptions shown below could improve relations between the crewmembers and leaders: • Setting policies regarding crew supervision, remedies for noncompliance with quantifiable work standards, employee evaluations, lunch and break times, division of labor, and disciplinary procedures • Conducting on-site inspections by the crew supervisor to view the work in progress for compliance with established policies • Allowing each crew leader to name an "assistant crew leader" and to reward the top two crew members with appropriate raises in order to convey a sense of career movement and monetary advancement A plan in which seniority is factored into the decisions about promotions and raises will encourage staff members to stay with the firm, thereby reducing the high turnover rate. The hiring and training of new workers is very expensive, so a reduction in the rate of employee turnover is very attractive. Any savings realized under this plan could be returned to the quality improvement program. CASE: THE COMPLAINT LETTER 1. Briefly summarize the complaints and compliments in Dr. Loflin's letter. Answer: Complaints: • Had to ask repeatedly for such things as salads, entrees, water, rolls, and butter. • Had to wait much too long for cocktail waitresses, drinks, salads, entrees, water, rolls, and butter. • Had to endure rude treatment from the cocktail waitress and waiter and inept service from an untrained waiter's assistant. • Received a level of service that was not commensurate with the cost of the meal. Compliments: • The food was excellent. • The atmosphere was very pleasing. 2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? Answer: Strengths: • She put much time and effort into her response, acknowledged Dr. Loflin's concerns, and thanked him for his feedback. • She communicates on a professional-to-professional basis and conveys a sense of sympathy rather than antagonism. • She does not deny or dispute Dr. Loflin's claims. Weaknesses: • Many of her comments in which she complains about how hard it is to get good help seem self-serving. • She offers no plans for correcting the situation; consequently Dr. Loflin cannot feel confident that he will receive better service if he should return. • She doesn't offer Dr. Loflin any enticements, such as free desserts, with his next meal. 3. Prepare an "improved" response letter from Gail Pearson. Answer: [The material related to this case is reprinted from Martin R. Moser, "Answering the Customer's Complaint: A Case Study," The Cornell H.R.A. Quarterly, May 1987, p. 15, The Better Letter by Darryl Forrester. * Cornell HRA Quarterly. Used by permission. All rights reserved.] [Darryl L. Forrester, manager of the Weekapaug Inn, a seasonal resort in Weekapaug, Rhode Island, wrote this response.] Dear Dr. Loflin, Your letter of October 13, 1986, was most troubling, because it accurately pinpointed our greatest deficiency: lack of consistency. The comments made to your party by our wait-staff that night are totally inexcusable under any circumstances. It is our job to provide a wonderful dining experience - beautiful surroundings, excellent food, and excellent service - and in this instance we have fallen far short of the mark. I ask you to please accept my sincere apology. More than that, I also want to thank you for taking the time to write the letter. Your letter was, in a way, the straw that broke the camel’s back. It shocked me out of my complacency and propelled me into a reevaluation of the recruitment and training of our service staff. Unfortunately, we have so far concentrated primarily on finding and training an excellent chef and assistants, while paying only lip service to training our service staff. Your letter actually confirmed a situation I had suspected (but ignored) some time ago. We have begun a total restructuring of our staffing program. Though we do not expect overnight miracles, I can personally guarantee that no guest of ours ever will have a repeat of your awful experience here. I have saved your letter and read it in weekly staff meetings as a training tool to demonstrate unacceptable wait-staff behavior. Realizing that that evening cannot be brought back, I fully understand your predisposition not to return. While we cannot change the past, I do hope that you will give us another chance. Our food is better than ever, and the difference in attitude and service of our wait-staff really makes dinner at the Retreat House the delightful experience it should be. Your contribution to the Retreat House has been great, and we would like to have the opportunity of demonstrating our appreciation for your help. 4. What further action should Gail Pearson take in view of this incident? Answer: • Motivate the employees to deliver good service by giving them a sense of ownership (if not the real thing, then in some form of profit sharing). • Train employees better. • Use Dr. Loflin's letter as part of the training process. • Institute a service guarantee. • Provide the employees with monetary incentives for excellent service. CASE: THE HELSINKI MUSEUM OF ART AND DESIGN [Students Tahseen Ahsan, Deanna Draper, and Bruce Fulton provided this case analysis.] 1. Critique the WtA gap analysis. Could there be other explanations for the gaps? Answer: A walk-through-audit "can be a useful management tool for the systematic evaluation of a customer’s view of the service being provided." Such an audit was conducted by a group of MBA students from the Helsinki School of Economics and Business Administration for the Helsinki Museum of Art and Design. This audit identified several areas of diverging service perceptions by museum staff and customers. One of the most important gaps identified by the audit dealt with customers' likelihood of visiting the museum again and customers’ expectations of recommending the museum to friends. Both measures represent overall visitor satisfaction with museum services. The average rating of their own expectations for a repeat visit as 2.8 out of 5 and of the likelihood that they would recommend the museum to others as 2.2. Management and staff who responded to the same statements as if they were customers, however, rated the likelihood of a repeat visit 3.4 and 3.8 ratings, respectively, and they gave the notion of recommending the museum to other ratings of 3.2 and 2.8. The walk-through-audit analyzed various services offered by the museum individually, identifying possible causes for the overall service perception gaps. The Helsinki Museum specializes in design and industrial art focused primarily on Finnish design. It hosts three to four major exhibitions per year with a number of smaller exhibits and a private collection. Museum facilities include a private cafe and gift shop, as well as exhibition areas. The museum does not maintain its own Web site at this time. The walk-through-audit surveyed museum customers, employees, and managers. Six elements of museum services were analyzed for service gaps. These included awareness of exhibits, information, exhibit experience, visitor habits, facilities, and language (i.e., of posted information). Museum staff and visitors had similar perceptions concerning the appropriate level of interactivity of the exhibition experience, as well as the language in which museum information should be provided, primarily in Finnish and Swedish. However, customers indicated that lighting, background noise, and music were more important elements of the service than the staff perceived, thereby indicating that staff should be more aware of these items. The audit uncovered a positive gap concerning the museum's facilities. Visitors had much higher perceptions of the facilities than did the museum staff. In a series of eight questions concerning restrooms, the gift shop, and the restaurant, customers gave an average rating of 2.7, while managers and staff gave these same questions ratings of 0.8 and 1.6, respectively. The audit concludes that this gap may be the result of the museum staff anticipating higher visitor expectations of services than visitors themselves have. However, we certainly believe that the museum staff should still focus on improving customer satisfaction with these services. Customers still gave these services relatively low scores, less than a “not sure.” Additionally, this is an area of services that can be managed most easily by the staff. The questions focused on the cleanliness of restrooms, the quality of food, the price of both food and gift items, and the signs locating these facilities. Therefore, even though customer expectations perhaps exceed those of the staff, improving these services could be an easy and relatively inexpensive means for improving customers’ overall experiences. Perhaps management should spend some time comparing its own facilities to those of comparably sized museums, ascertaining menu item ideas, gift pricing, and identifying facilities with signs to ascertain customer expectations better. Finally, it would certainly be important to investigate further the gap between management and employee perceptions of these services. Managers gave significantly lower ratings than employees and if management is that dissatisfied with the level of these services, it certainly should be attempting to bring employee services in line with their own expectations. The WtA (What the customer wants vs. What the organization actually delivers) gap analysis at the Helsinki Museum of Art and Design may reveal discrepancies between visitor expectations and museum offerings. Other explanations for these gaps could include inadequate understanding of visitor needs, communication breakdowns, or limitations in resource allocation. It's crucial to consider external factors like changing visitor preferences or economic conditions that might also contribute to these gaps. 2. Make recommendations for closing the gaps found in the WtA. Answer: The audit uncovered two important marketing perception gaps. First, the museum staff believed that word of mouth played the largest role in visitor awareness, however, visitors ranked this method last. This is reflected by customers' low scoring of the statement that they would recommend the Museum to friends, only a 2.2, compared to management and employee scores in this category of 3.2 and 2.8 respectively. Additionally, the museum staff also thought radio was much more influential in customer awareness than it actually was. In fact, the staff felt as if newspapers played the least role in customer awareness, when it actually caused the greatest amount of customer awareness according to customers. Therefore, the museum should focus more of its resources on newspaper coverage of its events. Additionally, improving customers’ overall perceptions of their experiences as discussed below will likely increase the amount of customer awareness generated by word of mouth. [Since this study was done, online resources have surely replaced newspapers as a source of information about museum events.] The second marketing gap identified by the audit concerned visitor behavior. Museum staff indicated that they believed most visitors came alone and viewed all of the exhibits while they were there. However, according to customer responses, large numbers of visitors came in groups of twos and threes and only 38 percent of visitors saw all of the exhibits. The audit concluded that different exhibits drew different audiences. This might represent an opportunity to capture visitors who return each time the exhibits change. With four new exhibits a year, the museum has the potential of creating a substantial group of highly profitable customers, if the overall service experience improves. Finally, only 13 percent of customers visited the museum's permanent collection. This might be caused by the problems discussed below concerning the low ratings given to the ease of navigating the exhibits. If visitors cannot locate the permanent collection, the museum layout might unintentionally cause customer self-selection of this exhibit. Improving service facilities in these areas might make it easier for visitors to find the permanent collection and increase the number of visitors. Conversely, it might only be a signal that many of these visitors are repeat visitors and have already viewed the permanent collection, an important distinction that should be investigated further. The most important individual service gap identified by the audit concerns the amount of information available to visitors. The museum staff had much higher perceptions than customers of how available staff people actually were to customers. Conversely, the staff had much lower perceptions of the clarity and adequacy of information and explanations about exhibited information than did customers. Additionally, all three groups rated the services in this category very poorly. Overall, in this category, customers gave these questions an average rating of 1.4, employees gave them a 1.8 rating, and management gave them a 0.9 rating. The audit concluded that museum personnel were much harder to locate than they themselves believed and that customers preferred human information sources to print or audio information. These rational conclusions indicate a need for more identifiable uniforms for museum personnel and possibly for instituting more guided tours by museum personnel or perhaps even by volunteers and design professionals. All three groups of respondents gave low ratings to the ease of navigating the facilities. Generally, there were not enough signs concerning the location of exhibits and insufficiently clear passages for visitors to follow through the exhibits. These problems with the service scape might also be the cause of the perception gaps in the availability of museum staff. Staff might be on-hand and ready to answer questions, but visitors might have trouble locating them. Additionally, customer frustration with getting lost in an exhibit might exacerbate perceptions of inadequate staffing. Because the museum has recently undergone significant renovations, actual physical alterations such as the addition of an entry atrium, are unlikely to be feasible. Smaller changes, like color coding rooms or enlarging signs with room numbers on them accompanied by easy-to-read printed maps would help to alleviate problems in this area. Again, however, customers indicated a greater preference for human contact, so efforts to address this problem should include increasing staff visibility and, to the extent possible, increasing the number of staff throughout the exhibits themselves. Such an effort might only require repositioning existing staff or might include the introduction of a museum “docent” volunteer program, which would allow students and other volunteers to act as information sources throughout the exhibits. Finally, the museum might want to investigate the economic viability of lowering ticket prices. All three groups of respondents strongly disagreed that the ticket price is a good value for the money. Because “delivery of a service should conform to the customers' expectations from the beginning to the end of the experience,” a high-ticket price might be raising customer expectations beyond what reasonably can be filled by the museum. If a lower ticket price is not feasible for the Museum, other means of increasing customers’ perceived value in museum services must be addressed. Addressing the service gaps identified by the walk-through-audit should aid the Museum in increasing overall customer satisfaction. Solution Manual for Service Management: Operations, Strategy, Information Technology James A. Fitzsimmons, Mona J. Fitzsimmons 9789339204471