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Quality Improvement in Service Industry

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Total Quality Management (TQM) is an integrated organizational approach to delighting customers by continuously meeting and exceeding their expectations through improvement efforts across all processes. TQM requires communication and involvement from all organizational members and suppliers/customers. It originated from efforts to improve postwar Japanese industry and emphasizes continuous learning and improvement, employee empowerment, fact-based decision making, and customer focus. For services industries, implementing an effective TQM system requires commitment from management and staff to establish smooth business processes and satisfy customers.

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TQM in the Service Industry Prinson D'Lima ---By
What is Quality? Quality is fitness for use (Joseph Juran) Quality is conformance to requirements (Philip B. Crosby) Quality of a product or services is its ability to satisfy the needs and expectations of the customer
What is TQM? Constant drive for continuous improvement and learning. Concern for employee involvement and development Management by Fact Result Focus Passion to deliver customer value / excellence Organisation response ability Actions not just words (implementation) Process Management Partnership perspective (internal / external)
TQM is an integrated organisational approach in delighting customers by meeting their expectations on a continuous basis through everyone involved with the organisation working on continous improvement in all services, products and processes along with proper problem- solving methodology. TQM is built on a foundation of ethics, integrity and trust. It fosters openness, fairness and sincerity and allows involvement by everyone. This is the key to unlocking the ultimate potential of TQM Communication is a strong mortar of TQM. Communication means a common understanding of ideas between the sender and the receiver. The success of TQM demands communication with and among all the organization members, suppliers and customers
Evolution of TQM The concept of Total Quality Management (TQM) was developed by an American, W. Edwards Deming, after World War II for improving the production quality of goods and services. Mr. Deming is regarded as The quality Guru who never gave up. But it was the Japanese who adopted TQM more seriously in 1950 to resurrect their postwar business and industry, used it to dominate world markets by 1980.
Contd. The 1980s saw an explosion in the use of statistical methods and quality methodology in both manufacturing and non-manufacturing organisations. Mr. Subodh Bhargava, Chief Executive of Eicher, recently revealed an interesting fact that TQM is not new to India and its roots in Indian ancient scriptures like the Upanishads and the Srimad Bhagavadgita.
Importance of TQM for services sector Total Quality Management is the key mantra for the manufacturing industry, but its benefits have been better realized by intense customer-oriented service industries be it fast moving consumer goods (FMCG), retail, hospitality, telecom or banking. In service organisations, the TQM challenge lies in establishing smooth connectivity between business processes so as to retain the customer. A quality control approach to cover all processes would be beneficial to every Organisation.. Since in a service industry every aspect of quality is associated with every employee, quality Control department has a key and a very important role to play. Putting in place an effective TQM mechanism in a service industry requires patience and commitment on the part of the management and the workforce to satisfy the customer.
Contd. Over 60 % of the organization's future revenue will come from the existing customers. A 2 percent increase in customer retention has an equivalent impact upon profitability as a 10 percent reduction in operating costs. Upto 96% of unhappy customers do not in fact complain, but they are three times more likely to communicate a bad experience to other customers than a good one If a customer complains and the organization responds effectively to the product or service failure, then the loyalty of the customer can actually increase It costs 5 times as much to attract a new customer as it costs to keep an old one.
In the future there will be two kinds of companies those who have implemented Total Quality and those who have gone out of business; you do not have to do this since survival is not compulsory Dr. Edward Deming The Principles of Total Quality Management (TQM) are now recognised characteristic of most of the successful businesses world over.
Learning LEARNING AND TQM Process Improvement Quality Improvement Customer Satisfaction Shareholder Satisfaction Employee Satisfaction
TOTAL QUALITY MANAGEMENT Continuous Improvement or Kaizen Quality Circles Benchmarking Just-in-Time (JIT) Taguchi Concepts Knowledge of TQM Tools
Kaizen Practice Kaizen programme can be divided into three segments depending upon the complexity. Management- oriented Kaizen Group- Oriented Kaizen Individual- Oriented Kaizen
Kaizen Movement or 5S movement Seiri straighten up Seiton means putting things in order Seiso means to clean up Seiketsu means personal cleanliness Shitsuke means discipline
Quality Circle QC is a small group of employees in the same workarea or doing a similar type of work who voluntarily meet regularly to identify, analyze and resolve work- related problems , leading to improvement in their total performance and enrichment of their worklife Bharat Heavy Electricals Limited (BHEL), an engineering company was the first one to initiate quality circles in India.
Some organisations in India give different Individual to quality Circles .. For instance Air India- Jet Quality Circles, 7 Aces, Safe Air Quality Circles, Quality Brothers etc.. BHEL call Quality circles by their serial numbers like QC1, QC2, QC3, QC4 etc.. Madras Motors- Vallavar, Ganga, Bharthi etc..
Benchmarking Benchmarking is the systematic comparison of elements of performance of an organisation against those of other organizations, usually with the aim of mutual improvement.
Types of Benchmarking Internal Benchmarking Competitive Benchmarking Functional Benchmarking Generic Benchmarking
Just In Time (JIT) Just- in time is an approach to minimize waste in manufacturing in the form of time, materials, energy and error. The objectives of JIT are To reduce the set up times and lot sizes To achieve zero defects goal in manufacturing To focus on continuous improvement To eliminate waste and all non-value adding activities by systematically identifying these.
3Ms- Muda, Muri & Mura These 3 Ms should be avoided to implement of JIT Muda means Waste Muri means Excess Mura means unevenness
Taguchi Concepts Taguchi Concepts provides an alternative for the relationship between the performance of cost and quality. Taguchi further maintains that the relationship is quadratic and the cost varies with the square of the deviation from the target . The Taguchi loss function is therefore represented by L(Y) =K(Y-M) 2 where L= Loss associated with parameter Y M= target expected K= Constant
Capability Maturity Model ( CMM ) It is a way to develop and refine an organization's processes mainly for the purpose of developing and refining software development processes. The model describes the maturity of the company based upon the project the company is handling and the related clients.
The CMM was originally intended as a tool to evaluate the ability of government contractors to perform a contracted software project. Though it comes from the area of software development, it can be, has been, and continues to be widely applied as a general model of the maturity of processes
Pareto Analysis Pareto, an Italian economist discovered a universal relationship between value and quantity. He used this technique for assessing uneven distribution of wealth. Pareto charts gave rise to 80-20 rule which suggests that 80 percent of an organization's problems came from 20 percent of its tasks. Pareto Analysis helps in identification of the Vital few from the trivial many at a glance.
Pareto Analysis can be carried out for the problems of a company which are contributed by the following: Working Systems Operating Costs Facilities Manpower
Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920s Involves Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary) Statistical Process Control (SPC)
Process Control Chart
Quality Awards National Awards of Different Countries: Malcolm Baldrige National Quality Award (United States) The Deming Prize (Japan) Golden Peacock National Quality Award (India) British Quality Award (UK) Egyptian Quality Award Turkish Standard Institution Award (Turkey) French National Quality Award Australian Quality Award
A list of Awards related to Quality The Margaret Chase Smith Maine State Quality Award Shingo Prize for Excellence in Manufacturing The NASA Excellence Award/ George M. Low Award The North Corolina Quality Leadership Award Rajiv Gandhi Foundation Quality Award (India) The Florida Sterling Award California s Eureka Award Siemens and Sun Win Philip Crosby Award for Quality Connecticut Quality Improvement Award
The most prestigious Quality Awards in the World are The Deming Prize The Malcolm Baldrige National Quality Award and The European Quality Award
Some of the Award Winners of Macolm Baldrige National Quality Award are: Ames Rubber Corporation AT&T Eastman Chemical Company Motorola Inc. Zytec Corporation Xerox Corporation- Business Products &Systems The Ritz-Carlton Hotel Company Marlow Industries Cardillac Motor Car Company IBM Rochester Globe Metallurigical Inc.
Big Growth of the Service Sector According to the survey by the Economic Times in 1992, The service sector is a the threshold of the tremendous growth . Service and knowledge workers are estimated to constitute 80% of the workforce with the manufacturing sector contributing to only the rest 20 percent. According to a recent survey of the top ranking organisation in Europe , 89 percent of the respondents said that quality was the primary buying argument for the ultimate customer. TQM is supported and adopted not only by the manufacturing industries but also by the banks, hospitals, educational institutions, hotels and community development projects.
Quality is a Journey, not a Destination

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Quality Improvement in Service Industry

  • 1. TQM in the Service Industry Prinson D'Lima ---By
  • 2. What is Quality? Quality is fitness for use (Joseph Juran) Quality is conformance to requirements (Philip B. Crosby) Quality of a product or services is its ability to satisfy the needs and expectations of the customer
  • 3. What is TQM? Constant drive for continuous improvement and learning. Concern for employee involvement and development Management by Fact Result Focus Passion to deliver customer value / excellence Organisation response ability Actions not just words (implementation) Process Management Partnership perspective (internal / external)
  • 4. TQM is an integrated organisational approach in delighting customers by meeting their expectations on a continuous basis through everyone involved with the organisation working on continous improvement in all services, products and processes along with proper problem- solving methodology. TQM is built on a foundation of ethics, integrity and trust. It fosters openness, fairness and sincerity and allows involvement by everyone. This is the key to unlocking the ultimate potential of TQM Communication is a strong mortar of TQM. Communication means a common understanding of ideas between the sender and the receiver. The success of TQM demands communication with and among all the organization members, suppliers and customers
  • 5. Evolution of TQM The concept of Total Quality Management (TQM) was developed by an American, W. Edwards Deming, after World War II for improving the production quality of goods and services. Mr. Deming is regarded as The quality Guru who never gave up. But it was the Japanese who adopted TQM more seriously in 1950 to resurrect their postwar business and industry, used it to dominate world markets by 1980.
  • 6. Contd. The 1980s saw an explosion in the use of statistical methods and quality methodology in both manufacturing and non-manufacturing organisations. Mr. Subodh Bhargava, Chief Executive of Eicher, recently revealed an interesting fact that TQM is not new to India and its roots in Indian ancient scriptures like the Upanishads and the Srimad Bhagavadgita.
  • 7. Importance of TQM for services sector Total Quality Management is the key mantra for the manufacturing industry, but its benefits have been better realized by intense customer-oriented service industries be it fast moving consumer goods (FMCG), retail, hospitality, telecom or banking. In service organisations, the TQM challenge lies in establishing smooth connectivity between business processes so as to retain the customer. A quality control approach to cover all processes would be beneficial to every Organisation.. Since in a service industry every aspect of quality is associated with every employee, quality Control department has a key and a very important role to play. Putting in place an effective TQM mechanism in a service industry requires patience and commitment on the part of the management and the workforce to satisfy the customer.
  • 8. Contd. Over 60 % of the organization's future revenue will come from the existing customers. A 2 percent increase in customer retention has an equivalent impact upon profitability as a 10 percent reduction in operating costs. Upto 96% of unhappy customers do not in fact complain, but they are three times more likely to communicate a bad experience to other customers than a good one If a customer complains and the organization responds effectively to the product or service failure, then the loyalty of the customer can actually increase It costs 5 times as much to attract a new customer as it costs to keep an old one.
  • 9. In the future there will be two kinds of companies those who have implemented Total Quality and those who have gone out of business; you do not have to do this since survival is not compulsory Dr. Edward Deming The Principles of Total Quality Management (TQM) are now recognised characteristic of most of the successful businesses world over.
  • 10. Learning LEARNING AND TQM Process Improvement Quality Improvement Customer Satisfaction Shareholder Satisfaction Employee Satisfaction
  • 11. TOTAL QUALITY MANAGEMENT Continuous Improvement or Kaizen Quality Circles Benchmarking Just-in-Time (JIT) Taguchi Concepts Knowledge of TQM Tools
  • 12. Kaizen Practice Kaizen programme can be divided into three segments depending upon the complexity. Management- oriented Kaizen Group- Oriented Kaizen Individual- Oriented Kaizen
  • 13. Kaizen Movement or 5S movement Seiri straighten up Seiton means putting things in order Seiso means to clean up Seiketsu means personal cleanliness Shitsuke means discipline
  • 14. Quality Circle QC is a small group of employees in the same workarea or doing a similar type of work who voluntarily meet regularly to identify, analyze and resolve work- related problems , leading to improvement in their total performance and enrichment of their worklife Bharat Heavy Electricals Limited (BHEL), an engineering company was the first one to initiate quality circles in India.
  • 15. Some organisations in India give different Individual to quality Circles .. For instance Air India- Jet Quality Circles, 7 Aces, Safe Air Quality Circles, Quality Brothers etc.. BHEL call Quality circles by their serial numbers like QC1, QC2, QC3, QC4 etc.. Madras Motors- Vallavar, Ganga, Bharthi etc..
  • 16. Benchmarking Benchmarking is the systematic comparison of elements of performance of an organisation against those of other organizations, usually with the aim of mutual improvement.
  • 17. Types of Benchmarking Internal Benchmarking Competitive Benchmarking Functional Benchmarking Generic Benchmarking
  • 18. Just In Time (JIT) Just- in time is an approach to minimize waste in manufacturing in the form of time, materials, energy and error. The objectives of JIT are To reduce the set up times and lot sizes To achieve zero defects goal in manufacturing To focus on continuous improvement To eliminate waste and all non-value adding activities by systematically identifying these.
  • 19. 3Ms- Muda, Muri & Mura These 3 Ms should be avoided to implement of JIT Muda means Waste Muri means Excess Mura means unevenness
  • 20. Taguchi Concepts Taguchi Concepts provides an alternative for the relationship between the performance of cost and quality. Taguchi further maintains that the relationship is quadratic and the cost varies with the square of the deviation from the target . The Taguchi loss function is therefore represented by L(Y) =K(Y-M) 2 where L= Loss associated with parameter Y M= target expected K= Constant
  • 21. Capability Maturity Model ( CMM ) It is a way to develop and refine an organization's processes mainly for the purpose of developing and refining software development processes. The model describes the maturity of the company based upon the project the company is handling and the related clients.
  • 22. The CMM was originally intended as a tool to evaluate the ability of government contractors to perform a contracted software project. Though it comes from the area of software development, it can be, has been, and continues to be widely applied as a general model of the maturity of processes
  • 23. Pareto Analysis Pareto, an Italian economist discovered a universal relationship between value and quantity. He used this technique for assessing uneven distribution of wealth. Pareto charts gave rise to 80-20 rule which suggests that 80 percent of an organization's problems came from 20 percent of its tasks. Pareto Analysis helps in identification of the Vital few from the trivial many at a glance.
  • 24. Pareto Analysis can be carried out for the problems of a company which are contributed by the following: Working Systems Operating Costs Facilities Manpower
  • 25. Uses statistics & control charts to tell when to adjust process Developed by Shewhart in 1920s Involves Creating standards (upper & lower limits) Measuring sample output (e.g. mean wgt.) Taking corrective action (if necessary) Statistical Process Control (SPC)
  • 27. Quality Awards National Awards of Different Countries: Malcolm Baldrige National Quality Award (United States) The Deming Prize (Japan) Golden Peacock National Quality Award (India) British Quality Award (UK) Egyptian Quality Award Turkish Standard Institution Award (Turkey) French National Quality Award Australian Quality Award
  • 28. A list of Awards related to Quality The Margaret Chase Smith Maine State Quality Award Shingo Prize for Excellence in Manufacturing The NASA Excellence Award/ George M. Low Award The North Corolina Quality Leadership Award Rajiv Gandhi Foundation Quality Award (India) The Florida Sterling Award California s Eureka Award Siemens and Sun Win Philip Crosby Award for Quality Connecticut Quality Improvement Award
  • 29. The most prestigious Quality Awards in the World are The Deming Prize The Malcolm Baldrige National Quality Award and The European Quality Award
  • 30. Some of the Award Winners of Macolm Baldrige National Quality Award are: Ames Rubber Corporation AT&T Eastman Chemical Company Motorola Inc. Zytec Corporation Xerox Corporation- Business Products &Systems The Ritz-Carlton Hotel Company Marlow Industries Cardillac Motor Car Company IBM Rochester Globe Metallurigical Inc.
  • 31. Big Growth of the Service Sector According to the survey by the Economic Times in 1992, The service sector is a the threshold of the tremendous growth . Service and knowledge workers are estimated to constitute 80% of the workforce with the manufacturing sector contributing to only the rest 20 percent. According to a recent survey of the top ranking organisation in Europe , 89 percent of the respondents said that quality was the primary buying argument for the ultimate customer. TQM is supported and adopted not only by the manufacturing industries but also by the banks, hospitals, educational institutions, hotels and community development projects.
  • 32. Quality is a Journey, not a Destination

Editor's Notes

  • #26: This slide introduces the process of Statistical Process Control. 際際滷s illustrating the mechanics will be found in the presentation for supplement 6S. At some point, you may wish to illustrate or discuss the connection between Statistical Process Control and the Target and Conformance-based quality control discussed earlier.