Service quality and

the concept of TQM

Service Management
Lecture 5
 Learning Objectives
• To define the service quality construct
• To examine the key components of the service quality
construct
• Identify those factors that influence consumer ratings of
service quality
• How do we measure service quality? - highlight a number
of the more prominent methods employed by the tourism
industry
• To understand the idea and meaning of TQM
• To clarify the main difference between traditional quality
management and TQM.
• To understand the role of ISO 9000 etc in TQM
 Why quality?
• Provides a focus for our efforts and a basis for
dialogue both within and outside the organization.
• Quality improvements can radically affect overall
organization performance.
• Revenues can be increased by better sales and
enhanced prices in the market.
• Cost can be brought down by improved
efficiencies, productivity and the use of capital.
Higher quality has a beneficial effect on both revenues and costs

Scan slack p. 539

Source: Slack et al (2005: 539)

 The cost of service (quality) failure
For every complaint received at HQ there are 19
customers who did not bother
It costs up to 10 times as much to gain a new
customer as to retain an existing one
A customer must have 12 positive experiences to
overcome ONE negative one
Companies spend 95% service time correcting
mistakes and 5% thinking about why they
happened
More than 50% of responses to customer
complaints make the situation even worse
(Bateson & Hoffman 1999:311)
 What is quality?
• Definition(s) of quality is multi-dimensional, Garvin (1988)
has identified ‘five approaches’ to quality:
1. The transcendent approach = innate excellence ...
2. The manufacturing–based approach = free of errors...
3. The user-based approach = fit for purpose...
4. The product-based approach = precise and measurable
characteristics to satisfy customers...
5. The value-based approach = cost and price
considerations...
 Which is the highest quality?
Swatch watch Rolex watch
 Quality - the operation’s view

Quality is consistent conformance to customers’ expectations

(Slack, et al, 2007: 539)
Demands that materials, facilities and process have been
designed and then controlled to ensure that the product or
service consistently meet an explicit specification using a
set of measurable product or service characteristics.

But an individual customer’s expectations may be different...

the operation's view of quality is concerned with trying to
meet customer expectations... this is a major challenge!
We need to understand the concept of customer
satisfaction and where quality shortfalls can occur...
 What is customer satisfaction?

Source: Johnston and Clark (2005, p. 105)

Customer satisfaction is the result of customers’ assessment of a

service based on a comparison of their perceptions of service delivery
with their prior expectations. There might be a gap here... We need to
understand what can create this gap...
The four potential quality gaps

Source: Slack et al (2005, p. 542)

 Diagnosing quality problems

• Gap 1: The customer’s specification operation’s specification

Perceived quality could be poor because there maybe a mismatch
between the organisation’s own internal quality specification and the
specification which is expected by the customers.

• Gap 2: The management concept organisation specification

Perceived quality could be poor because there is a mismatch between
the product or service concept and the way the organisation has
specified the quality of the product or service internally.

• Gap 3: The quality specification actual quality

Perceived quality could be poor because there is a mismatch between
the actual quality of the service or product provided by the operation
and its internal quality specification.

• Gap 4: The actually quality communicated image Perceived

quality could be poor because there is a gap between the
organisation’s external communications or market image and the
actual quality of the service or product delivered to the customer.
 Understanding how customers are satisfied

• Questionnaire and Surveys

• Focus Groups

• Customer Advisory panels

• New/Lost Customer Surveys

• Complaint/compliment analysis
 Total Quality Management (TQM)
• TQM is one of the best –known approach to continuous
improvement and has had a major impact on organisations by
putting the customer at the heart of quality decisions and
improvements.
• It concerns the development of an effective system for integrating
the quality development, quality maintenance and quality
improvement efforts of the various groups in an organisation so as
to enable production and service at the most economical levels
which allow for full customer satisfaction.
• Originally, quality was achieved by inspection - screening out
defects before they were noticed by customers.
• The quality control (QC) concept developed a more systematic
approach to not only detecting, but also treating quality problems.
• quality assurance (QA) widened the responsibility for quality to
include functions other than direct operations. It also made
increasing use of more sophisticated statistical quality control
techniques.
Source: Slack et al (1998: 765)
 A short history of (TQM) quality
• Origins of TQM go back to 1920s when statistical control was first
applied to product quality control. This was further developed in Japan
in the 1940s under the leadership of Americans such as Deming and
Juran – here the focus was widened from the quality of products to
the quality of all issues within an organisation – the start of TQM.
• The application of TQM principles underpinned the radical
improvement in the quality of the output of Japanese manufacturers.
• TQM arrives in the 1980s – in 1988 the Malcolm Baldrige Award is
developed in the USA – the model upon which the award is based is
seen as the first clearly defined and recognised TQM model.
• Today, the “new TQM” is often called Business Excellence –
essentially the same as TQM but with a more clearly defined
approach.
[See www.bpir.com]
 Two key foundations of TQM
• Customer Focus- The TQM philosophy is centred on
customers, meeting their expectations in order to retain
those customers and capture others, thus enhancing
profitability; and meeting the strategic needs of the
organisation.

• Total Involvement- TQM is based on a culture of

continuous improvement, which is shared and enacted by
everyone in an organisation, all working with a single
purpose of improving what they do.
 The nature of TQM
• TQM is an organizational approach that puts
quality a the heart of everything that is done by an
service operation and includes all the activities
within an operation.
• What makes TQM successful?
• Involves meeting the needs and
expectations of customers
• Covers all parts of the organizations
– For an organization to be truly effective, every single part of it:
each department; each activity; each person and each level,
must work properly together... every person and every activity
affects and in turn is affected by others.
• Involves every person in the organization
 Key characteristics of TQM strategies
According to the European Foundation for Quality
Management (EFQM):
1. Excellence of all managerial, operational and administrative
processes;
2. A culture of continuous improvement in all aspects of the business;
3. An understanding that quality improvement results in cost
advantages and better profit potential;
4. The creation of more intensive relationships with customers and
suppliers;
5. The involvement of all personnel;
6. Market-oriented organizational practices.
 The EFQM Excellence Model

Enablers Results

People
People Results

Key
Policy & Processes Customer Performance
Leadership Strategy Results
Results

Partnerships Society
& Resources Results

Innovation and Learning

Source: EFQM
 The quality system
A quality system is the organizational structure, responsibilities,
procedures, processes and resources for implementing quality
management (Slack et al., 2007: 661).
The quality system should define and cover all facets of an
organization’s operations, from identifying and meeting the
needs and requirements of customers, design, planning,
purchasing, manufacturing, packaging, storage, delivery and
service, together with all relevant activities carried out within
these functions. It deals with organization, responsibilities,
procedures and processes. Put simply, a quality system is good
management practice (Dale, 1993).
The improvement of quality in a service organization will not happen
purely from the commitment of everyone to think quality, but through
having a system and procedure(s) that prevent mistakes happening.
 The ISO
(The International Organisation for Standardisation)
9000 Quality System
• It is a set of worldwide standards that
establishes requirements for
companies’ quality management
systems. ISO 9000 is being used world-
wide to provide a framework for quality
assurance.
• By 2000 had been adopted by >250,000
firms in > 143 countries
• The purpose of ISO 9000 is to provide
an assurance to the purchasers of
products or services that they have
been produced in such a way that they
meet their requirements.
• Seeks to define the procedures,
standards, and characteristics of the
management control system which
governs the operation to ensure quality
is “built-in” to the operations process . www.iso.org
 ISO 9001 (2008)
Quality Management (QM) System: Requirements

• Substantially revised in
2000 and updated in
2008.
• Four key principles:
• QM should be
customer focussed
• Quality performance
should be measured
• QM should be
improvement driven
• Requires top
management
commitment
 TQM implementation –
success factors
• A quality strategy is necessary to provide the goals and guidelines
to help to keep the TQM programme heading in a direction which is
appropriate for the service organizations’ other strategic aims.
• Top-management support - confusion and doubt will arise from the
employees if the organisation’s senior managers do not understand
and show commitment to the programme.
• A steering group - the group/team decide where to start the
programme and who initially to involve and they are responsible for
monitoring the programme and making sure that all the learning and
experience, accumulated as the programme progresses.
• Group-based improvement - TQM is based on teams, normally a
‘quality circle’ will be implemented at the employee-level. At the
management-level might involve creation of ‘task forces’.
• Success is recognised- Recognising success formally stresses the
importance of the quality improvement process as well as rewarding
effort and initiative.
• Training is the heart of quality Improvement- training manager
involvement is critical.
 Reading List

Slack, N., Chambers, S. and

Johnston, R. (2007)
Operations Management 5E,
Harlow: FT Prentice Hall.
Johnston, R. and Clark, G.
(2005) Service Operations
Management: Improving
Service Delivery, Harlow: FT
Prentice Hall.

Video clip -
Continuous Improvement (Kaizen)
http://www.youtube.com/watch?v=Q89qAbAAR3Q 2009
 Tutorial – Weeks 6 & 7
 Read the Ritz-Carlton case study and prepare to
discuss the three questions listed at the end.
 This case is an excellent example of leadership
in the context of service quality.
 It outlines the process adopted to install quality
as a central focus within the organization.
 It highlights the crucial importance of employee
and customer engagement.