Improving service quality: a tale of two operations

Citation

(2002), "Improving service quality: a tale of two operations", Measuring Business Excellence, Vol. 6 No. 1. https://doi.org/10.1108/mbe.2002.26706aab.003

Improving service quality: a tale of two operations

Our struggle is that in the service industry quality, consistency, reliability and improvement can be driven to a great extent by human factors that are very difficult to replicate between different facilities … Even with the same systems and equipment, the variance between similar operations can be staggering which is a very frustrating situation for us (Vice President for Distribution, US Fortune 1000 Service Organization).

While much of the fervor for total quality management (TQM) as a key organizational practice has died down in recent years, the need for quality improvement continues unabated in both the manufacturing and service sectors. The manufacturing sector learned some very painful lessons during the past 20 years about the necessity of improving product quality to remain competitive. In manufacturing, quality was once a competitive advantage. Today it has become more or less of a market segment mandate – improve your quality or run the risk of being driven out of business. While many TQM efforts still exist in manufacturing, they have frequently been absorbed or incorporated into reengineering activities, ISO 9000 practices, or continuous improvement initiatives as these processes integrate themselves into nearly every facet of manufacturing organizations.

Service organizations have all too often lagged behind many of their manufacturing counterparts in developing quality improvement systems for a host of reasons. These reasons frequently include the lack of competitive pressure, the difficulty in establishing and measuring quality, and the belief that human-driven delivery systems are more difficult to develop and regulate than the technologies associated with manufacturing. Yet, quality problems in the service sector are well-known and well documented in many industries. Restaurants make customers wait too long for food that may be cold or poorly prepared. Airliners have long waiting and departure lines for check-in and baggage pick-up. Hotel rooms are not always properly cleaned or maintained according to specified company standards. Long cycle times often exist for hospital emergency room patients in need of urgent care. Government agencies are frequently accused of being unresponsive and sluggish in providing critical human services. And, as the popularity of online shopping grows, orders can contain the wrong items or the items are damaged in transit. In spite of these common examples, the service sector continues to improve quality as competition heats up and organizations seek new competitive advantages.

The importance of applying TQM in the service sector can be seen by examining employment and dollar output statistics. In 1998, US service sector employment was more than five times that of manufacturing, 100.5 million people versus 18.8 million. By 2008, forecasts indicate that service sector employment will grow approximately 20 per cent from 1998 while manufacturing employment will remain relatively constant. In terms of dollars, service sector output in 1998 was almost double that of manufacturing, and this ratio is projected to hold through 2008 (Thomson, 1999). It is important to note that similar patterns in the service sector exist or are emerging in the UK, Canada, Germany, France, Italy and Spain.

The process of quality improvement in the service sector follows the same logical process used in manufacturing with some adjustments (Rosander, 1985). This quality improvement process typically includes:

• •

  defining quality;

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  developing quality standards;

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  measuring quality;

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  developing effective corrective-action procedures;

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  making changes to eliminate quality problems;

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  integrating all factors that affect quality.

Yet, one of the greatest problems facing service organizations is the fact that a host of quality problems can be driven by human factors that are not always as easy to identify and correct as a problematic production process. Deming (1982, 1986) consistently stated that lack of top management support and poor supervision will doom any quality effort. He also emphasized the need for all organizational employees to make a commitment to practice TQM on an ongoing basis. Juran (1993) emphasized that management needs to instill a philosophy of continuous improvement and provide the necessary supporting organizational practices. In some of our previous research, we have observed that an organization's TQM efforts can be severely undercut by such people problems as individuals not performing their jobs effectively, ineffective training, communication breakdowns, lack of teamwork, lack of worker involvement, and ineffective managers (Longenecker and Scazzero, 1993, 1996).

While human factors are important in all quality improvement, they are critically important in service industries. As seen in the opening quote from an executive in the distribution industry, "Even with the same system and equipment, the variance between operations can be staggering". This variance was very frustrating to the executive because the two operations were quite different in terms of the quality of the services they provided even though they had the same work environment, processes, and systems. In this paper, we will explore a case study of two nearly identical distribution operations that have significantly different levels of quality and performance. And, as the reader will see, the major differences are due to "human" rather than technological factors. A discussion will offer lessons for improving service quality based on this study.

The study

In this study, we will explore two nearly identical warehousing/distribution operations located in the Midwest area of the USA. Both operations are part of the same large organization that implemented a TQM process on a corporate-wide basis approximately four years prior to this study. Both operations use the same computer system, technology, measurement systems, equipment, and processes to fill and deliver customer orders to both commercial and retail accounts. Both operations handle the same product mix and have approximately the same number of personnel employed using the same human resource management system for all personnel issues governing selection, training, compensation, benefits and conditions of employment. It is at this point that the similarities end.

These warehousing operations receive customer orders that are filled by workers and loaded on to trucks for direct customer delivery. Distribution and warehousing operations frequently measure quality using four primary indicators:

1. 1.

   Completeness of order – was the customer order properly filled without overages or shortages?

2. 2.

   Damages – was the customer order filled completely without damaging the product in the storage, loading, and transit process?

3. 3.

   Service – did the order leave the facility on time, so it could be delivered punctually to the customer?

4. 4.

   Documentation – was the paper work accompanying the order properly completed, including an accurate manifest and invoice?

Collectively, these specific measures combine to determine the service organization's "quality of product". These measures are common performance standards in warehousing, distribution, and transportation industries.

In this study of two nearly identical operations, the variance on these critical quality measures was statistically different on all four quality measures. That is to say, one operation's quality of product was significantly better than the other operation's. A clear pattern of superior quality performance was demonstrated by one operation while the other operation's performance was problematic.

To explore why this difference existed, a 15-item questionnaire was administered to the workforces in both operations. Operation A, the high performing operation, had a response rate of 81 per cent (119 people out of 147 people) while operation B had a response rate of 76 per cent (103 out of 136 people). The questionnaire asked respondents a series of agree/disagree statements that assessed the degree to which the organization had implemented 15 key factors that have been found necessary to support ongoing quality performance and improvement.

Table I contains the agreement percentages for these factors at the two different locations.

Completed questionnaires were analyzed and tests of hypotheses were conducted to determine the factors whose agreement percentages at the two locations were statistically significantly different. In the following section, we discuss how different implementation of certain factors and practices resulted in a successful TQM effort at one location and a failure at the other.

Survey results

Table I ranks the key TQM quality factors by the differences in agreement percentages at the two locations. Ten out of the 15 factors were found to differ significantly after performing two-sample proportion tests of hypotheses using a level of significance of 0.01. In reviewing these factors, a number of critical observations are in order.

The factor that most differed in terms of implementation was teamwork/cooperation among management personnel. Approximately two-thirds of the workforce perceived management personnel working together at the effective TQM location, compared with only one-third at the ineffective TQM location. This result emphasizes the critical role of all management personnel when attempting to implement and sustain a TQM initiative. Without management support throughout the organization, any TQM effort is doomed to failure since workers will see such effort as external to the prevailing corporate culture. The importance of management commitment to quality is further illustrated by its use as a criterion when evaluating companies for the Malcolm Baldrige National Quality Award (Tamimi and Sebastianelli, 1998).

The responses to factor 6 show further evidence of the difference in management support for TQM. Approximately 80 per cent of the workforce at the effective TQM location stated that improving quality was an organizational priority compared with only 56 per cent at the ineffective TQM location. This difference in management commitment to TQM is also reflected in the responses to factors 4, 5, 7, and 10, i.e. having effective measures of quality, operating policies, corrective action procedures, and following up quality problems. As stated earlier in the paper, these are essential components for improving quality.

The survey results also highlight the importance of front-line supervision to the TQM process. As seen in the responses to factors 2, 3, 8 and 9, the successful TQM location had more effective supervision than the less successful location. A significantly higher percentage of workers at the former location reported the following factors as effective: two-way communication, feedback on performance, and workers cooperating with one another. These factors are all critical in a service organization whose performance depends so heavily on the human component.

In summary, several factors have been identified as contributing to the significant differences found in the TQM culture of two nearly identical warehousing operations of the same company. As discussed below, a number of important lessons can be drawn from these findings.

Implications for organizational improvement

The findings of this study offer a number of rather strong lessons for organizations anxious to improve the quality of their service product. Significant differences were found in ten out of 15 key practices necessary for quality improvement. These differences are quite common based on both our research and consulting experience with service organizations. Acting on these common patterns is a critical mandate for managers at all levels who are interested in improving service quality.

Lesson 1: Assess the effectiveness of your current practices that impact service qualityMature TQM organizations are well-served to survey management personnel on the issues identified in this study to assess their current perception of the organization's TQM processes and the consequences of these perceptions. Managers should be surveyed first to assess their belief in the TQM process and willingness to support this effort in both word and deed. Workers should then be surveyed to solicit their perceptions of the organization's TQM process to determine their support and confidence in the system. Such an audit allows the organization an opportunity to determine its location along the TQM continuum and provides input on what steps the organization must take to move forward in the TQM maturation process. The feedback garnered from this process can be an invaluable source of information and impetus for change while at the same time reinforcing desired behaviours.

Lesson 2: Management support and teamwork are critical to long-term quality improvementIt is a well-documented fact that management support is needed to initiate any TQM effort started. What is not always apparent is the necessity of the continued involvement and support of managers to keep TQM efforts viable. To this end, top management must make continuous improvement and cooperation an ongoing priority for all managers throughout the organization. Managers' roles and duties must be specified with continuous improvement as part and parcel of every manager's job description. Involvement on correction action teams, providing leadership on defining and refining quality standards, providing the resources necessary for improvement, developing and implementing feedback mechanisms, and coaching are all critical elements of a manager's job as a TQM leader. In service industries, there is no substitute for effective leadership on these critical practices. Managers must be selected, trained, promoted, appraised, and rewarded on their ability to foster continuous improvement in their areas of responsibility within the organization. Without this focus, as seen in this study, managers' enthusiasm and support for TQM will decrease over time, creating less than positive role models for the rest of the organization.

Lesson 3: People drive service quality Technical problems are generally dealt with early on in the TQM process. This study suggests that long-term improvement is predicated on systematically addressing the "human side of quality". As was previously discussed, workers at all levels need to be properly led by their superiors. Furthermore, workers need proper training to perform their jobs, to develop effective problem-solving/conflict-resolution skills, to develop effective communication skills, and to learn how to function in team-oriented cultures. In addition, employee input must be systematically tapped by managers on issues that impact both continuous improvement and the workplace. Feedback and coaching for the individual is paramount for overall TQM efforts to progress. Both practice and research demonstrate that workers are the key ingredients in long-term quality improvement and that they respond favorably when given proper support and leadership. The human element cannot be ignored or neglected without negative consequences.

Lesson 4: TQM systems must continuously improve TQM practicesService quality will be enhanced when an organization implements an effective improvement system. Yet, even the most effective system must evolve and mature in conjunction with the dynamic demands associated with changing organizational needs. This suggests that systematic approaches to long-term quality improvement must be periodically scrutinized and feedback provided to enhance quality improvement systems. To this end, corrective action procedures must be modified and streamlined, feedback mechanisms must be continually evaluated and improved, quality standards must evolve, and measurement procedures must be meaningful and cost-effective. Without adjustments, these TQM systems can hinder rather than help quality improvement and be perceived as barriers to improvement. In addition, technical improvements must be made to operating systems to keep them viable and technologically up to date. Negative consequences are inevitable for the organization that is guilty of not practicing continuous improvement of its TQM systems.

Lesson 5: There is no substitute for leadership in improving service quality performanceA number of introspective questions are in order for managers operating in a service organization that desires to improve its quality:

1. 1.

   Am I practicing continuous improvement on an ongoing basis?

2. 2.

   Am I encouraging my employees to practice the principles of TQM through my actions?

3. 3.

   Am I providing leadership in addressing ongoing/persistent quality problems?

4. 4.

   Am I providing leadership to improve our existing quality improvement processes?

5. 5.

   Are we using corrective action procedures and following up quality problems in an effective and efficient manner?

These are questions that TQM managers must be encouraged to address honestly on an ongoing basis. The answers to these questions are critical and represent the true test of an organization's leadership commitment to long-term continuous improvement. When two operations have nearly identical TQM systems, technology and processes, but differ significantly in their quality of product, a careful examination must be made of leadership and other human factors. This is no small challenge, requiring purpose, honesty, and openness.

Summary

Although this study was limited in scope, we believe a great deal can be learned by the comparison of two different facilities within the same large organization. Both facilities had the same infrastructure and systems but only one location had a TQM process that had a positive effect on service quality. Through workers' responses to a survey, several factors were identified as contributing to the difference in TQM. These include:

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  management support for TQM;

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  communication and teamwork between managers and workers;

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  effective supervision;

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  effective corrective action procedures; and

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  follow-up of quality problems.

The lesson for top management is clear as it relates to improving quality throughout any large-scale service organization. In order to compete strategically, an organization must make a commitment to provide the leadership, personnel practices, and resources needed to address the host of human issues that drive the process of service quality.

In the end, service organizations that want to improve quality and overall performance must give due diligence to both people and process issues.

Clinton O. Longenecker and Joseph A. ScazzeroThe University of Toledo, Toledo, Ohio, USA

References

Deming, W. (1982), Quality and Productivity and Competitive Position, MIT Center for Advanced Engineering Study, Cambridge, MA.Deming, W. (1986), Out of the Crisis, MIT Center for Advanced Engineering Study, Cambridge, MA.Juran, J. (1993), "Made in USA: a renaissance in quality", Harvard Business Review, pp. 42-50.Longenecker, C. and Scazzero, J. (1993), "Total quality management from theory to practice: a case study", International Journal of Quality & Reliability Management, Vol. 10 No. 5, pp. 24-31.Longenecker, C. and Scazzero, J. (1996), "The ongoing challenge of total quality management", The TQM Magazine, pp. 55-60.Rosander, A.C. (1985), Applications of Quality Control in the Service Industries, Marcel Dekker, New York, NY.Tamimi, A. and Sebastianelli, R. (1998), "The barriers to total quality management", Quality Progress, Vol. 31 No. 6,pp. 57-60.Thomson, A. (1999), "Industry output and employment projects to 2008", Monthly Labor Review, pp. 33-50.

This article originally appeared in Managing Service Quality, Vol. 10 No. 4, 2000, pp. 227-32, ISSN 0960-4529.