SessionXIII

• Quality Management in Services-the

SERVAQUAL Model
TQM in Service
Industry
Combined TEST at 02:15 PM
on Tue, March 6th
• By Chithur Devaraj
• On Mar 6, 2012 09:30 TO 12:30 PM & 02:30 TO 05:50 PM
• Somaiya Institute of Management Studies & Research
MMS Sem IV 1
 TQM IN SERVICE SECTOR
• Service sector is all about interacting with customers.
• Measuring quality in Services set-up is different from a Mfg. set-up
• Services are performances that one party offers to another and are
intangible and does not result in transfer of ownership of a
tangible asset. Whereas, manufacturing deals with tangible
products.
• Services are heterogeneous because performances vary from
producer to producer & consumer to consumer. E.g. all Dentists do
not produce the same service to customers.
• Services have an element of Simultaneity because, unlike a product,
services are not manufactured in a plant and then delivered to
customer. Here, quality occurs during delivery of service.
• Hence , measure of service quality involves perceptions of the
customer and the service provider.
 Service Industry - Facts
• Service industries generate over 2/3rd of GNP and
employment in developed countries - ISSN Journal Volume 22, 2004)
• 9 out of 10 jobs are created by Services economy –
“Delivering Service Quality” by Valerie, Parsuraman and Leonard”;

• Of the top 100 revenue earners worldwide, 55% are

service firms – www.service-growth.com
• Top service firm in revenue worldwide – Wal-Mart is a
service firm;
• Service firms produced 45% more revenue per employee
than manufacturing firms;
• Service Industry Contributions to India’s GDP is
increasing steadily compared to Mfg due to “Outsourcing”
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 What Makes Service Quality Unique

1. Service is intangible - it cannot be easily

measured, tested and verified in advance of sales
to assure quality;
2. Services are perishable;
3. Precise standards like manufacturing can rarely be
set;
4. It is created and consumed simultaneously or near
simultaneously; Service Production and
Consumption are often inseparable i.e. Customer
is in service factory.
5. Services offered can vary from “Producer to Producer”
e.g. outlet to outlet;

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 What Makes Service Quality Unique
6. Outcome of Service is as important as process of
delivery; assessment of quality is made during the
service delivery process.
7. Service Quality is more difficult for customer, to
evaluate, than product quality;
8. Customer cannot retain the actual service. The effect
of the service can be retained.
Services Include a large variety of industries :
Financial services – banking, insurance; transportation, energy supply,
health-care, media, BPO, Retailing, Distribution; Hotels and tourism;
Leisure, recreation, entertainment; Professional and business services
like accountancy, marketing, law, consulting; Software etc.
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 Customers assessment of Service
Quality
Dimensions of Service Quality Word of Personal Past
Mouth Needs Experience
1. Accessibility/approachability (24x7)
2. Communicating to keep
customers informed in their
language
External
3. Competence to perform service Expected Communication
Service to Customers
4. Courtesy & politeness towards
people
5. Credibility & honesty of Service Perceived
purpose-financial ratings, Image Quality Service
Gap Quality
6. Reliability-honouring promise
7. Responsiveness to provide
services beyond specified-speed Perceived
8. Security- Ability to dispel risk Service
9. Tangibles-physical delivery
10. Listening to their customers &
understanding their needs 6
 Service Quality Gap
• Company’s perception of service outcome should match
customer's expectation. If it fails, there is a service gap.
• The gap between expected and perceived service is a
measure of service quality
• Expectation > Service perceived = Exceptional Quality,
• Expectations < Service perceived = Unacceptable
quality.
• Expectations = Service perceived = Satisfactory Quality.
SERVQUAL model is a gap analysis tool developed by
Parasuraman, Zeithamel & Berry in 1988.
5 gaps exists which can be analyzed on 5 dimensions of
service quality 7
SERVQUAL Model

5 Dimensions of Tangibles,
Reliability,Responsiveness,
Assurance & Empathy on
ratings scale (1-7)
 Gap 1 : Not knowing what customers expect
- The difference between customer expectations and
management’s idea or perception of customer expectations
1. Lack of Market
Research Orientation;
Management Expected
2. Inadequate upward
Perceptions Service communication;
of Customer
3. Too many levels of
Expectations management

- E.g. Financial / telecom organizations treat issues of

privacy and confidentiality as unimportant but consumers
consider these issues very important.
- Management has inaccurate perception of what customer
actually expects.
- Gap exists because there is a lack of customer focus.
 Gap 2 : The wrong service
quality standards
– Mismatch between manager’s expectations of customer’s
service quality and service quality specifications
– Gap between management’s perception of customer’s
expectation and company’s quality specifications.
– Represents inability of management to translate
customers’ expectations to service quality specifications
1. Inadequate
management
commitment to
Service Management Service Quality
Quality Perceptions 2. Perception of
infeasibility
Specifications of Customer 3. Absence of goal
Expectations setting
Gap 3 : The service performance gap
– Poor delivery of service quality
– Occurs because of lack of support for frontline staff and
process problems
– Gap between service quality specifications and actual
service delivery 1. Role ambiguity
2. Role conflict
3. Poor technology
4. Lack of team work
5. Poor employee – job fit

Service Service
Delivery Quality
Specifications
 Gap 4 : When promises do not
match actual delivery
– Differences between service delivery and external
communication with customer
– Gap results from inadequate communication from service
provider
1. Propensity to over-
promise
2. Inadequate horizontal
communication

Service External
Delivery Communications
to Customers
Gap 5 : Difference between customer
perception and expectation
- Differences between Expected and Perceived Quality
- Perceived quality of service depends on size of the gap
which in turn depends on gap associated with marketing,
design and delivery of service.
- Gap between customer expectation and perceived
service

Expected Perceived
Service Service
 SERVQUAL features
Can serve as an effective diagnostic tool for uncovering
broad areas of a company’s service quality shortfalls
and strengths. Used to analyze the gaps influencing
customer perceptions.
SERVQUAL is a 21-item tool that measures both
expectations and customer perceptions of the service
encounter
The SERVQUAL scale offers the potential to determine
the relative importance of the 5 major service quality
dimensions-- Reliability, Responsiveness, Assurance,
Tangibles, and Empathy -- and to track service quality
performance over time
The scale serves as a suitable generic measure of service
quality, transcending specific functions, companies,
and industries
 Revised SERVQUAL 21 Items for Rating
Reliability
1. Providing services as promised
2. Dependability in handling customers' service problems
3. Performing services right the first time
4. Providing services at the promised time
5. Keeping customers informed about when services will be performed
Tangibles
Responsiveness 17. Modern equipment
6. Prompt service to customers 18. Visually appealing facilities
7. Willingness to help customers 19. Employees who have professional appearance
8. Readiness to respond to customers' requests 20. Visually appealing materials
21. Convenient business hours
Assurance
9. Employees who instill confidence in customers Assurance:-
10. Making customers feel safe in their transactions Competence,
11. Employees who are consistently courteous Courtesy
12. Employees who have the knowledge to answer customer questions Credibility, Security
Empathy
13. Giving customers individual attention Empathy:-
14. Employees who deal with customers in a Access,
caring fashion Communication,
15. Having the customer's best interest at heart Understanding
16.Employees who understand the needs of
their customers
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 SERVQUAL Data - How Useful is it?
1. We can assess service quality from the customer’s
perspective
2. We can track customer expectations and perceptions
over time and the discrepancies between them
3. We can compare a set of Servqual scores against those
of competitors or best practice examples
4. We can compare expectations & perceptions of
different customer groups-useful in Public sector.
5. We can use data on customer priorities to feed into the
House of Quality (QFD) . Customer priorities and their ranked order of
importance can become the WHATS . These WHATS can then be compared with the
HOWS (key business processes) and relationships matched to check service design
and provision according to key requirements
PROCESS MODEL FOR CONTINUOUS MEASUREMENT AND IMPROVEMENT
OF SERVICE QUALITY

DO YOUR CUSTOMERS PERCEIVE YES CONTINUE TO MONITOR

YOUR OFFERINGS AS MEETING CUSTOMERS’ EXPECTATIONS
OR EXCEEDING THEIR EXPECTATIONS? AND PERCEPTIONS

NO
Firms needs to
DO YOU HAVE AN ACCURATE NO TAKE CORRECTIVE ACTION
UNDERSTANDING OF address these
CUSTOMERS’ EXPECTATIONS?
gaps to
YES
improve
ARE THERE SPECIFIC
STANDARDS IN PLACE TO MEET
NO
TAKE CORRECTIVE ACTION quality. E.g. 5-
CUSTOMERS’ EXPECTATIONS? star Hotels,
YES Airlines,
DO YOUR OFFERINGS MEET OR NO
TAKE CORRECTIVE ACTION
Hospitals keep
EXCEED THE STANDARDS?
guest feedback
YES form to
NO address Gap1,
IS THE INFORMATION TAKE CORRECTIVE ACTION
COMMUNICATED TO CUSTOMERS
ABOUT YOUR OFFERINGS ACCURATE?
YES
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 SERQUAL Gaps Model
Example
• If a survey was taken which showed the
averages for each dimension is as follows:
Dimension Perception Average Expectation Average
Tangibles 5.4 2.4
Reliability 5.6 4.6
Responsiveness 3.2 3.5
Assurance 6.2 3.4
Empathy 2.8 4.2

• Perceptions and Expectations were rated on a

scale of 1 to 7.
• What dimension should be emphasized?
 SERVAUAL Gaps Model
Solution
• Perception – Expectation = Difference
– Tangibles: 5.4 - 2.4 = 3.0
– Reliability: 5.6 - 4.6 = 1.0
– Responsiveness: 3.2 - 3.5 = -0.3
– Assurance: 6.2 - 3.4 = 2.8
– Empathy: 2.8 - 4.2 = -1.4
• Empathy has the lowest rating therefore it is
the dimension where training should be
emphasized the most. A focus should also
be placed on Responsiveness because of its
negative rating.
 FedEx Service Quantitative performance
standards & other examples
• No. of damaged packages;
• No. of lost packages;
• Missed pickups;
• Aircraft delays;
• Complaints not solved first time
• Wrong day late deliveries;
• Right day wrong delivery;
• Abandoned calls;
• Invoice adjustment requests;
• Missing proof of deliveries.
Firms like Aravind Eye Hospital,
Madurai give brochure in English
& vernacular language to patients
giving details : Registration: 5min,
vision test 10 min etc. Shaping
customer expectations & meeting
them-meeting Gap 4.
They provide employee training on
communication & behavior to
address Gap 3.
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 Service Quality Exercise
HOME WORK

Choose one of these Answer these questions:

 How unique/standardized is
SQ situations: product and/or service?
Auto repair  Type of service – search,
Hospital visit experience, or credence.?
 Pure service or product-
Theme park service blend?
Hair cut  What factor most affects
Supermarket service quality?
Fast food restaurant  After service is delivered,
is corrective action
Air travel possible?
 In Conclusion, to Deliver Superior Service we need to :

• Understand customers’ service expectations and how well those

expectations are being met
• Work systematically to remove organizational barriers that lead to
poor customer service -- offline and online
• Recognize and capitalize on the increasing role of technology in
serving customers
• Put in place a solid behind-the-scenes infrastructure -- information
systems, logistics, and human resources -- to deliver what the
company promises.
• Continuously monitor customers’ and employees’ reactions to
experiences

SERVQUAL Model video.mp4

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Case study Solution on SMED
Brakes India adopted, 4 stage method of implementing SMED
to reduce set-up time.
In stage1, process mapping revealed current set up activities
and time taken for each activity. It was found that large set up
time was due to (a) technological issues (b) Procedural issues
and (c ) Planning issues –which consumed close to 75% of
time taken for setup.
In stage 2, above separated external activities were done first,
before switching off the machine.
In Stages 3&4, alternative planning & procedures for machine
setup was done after brainstorming & analysis. These external
activities were improved and the remaining internal activities
time was reduced by making technical changes. After 1 month
of implementing, the results were significant.
Results after 4 rounds of iteration are given in next table.
 Case Study Conclusion
Operation/Machine Changeover Time in Minutes
Round 1 Round 2 Round 3 Round 4
Wyomatic A 540 450 205
Acme gridley 1020 315
Wyomatic B 165
Stama feed machine 510 180 60
Stama bleed machine 110 65
Brakes India’s monthly production could not cross 24,000 components,
mainly due to loss of capacity on account of large set-up time required
for the machines. Instead of augmenting the capacity by adding new
machines, Brakes India chose to launch a set-up time reduction
campaign.
Due to a dramatic reduction in set-up times, with the application of
SMED technique, the company was able to produce over 29,000
components.
Though the concept of SMED was initially applied only to presses, soon
it was extended to all manufacturing processes and later even to
administrative processes. It enabled the company to bring about lead24
time reduction and implement JIT Manufacturing.
THANK YOU

MMS Sem IV 25