QUALITY ASSURANCE / QUALITY

MANAGEMENT IN SERVICES
Books:
1) Total Quality Management
by
Dale H. Besterfield; Carol Besterfield-Michna, Glen H.
Besterfield, Mary Besterfield-Sacre.
2) Managing Quality
by
Barrie G. Dale, Ton van der Wiele and Jose van Iwaarden
3) Service Management
by
James A. Fitzsimmons & Mona J. Fitzsimmons 1
 COURSE CONTENTS
i. Basic concepts of Quality
– Introduction of quality, quality control, quality
assurance, quality management, total quality
management, transformation from quality control to
quality assurance.
ii. Quality Philosophies
iii. Eight Quality Principles
iv. Customer Focus
– Type of Customer, customer satisfaction, customer
satisfaction measurement
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 COURSE CONTENTS
iv. Customer focus
– Type of customer, customer satisfaction, customer
satisfaction measurement.
v. Continuous improvement
– Kaizen Japanese 5S house keeping system, plan do act
cycle (PDCA), six sigma,
vi. Business considerations
– Cost of quality, business process re-engineering,
benchmarking, waste reduction.
vii. Reliability engineering
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 DEFINITION
• Total quality management is an enhancement
to the traditional way of doing business;
• Three words may be analyzed as follows:
– Total: made up of the whole;
– Quality: degree of excellence a product or service
provides;
– Management: Act or manner of handling,
controlling and directing.
Therefore, TQM is the art of managing the entire
organization to achieve excellence.
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 DEFINITION
• TQM is defined as both a Philosophy and a set of
guiding Principles that represent the foundation of a
continuously improving organization.
• TQM is applied to improve all the processes within an
organization to meet and even exceed customer
needs.
• TQM combines fundamental management tools,
existing improvement efforts and technical know
how in a disciplined and organized manner.

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 THE WORD “QUALITY” HAS MANY
MEANINGS
• A degree of excellence;
• Freedom from defects, imperfections;
• Conformance with requirements;
• Fitness for use and intended purpose;
• Totality of characteristics of an entity that
bears on its ability to satisfy stated or implied
needs;

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 THE WORD “QUALITY” HAS MANY
MEANINGS
• The expression “Quality” is often considered in
terms of an excellent product or service that fulfills
or exceeds our expectations. Therefore, when a
product exceeds our expectations, we consider it
of good quality. This is based on perception.
However, quality can also be quantified as follows:
• Q = P/E
where Q = Quality, P = Performance,
E = Expectations

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 QUALITY DEFINITION AS PER ISO 9000
STANDARD
• It is defined as the degree to which a set of
inherent characteristics fulfills requirements.
• Degree means that quality can be used with
adjectives such as poor, good, and excellent.
• Inherent is defined as existing in something
specially as a permanent characteristic.

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 QUALITY DEFINITION AS PER ISO 9000
STANDARD
• Characteristics can be qualitative or
quantitative.
• Requirement is a need of expectation i.e.
stated; generally implied by the organization,
its customers and other interested parties; or
obligatory.

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 QUALITY DEFINITION AS PER ISO 9000
STANDARD
The term quality has also been defined by
combining the definition of the terms “Quality”
and “Requirements” in ISO 9000:2000 Standard,
as follows:

“The Degree to which a set of inherent

characteristics fulfill a need or expectation i.e.
stated or generally implied.”

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 QUALITY DEFINITION AS PER ISO 9000
STANDARD
• Quality has nine different dimensions. These
dimensions are somewhat independent,
therefore a product can be excellent in one
dimension and average or poor in another.
• Very few products can be excellent in all nine
dimensions. Therefore, quality products can
be determined by using a few of the
dimensions of the quality.

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 QUALITY DEFINITION AS PER ISO 9000
STANDARD
• Marketing has the responsibility of identifying
the relative importance of each dimension of
quality. These dimensions are then translated
into the requirements for the development of
a new product or the improvement of an
existing one.
• Different dimensions of quality are given as
follows:

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 THE DIMENSIONS OF QUALITY
Dimension Meaning and Example
Performance Primary product characteristics, such
as brightness of the picture;
Features Secondary characteristics, added
features, such as remote control;
Conformance Meeting specifications or industry
standards, workmanship;
Reliability Consistency of performance over time,
average time for the unit to fail
Durability Useful life, includes repair;

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 THE DIMENSIONS OF QUALITY
Dimension Meaning and Example
Service Resolution of problems and
complaints, ease of repair;
Response Human to human interface, such as the
courtesy of the dealer;
Aesthetics Sensory characteristics, such as
exterior finish;
Reputation Past performance and other
intangibles, such as being ranked first.

Adapted from David A. Garvin, Managing Quality: The

Strategic and Competitive Edge (New York: Free Press, 1988) 14
 Operations Management
• Goods: Physical items produced by
business organizations.
• Services: Activities that provide some
combination of time, location, form and
psychological values.
• Supply chain: A sequence of activities and
organizations involved in producing and
delivering a good or service.
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 Operations Management
• The operations function is responsible for
producing products and/or delivering services.
However, it also needs the support and input from
other areas of the organization, which are finance,
marketing and operations.
• All business organizations have these three basic
functions. It does not matter whether the business
is a retail store, a hospital, a manufacturing firm or
some other type of business.

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THREE BASIC FUNCTIONS OF BUSINESS
ORGANIZATION

Organization

Finance Operations Marketing

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 Examples of inputs, transformation, and
outputs
Inputs Transformation Outputs
Land Processes High goods percentage
Human Cutting, drilling Houses
Physical labor Transporting Automobiles
Intellectual labor Teaching Clothing
Capital Farming Computers
Raw materials Mixing Machines
Water Packing Televisions
Metals Copying, faxing Food products
Wood Analyzing Textbooks
Equipment Developing CD players
Machines Searching High service percentage
Computers Researching Health care
Trucks Repairing Entertainment 18
 Examples of inputs, transformation, and
outputs
Inputs Transformation Outputs
Tools Innovating Car repair
Facilities Debugging Legal
Hospitals Selling Banking
Factories
Retail stores
Energy
Other
Information
Time
Legal constraints
Government regulations

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 The goods-service range
Goods Service

Surgery, teaching

Songwriting, software development

Computer repair, restaurant meal

Automobile repair, fast food

Home remodeling, retail sales

Automobile assembly, steelmaking

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The majority of service jobs fall into these
categories:
• Professional services (e.g., financial, health
care, legal).
• Mass services (e.g., utilities, internet,
communications).
• Service shops (e.g., tailoring, appliance repair,
car wash, auto repair/maintenance).

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• Personal care (e.g., beauty salon, barbershop).
• Government (e.g., Medicare, mail, social
services, police, fire).
• Education (e.g., schools, universities).
• Food service (e.g., restaurants, fast foods,
catering, bakeries).
• Services within organizations (e.g., payroll,
accounting, maintenance, IT, HR).
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• Retailing and wholesaling.
• Shipping and delivery (e.g., truck, railroad,
boat, air).
• Residential services (e.g., lawn care, painting,
general repair, remodeling interior design).
• Transportation (e.g., mass transit, taxi, airlines,
ambulance).

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• Travel and hospitality (e.g., travel bureaus,
hostels, resorts).
• Miscellaneous services (e.g., copy service,
temporary help).

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 Differences between Services and Goods
Production
Services Goods Production
Intangible process Tangible process (physical output)
No physical output Physical output
Location of the service facility is important Location of a production unit is not
important
Direct customer involvement No direct customer involvement
Operations activities are scattered Operations activities to produce its
throughout the organization products are grouped in one department

However, there are many production units which

provide many services as part of their product i.e. the
physical products are manufactured and then delivered
to their customers
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The customers are on the shop floor when
consuming many services. The shop floor may
be called the front office, dinning area,
operating room, or passenger cabin depending
on the industry. There are also many behind the
scenes activities with tangible inputs and
outputs e.g. major airlines, banks and insurance
companies have large back offices that support
customer contact operations.
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 Operations as Service
The emerging model in industry is that every
organization is in the service business. This is
true whether the organization makes aero planes
or burgers.
Therefore, manufacturing operations as well as
every other part of the organization may be
considered in the service business even if the
customer is an internal one. Such services can
be divided into the following:
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 Operations as Service
In manufacturing , such services can be divided into
following two types that are provided to internal and
external customers of the factory.
1. The core services: Basic things that customers want
from the products they purchase. They want them to
be made correctly, customized to their needs,
delivered on time and priced competitively.
These may also be considered as the classic
performance objectives of the operations functions
which are Quality, Flexibility, Speed and Price (or cost
of production).
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 Operations as Service
2. Value added services: These services
make the external customer’s life easier
or in the case of internal customers help
them to better carryout their particular
functions. These services differentiate
the organization from competitors and
build relationships that bind customers
to the firm in a positive way.
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 Operations as Service
Value added factory services can be classified into four
broad categories:
i. Information: It’s the ability to furnish critical data
on product performance, process parameters and
cost to internal groups such as R&D and to external
customers, who then use the data to improve their
operations or products. For example, a company’s
quality department provides quality data sheets
documenting of actual product testing and field
quality performance to their field sales and service
personnel.
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 Operations as Service
ii. Problem solving: It’s the ability to
help internal and external groups
solve their problems especially in
quality. For example, a company sends
factory workers out with sales people
to trouble shoot quality problems.
Those factory workers then return to
the factory and join with shop floor
personnel to make an effort for
problem solving. 31
 Operations as Service
iii. Sales support: It’s the ability to enhance
sales and marketing efforts by
demonstrating the technology, equipment
or production systems the company is
trying to sell.

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 Operations as Service
iv. Field support: It’s the ability to
replace defective parts quickly. For
example, Caterpillar promises to make
repair parts available anywhere in the
world within 48 hours.

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 INTRODUCTION
• Operations System:
– The part of an organization that produces
the organization products (physical goods or
services).
– Physical goods may include refrigerators,
bread, cereal etc.
– Services may include insurance, health care
for the elderly etc.

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 INTRODUCTION
– The basic elements which are common in
manufacturing companies and service
sector organizations are:
• They have conversion process
• Some resource inputs, which are going
into the process;
• The outputs resulting from the
conversion inputs;

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 INTRODUCTION
• Information feedback about the activities
in the operation system;
• Random fluctuations consist of
unplanned or uncontrollable influences
that cause the actual output to differ
from the expected output;
– Once goods and services are produced they
are converted into cash (i.e. sold) to acquire
more resources to keep the conversion
process going.
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 INTRODUCTION
• Conversion Processes (Operations)
– The process of changing inputs of labor,
capital, land and management into outputs
of goods and services.

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 INTRODUCTION
• Output
– Output is a generated service/items coming
out with the conversion process
• Throughput
– Items going through the conversion process

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39
40
 INTRODUCTION
• Operations Management
– Management of the conversion
process which converts land, labor,
capital and management inputs into
desired outputs of goods and services.

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 INTRODUCTION
– The business function that plans,
organizes, coordinates and control the
resources needed to produce a
company’s goods and services.
– It involves managing people,
equipment, technology, information
and other resources.

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 INTRODUCTION
• Role of Operations Management
– The role of operations management is to
transform the company’s inputs into the
finished goods or services.
For operations management to be
successful it must add value during
the transformation/conversion
process.
The greater the value added the more
productive a business is.
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44
 INTRODUCTION
• Value added:
– when blending inputs into a product or
service, the increased value of outputs
compared to the some of the values of
inputs.
• Random fluctuations:
– unplanned or uncontrollable environmental
influences (strikes, floods etc.) that cause
planned or actual output to differ.

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 INTRODUCTION
• Feedback:
– information in the control process that
allows management to decide whether
organizational activities needs adjustments.
• Technology:
– The level of scientific sophistication in plant,
equipment and skills in the conversion
process

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 INTRODUCTION
• Conversion Processes
– Physical: as in manufacturing operations
– Locational: as in transportation or
warehouse operations
– Physiological: as in health care
– Psychological: as in entertainment
– Informational: as in communication

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MANUFACTURING OPERATIONS VS SERVICE
OPERATIONS
• Following characteristics are generally
considered in order to distinguish between
manufacturing and service operations:
– Tangible/intangible nature of output
– Consumption of output
– Nature of work
– Degree of customer contact
– Customer participation in conversion
– Measurement of performance

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• Manufacturing • Service Organizations
Organizations – Intangible product
– Tangible product – Product cannot be
– Physical product invented
– Product can be invented – High customer contact
– Low customer contact – Short response time
– Capital intensive – Labor intensive
– Long response time

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 Production of Goods versus Delivery of
Services
Inputs Processing Output
Food Processor Raw vegetables Cleaning Canned vegetables
Metal sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
Hospital Doctors, nurses Examination Treated patients
Hospital Surgery
Medical supplies Monitoring
Equipment Medication
Laboratories Therapy
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FOR SATISFACTION FROM QUALITY
PRODUCTS OR SERVICES, THERE
ARE THREE FUNDAMENTAL
PARAMETERS
• Price; Customer’s Approach
• Quality;
• Delivery. Price Delivery

Quality

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 WHY QUALITY?
• To reduce Costs

• To increase Profits

• To impart a sense of satisfaction

among your customers and
employees
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WHAT IS THE EFFECT OF BAD QUALITY?

• Lost sales;
• Decreasing profits;
• Increasing prices;
• Lost jobs;
• Plant closures, and
• Bankruptcy soon follows.

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WHAT IS THE EFFECT OF BAD QUALITY?
This in turn………
Reflects on the performance of the organization and
the country’s economic status…..
• High inflation;
• High interest rates;
• Swelling government deficits;
• Growing unemployment;
• Increasing taxes, and
• Plunging economy.
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 QUALITY PARAMETERS
• Quality is a composite of three
parameters:
– Quality of Design;
– Quality of Conformance;
– Quality of Use.

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 QUALITY PARAMETERS
• Quality of Design;
– Is the extent to which the design reflects a
product or service that satisfies the
customer need or expectations.
• Quality of Conformance;
– Is the extent to which the product or service
conforms to the design standard.

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 QUALITY PARAMETERS
• Quality of Use;
– Is the extent to which a product is easy to
use, reliable and maintainable.

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