Module E: Service Quality PDF

Module E: Service Quality Table of Contents Module E: Service Quality............................................................................................................... 1 What is Service Quality?...............................................................................................

Module E: Service Quality Table of Contents Module E: Service Quality............................................................................................................... 1 What is Service Quality?................................................................................................................. 2 RATER Expectations........................................................................................................................ 2 Service Encounter........................................................................................................................... 4 1. Customer - Frontline Service Provider Interaction:............................................................................ 4 2. Frontline Service Provider - Firm Interaction:...................................................................................... 5 3. Customer - Firm Interaction:................................................................................................................. 5 Role of Service Organization in the Triad....................................................................................... 6 Technology's Involvement in the Service Encounter Triad.......................................................... 7 Service Quality Gap......................................................................................................................... 9 How to Measure Service Quality?................................................................................................ 11 Cost of Quality............................................................................................................................... 12 Service failures & Fail-safing........................................................................................................ 13 Failures committed by Service Provider................................................................................................ 13 Failures committed by customers......................................................................................................... 14 Six Sigma........................................................................................................................................ 16 Customer Expectations (VOC, USL and LSL)......................................................................................... 16 Process Variation (VOP, UCL and LCL)................................................................................................... 16 Process Capability Indexes..................................................................................................................... 17 Achieving a Six-Sigma Level Process..................................................................................................... 18 Solved Six Sigma Examples.................................................................................................................... 18 DMAIC............................................................................................................................................ 20 Case Study: Reducing Appointment Cancellations at a Dental Clinic................................................ 23 Lean Philosophy and Its Application in Service Quality............................................................. 24 Lean Six Sigma............................................................................................................................... 26 What is Service Quality? Service Quality is a measure of how well the service level delivered matches customer expectations. There are two key ingredients to measuring service quality: Expectations are pre-conceived notions or beliefs about what value a service should provide. Expectations can be shaped by past experiences, word of mouth, marketing, and the reputation of the service provider. Perception is how customers interpret the service they receive. Setting Low Expectations Setting High Expectations Customers Quality perceive Low Confirm Low Quality Disappointment quality Customers Pleasant Confirm High Quality perceive High Surprise “Satisfaction” quality RATER Expectations The RATER model is a helpful framework for setting and assessing expectations in service quality. Developed by Parasuraman, Zeithaml, and Berry, RATER stands for five dimensions. Here’s how each component can help establish expectations in service quality with practical examples: 1. Reliability: Reliability means providing dependable and accurate services. For example, in a healthcare setting, a patient expects that they will receive accurate Responsiveness Reliability information about their treatment, have their appointments honored on time, and experience consistent care with each visit. Empathy Assurance For students, professors can set the expectation that feedback and grades will be consistently provided by a specific date, so students can trust the process Tangibles and plan their studies accordingly. 2. Assurance: Assurance involves making customers feel confident and secure in the service provided. In a financial services firm, for instance, clients expect assurance that their advisor is knowledgeable and competent, instilling trust that their investments are in safe  hands. In an educational setting, a professor’s clear communication of course goals and expertise in the subject assures students that they are receiving a high-quality education and support. 3. Tangibles: Tangibles are the physical evidence of the service, which includes everything customers see and interact with. For example, in a hotel, the cleanliness of the rooms, the appearance of staff, and the organization of public areas shape guests’ perceptions of the service quality. In a classroom, tangible elements could be the quality of presentation slides, clear organization of handouts, and accessible online resources. These tangibles create an impression of professionalism and care. 4. Empathy: Empathy reflects the service provider’s ability to understand and respond to individual customer needs. In a restaurant, this could mean adjusting a meal based on dietary preferences or allergies, showing that the service is genuinely attuned to customer needs. Professors can demonstrate empathy by offering flexibility with deadlines or being available for one-on-one meetings, ensuring students feel valued and understood. 5. Responsiveness: Responsiveness is the willingness to help customers promptly. For instance, in an IT support center, customers expect quick responses to technical issues or questions. This shows commitment to helping them resolve issues without unnecessary delays. In education, responsiveness could be demonstrated through timely replies to students’ emails and prompt feedback on assignments, helping students stay engaged and informed. Service Encounter The service encounter triad represents a framework for understanding the interactions and relationships in a service environment. The triad comprises three primary elements: Customer: The individual or entity receiving or benefiting from the service. Service Provider (Front-line Employee): The individual or team directly provides the service to the customer. Service Organization: The larger entity that establishes the framework, policies, and procedures for service delivery. The service encounter triad is a complex interplay of interests, expectations, and goals between three main players. Each pair within this triad has its own dynamic tension that influences the overall service experience. Specifically, the relationship between the service organization and the employee is characterized by a balance between efficiency and autonomy; the organization and the customer's relationship revolves around efficiency and satisfaction; and the interaction between the customer and the employee is influenced by the customer's perceived control versus the guidance provided by the employee. Let's delve deeper into these dynamics. 1. Customer - Frontline Service Provider Interaction: This interaction happens directly at the point of service delivery, where the customer interacts with an employee (or an automated service provider). Tension: Personalization vs. Standardization. Personalization suggests tailoring services to each individual customer's preferences and needs, leading to a unique service experience. Standardization, on the other hand, focuses on delivering a consistent service experience to all customers, irrespective of individual nuances. While personalization can enhance customer satisfaction by addressing unique requirements, it can also introduce inconsistencies in service quality and may not always be scalable. Standardization ensures consistent quality but may seem impersonal or not sufficiently tailored to individual customer needs. 2. Frontline Service Provider - Firm Interaction: This interaction revolves around how the organization supports its frontline service providers in delivering the service. Tension: Autonomy vs. Control. Autonomy empowers frontline providers to make decisions, adapt to situations, and perhaps go beyond the script to meet customer needs. Control entails strict guidelines, procedures, and scripts that frontline providers must adhere to, ensuring standardized service delivery. While autonomy can lead to more adaptable and possibly superior service encounters, it can also introduce variability in service quality. Strict control ensures consistent service but may prevent providers from adapting to unique situations or going the extra mile for customers. 3. Customer - Firm Interaction: This interaction is about the broader relationship between the customer and the organization. It often manifests through branding, service promises, loyalty programs, and overall value propositions. Tension: Expectations vs. Delivery. Expectations are the promises and anticipations set by the firm's marketing, branding, and communication efforts. Delivery is about the actual service experience the firm provides to its customers. A misalignment between customer expectations and actual service delivery can lead to dissatisfaction. It's vital for firms to either meet the expectations they set or manage and align customer expectations with what they can realistically deliver. Role of Service Organization in the Triad The service organization plays a critical role in facilitating the interaction between the customer and the service provider. It sets the stage for service delivery by designing the processes, defining expectations, and creating an environment (both physical and cultural) for seamless interaction. Key Responsibilities of the Service Organization 1. Service Design: The organization determines how the service will be structured, whether it is highly standardized (e.g., fast-food chains like McDonald's) or highly customizable (e.g., luxury travel agencies like Abercrombie & Kent). 2. Resource Provision: The organization provides the necessary tools, technologies, and infrastructure. Example: A hospital equips its staff with advanced diagnostic machines to ensure smooth patient care. 3. Training & Development Employees are trained to deliver quality service aligned with organizational goals. Example: Starbucks baristas undergo training to craft beverages and enhance customer interactions. 4. Setting Expectations: The organization shapes customer expectations through branding and communication. Example: Disney’s advertising sets the expectation of a magical experience, which aligns with its service delivery. 5. Feedback & Improvement: Continuous improvement is driven by collecting and acting on feedback. Example: Uber uses customer ratings to refine driver performance and service quality. Empowering Service Employees Through Control Systems To ensure consistent and high-quality service delivery, organizations empower their employees using the following four control systems: 1. Belief Systems: These inspire employees through a well-defined organizational culture and shared values. Example: The "Gold Standards" at Ritz-Carlton empower employees to go above and beyond for customers, such as spending up to $2,000 per guest to resolve service issues. 2. Boundary Systems: These define clear limits for employee actions while fostering autonomy within boundaries. Example: An insurance company sets a rule that agents cannot approve claims exceeding $1,000 without managerial approval. 3. Diagnostic Systems: These set measurable goals to track performance and ensure accountability. Example: Call centers aim to answer 95% of all customer inquiries within two minutes to maintain efficiency and customer satisfaction. 4. Interactive Systems: These encourage employee creativity and adaptability, particularly in knowledge-driven industries. Example: Consulting firms empower employees to design unique client solutions by allowing flexibility and collaboration during service delivery. Technology's Involvement in the Service Encounter Triad Technology's involvement in the service encounter triad, which consists of the customer, the service provider, and the organization, can span a spectrum. Here's a breakdown of that spectrum from tech-free to full automation: Technology Technolog Technology y Customer Server Customer Server Customer Server A) Technology-Free B) Technology-Assisted C) Technology-Facilitated Technology Technology Customer Server Customer Server D) Technology-Mediated E) Technology-Generated A: Tech-Free: The customer interacts solely with a human service provider, and there's no direct technological intervention in the service delivery. Example: a yoga instructor demonstrates and guides students through poses in person. B: Tech-Assisted: Only the service provider uses technology to enhance or complete the service, while the customer experiences the service without direct technological engagement. Example: The optometrist uses machines to measure a patient's eye health and determine prescriptions, but the patient just follows instructions. C: Tech-Facilitated: Both the customer and the service provider utilize technology during the service interaction. Example: the Uber driver uses the app to navigate and accept rides, and the passenger uses the app to request rides and make payment. D: Tech-Mediated: While both the customer and the service provider are involved in the service delivery, their interaction or communication is bridged by technology. Example: In an online class, students watch lectures, submit assignments, and interact with the instructor via online platforms. (ZOOM classes) E: Tech-Generated (SELF-SERVICE): The customer's primary interaction is with a technological platform or tool. Human service providers aren't directly involved in the transaction or interaction. Examples: Self-service means using customers as partial employees. What are the trade-offs of “self- service”? Allowing customers to contribute to the service process increases system efficiency by adding capacity precisely when needed. Example: A self-serve yogurt machine in a grocery store allows faster service during peak times. However, this approach reduces organizational control over service quality, as customer mistakes can lead to waste, additional cleaning, or equipment damage. Organizations must "train" customers to perform their roles correctly, often at the point of service. Example: Self-checkout machines in grocery stores require quick, clear instructions to ensure proper use. Failure to communicate effectively can lead to customer frustration, mistakes, or dissatisfaction. Shifting customer habits can be challenging, as many customers are resistant to change. Example: Airlines that pre-assign seats to streamline operations often find passengers still standing in unnecessary check-in lines, adhering to old habits. Services can target customers who are comfortable with control and quick to adapt. Example: Airlines often market self-service check-ins to frequent business travelers, who are typically experienced, educated, and prefer control over the process. Service Quality Gap What happens where is a mismatch between expectations, perceptions and reality (i.e, actuality)?! We will have a quality gap on our hand. The Service Quality Gap Model (also known as the GAP Model) identifies common gaps between customer expectations and the actual service provided. The model outlines five main gaps: Quality GAP 1: The Knowledge gap is the discrepancy between customer expectations and management’s understanding of these expectations. This gap arises from management’s lack of complete understanding of how customers formulate their expectations based on several sources: advertising, past experience with the firm and its competitors, personal needs, and communications with friends. Strategies for closing this gap include improving market research, fostering better communication between management and its contact employees, and reducing the number of levels of management. Quality GAP 2: The Policy gap results from management’s inability to formulate a service design that translates customer expectations into workable service standards. This gap might result from a lack of management commitment to service quality or a perception of the practicality of meeting customers’ expectations; however, setting SMART goals and standardizing service delivery tasks can close this gap. For example, managers may understand what their customers expect but haven't established the necessary training or standards to meet these expectations. Quality GAP 3: The Delivery gap occurs because the actual delivery of the service does not meet the service standards set by management. This gap can arise for several reasons, including lack of teamwork, poor employee selection, inadequate training, and inappropriate job design. For example, managers at a call center may have specific standards for how many calls a representative completes each hour. If they see that many find it challenging to meet the goal, managers may decide to provide more training. They may also revisit their hiring practices to ensure candidates are comfortable speaking with customers over the phone Quality GAP 4: The Communication gap because of the difference between the service a company tells customers it provides and the service they actually delivers. It measures whether the company advertises and shares information about its services accurately instead of exaggerating its claims. For example, a hotel's website and brochures might feature clean and modern-looking rooms, but if the staff doesn't properly maintain the rooms between guests, there may be a gap between what customers expect (or perceive) and what they receive. Quality GAP 5: The Perception gap is the last gap and is the one that defines service quality. The gap between customer expectations and perception. This gap addresses the difference between the level of service customers expect and the level they perceive. This can occur when the company's claims are honest but misinterpreted by the customer. Interactions with other customers and previous experiences with your company may also influence the type of experience that customers expect. For example, a salesman at a boutique clothing store may welcome guests, ask if they need help finding anything, offer to prepare a dressing room and check on them to ensure the clothes fit properly. While the sales associate may be providing the company's expected quality of service, customers may perceive this service as overwhelming based on experiences shopping at other stores. How to Measure Service Quality? Measuring service quality is essential for understanding how well a service meets or exceeds customer expectations. By using various methods, businesses can gain insights into their strengths and identify areas needing improvement. Here are some of the most effective ways to measure service quality, along with practical examples to illustrate each method: 1. Customer Satisfaction Surveys: Customer satisfaction surveys are detailed questionnaires that assess how satisfied customers are with different aspects of a service. These surveys often use a rating scale to measure specific service attributes. For example, a hotel may ask guests to rate their satisfaction with room cleanliness, front desk service efficiency, and overall experience on a scale from 1 to 5. Open-ended questions can also allow guests to share what they liked most and least about their stay, providing valuable qualitative feedback. 2. Focus Groups and Customer Advisory Panels: Focus groups involve gathering a small group of customers in a moderated setting to discuss their experiences and perceptions. For instance, a software company might host a focus group to explore users' experiences with their product, uncovering insights that go beyond quantitative data. Similarly, customer advisory panels engage a group of customers on a long-term basis, such as an airline forming a panel of frequent flyers to give regular feedback on service improvements. 3. New/Lost Customer Surveys: New/lost customer surveys are tailored specifically for customers who have recently started or ended their relationship with a business. For example, a gym might survey new members to capture their initial impressions and send a separate survey to those who cancel their memberships to understand their reasons for leaving. This method helps in capturing insights from different stages of the customer journey. 4. Complaint/Compliment Analysis: This method involves systematically collecting and analyzing customer complaints and compliments to identify recurring themes. A restaurant, for example, might track feedback from review sites and comment cards to see if there are common complaints about wait times or consistent compliments about food quality. This analysis helps businesses focus on areas for improvement while also recognizing their strengths. 5. Walk-Through Audits (WTA): Walk-through audits involve evaluating the service experience by "walking in the customer’s shoes." This often includes using a mystery shopper who assesses the service without staff knowing they are being evaluated. For instance, a retail store might employ a mystery shopper to evaluate cleanliness, staff helpfulness, checkout process, and overall shopping experience. This approach provides an authentic view of the service delivery from the customer’s perspective. Cost of Quality COQ is divided into two main categories: Cost of Good Quality (proactive costs to ensure high service quality) and Cost of Poor Quality (reactive costs to address service failures). Let’s break down these categories further: 1) Prevention Costs: These are costs incurred to prevent service failures from occurring in the first place. Prevention costs in services often involve training, designing processes to avoid errors, and using poka-yoke mechanisms. Examples include: Training: A hotel invests in staff training on proper customer greeting techniques to prevent poor customer experiences (treatment errors). Poka-Yoke: A bank uses a digital checklist at ATMs to guide customers through each transaction, reducing the chance of task errors, such as forgetting a step in the transaction. 2) Detection (Appraisal) Costs: These are costs associated with evaluating and monitoring service processes to identify potential failures before they impact the customer. Examples include: Surveys and Mystery Shoppers: A retail store hires mystery shoppers to evaluate customer service and ensure standards are met, reducing the likelihood of treatment errors. Quality Audits: A restaurant conducts regular quality checks on food preparation and cleanliness to ensure that tangible errors are avoided. 3) Internal Failure Costs: Costs incurred to correct service failures identified before they reach the customer. Examples include:  Rework: In a dry-cleaning service, if a garment is not cleaned correctly, it needs to be re- cleaned before returning it to the customer. Error Correction: In a call center, if an agent makes an error in processing a customer's request, they may need to redo the request before it affects the customer. 4) External Failure Costs: Costs incurred when service failures are identified by customers after service delivery. Examples include Compensation: A hotel might offer a free night’s stay if a guest complains about a noisy room (service recovery). Returns and Refunds: A restaurant refunds a meal if a customer is dissatisfied with the food quality. Service failures & Fail-safing When quality expectations are not met, we have “service failures.” Service failures may be committed by the service provider or the customers. Poka-Yoke, a Japanese term meaning "mistake-proofing" or "fail-safing," refers to designing processes and systems to prevent failures/errors before they occur. Originally developed in manufacturing, poka-yoke techniques are increasingly used in services to enhance quality by eliminating common errors that lead to service failures. The goal is to create systems that guide both service providers and customers through correct actions, reducing the likelihood of mistakes. Failures committed by Service Provider Service provider failures fall into three categories: 1. Task Errors: These refer to failures in the core service that the business is supposed to provide. These errors directly relate to the primary service or product that the customer expects. 2. Treatment Errors: These errors are related to how customers are treated by the service staff. These errors significantly impact the customer's emotional experience and perception of the service. 3. Tangible Errors: Tangible errors involve the physical or tangible aspects of the service environment. These errors impact the customer's comfort and satisfaction with the physical environment. Below are examples of poka-yoke solutions for each type of service failure committed by the service provider:  Service- Provider Type of Error Examples of Error Poka-Yoke Solution Errors Implement a double-check system Doing work Serving the wrong dish at where the server confirms the order with incorrectly a restaurant the customer before bringing it out. Use electronic prompts or checklists for Doing work not Performing unnecessary only essential tests based on diagnosis Task required tests at a lab or customer need. Errors Doing work in the Cleaning a hotel room Use a digital tracking system to ensure wrong order after guest check-in cleaning is completed before check-in. Bank teller taking too Doing work too Introduce self-service kiosks for simple long for a basic slowly tasks to reduce teller workload. transaction Failure to Set up an automatic door chime to Receptionist doesn’t acknowledge the prompt receptionists to greet each new greet arriving customers customer arrival. Ignoring a customer's Introduce training and role-play Treatment Failure to react complaint about order scenarios to improve staff Errors appropriately issues responsiveness to complaints. Hairstylist not Implement a standard pre-service Failure to listen considering customer’s checklist where staff confirm the to the customer specific request customer’s request. Gym equipment and Use cleaning checklists with Failure to clean locker rooms are timestamped logs to ensure regular facilities unclean cleaning. Failure to control Install automated climate control Tangible Restaurant too hot or environmental systems to adjust temperature based on Errors cold factors real-time conditions. Failure to Use software to automatically check for Hotel’s welcome packet proofread spelling and grammar errors before has spelling errors documents printing. Failures committed by customers Because customers play an active role in the delivery of services, they may cause failures and need help to avoid errors. These errors fall into three categories: preparation, encounter, and resolution. 1. Preparation Errors: These errors occur when customers fail to complete the necessary steps before the service encounter. 2. Encounter Errors: These happen when customers make mistakes or overlook certain actions during the service interaction that are crucial for the successful delivery of the service. 3. Resolution Errors: These occur when a customer does not effectively communicate issues they've encountered or fails to engage in the resolution process provided by the service. Below are examples of poka-yoke solutions for each type of service failure committed by the customers: Customer Type of Error Examples of Error Poka-Yoke Solution Errors Send an automated reminder with Failure to bring Customer forgets ID for a checklist of required documents necessary materials notary appointment prior to the appointment. Use clear, highlighted pre- Preparation Failure to understand Patient doesn’t fast appointment instructions on the Errors role in transaction before medical test patient portal or confirmation email. Design the booking system to Booking a basic service Failure to engage the display service differences clearly instead of premium correct service and confirm with customers at package checkout. Customer forgets to use Install prompts at checkout to Failure to remember membership card at remind customers to scan their the steps checkout membership card. Design the machine to prompt and Failure to follow Skipping steps on self- prevent further steps until all steps Encounter system flow checkout machine are completed. Errors Customer doesn’t Add a prompt in the ordering Failure to specify mention food allergy at system asking if the customer has desires sufficiently restaurant any allergies. Use clear visual instructions, Failure to follow Ignoring safety guidelines videos, or audio reminders before instructions on amusement rides the ride begins. Include a prompt in a follow-up Failure to signal Hotel guest doesn’t report survey to report any issues service failure a broken appliance encountered during the stay. Customer repeatedly Use a personalized checklist in the Failure to learn from forgets essential customer’s account to remind Resolution experience documents them of commonly forgotten items. Errors Ensure accurate description of Failure to adjust Diner expects fine dining service level on menus and expectations at a casual cafe signage. Provide digital aftercare Failure to execute Patient ignores aftercare instructions via SMS or email with post-encounter action instructions prompts to acknowledge receipt. Six Sigma Six Sigma is a quality management philosophy that focuses on reducing variability in service processes to consistently meet customer expectations. Traditional performance measures often rely on averages, such as the average wait time. However, averages alone can be misleading, as they may hide variations that lead to inconsistencies in service quality. Six Sigma goes beyond averages by aiming to minimize variability around a target value, ensuring services meet specific customer expectations consistently. Customer Expectations (VOC, USL and LSL) In Six Sigma, customer expectations are captured within a defined range called the Upper Specification Limit (USL) and Lower Specification Limit (LSL). These limits represent the Voice of the Customer (VOC), setting the boundaries of acceptable service outcomes. This range, known as the design width, encapsulates the outcomes that align with customer expectations. For example, in a customer support scenario, the USL might be the maximum acceptable time a customer should wait on hold, while the LSL represents the minimum duration that a service interaction should meet to feel adequately attended to. Process Variation (VOP, UCL and LCL) While VOC defines customer expectations, the actual performance of a process may vary due to both customer-driven factors and internal operational factors. This real-world variation is represented by the Voice of the Process (VOP). In Six Sigma, we measure this variation using control limits: the Upper Control Limit (UCL) and Lower Control Limit (LCL). These control limits capture the natural range of variation in the process, which we call the process width. For example, in a bank's check deposit process, customer behavior might vary depending on time of day, while operational factors could include the speed and reliability of the bank's software. If UCL and LCL fall within USL and LSL (as shown in the plot above), the process is both in control and capable of meeting customer expectations. Process Capability Indexes Process Capability Indexes are statistical measures used to assess how well a process can produce outputs that meet specified limits or requirements. The two primary indexes are Cp and Cpk. Cp measures the potential capability of a process by comparing the width of the process spread (based on standard deviation) to the width of the specification limits. It tells us if the process has the potential to fit within the limits, but it does not consider whether the process is centered. 𝑼𝑺𝑳$𝑳𝑺𝑳 Cp = 𝟔𝝈 Cpk goes a step further by accounting for process centering, indicating how close the process mean is to the target within the specification limits. A higher Cpk value (typically above 1.33) suggests a more capable process that consistently produces outputs within the desired range, minimizing defects. 𝑼𝑺𝑳$𝑷𝒓𝒐𝒄𝒆𝒔𝒔 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑷𝒓𝒐𝒄𝒆𝒔𝒔 𝑨𝒗𝒆𝒓𝒂𝒈𝒆$𝑳𝑺𝑳 Cpk = Min { , } 𝟑𝝈 𝟑𝝈 Achieving a Six-Sigma Level Process A Six-Sigma level process is a benchmark for near-perfection, aiming for only 3.4 defects per million opportunities (DPMO). This level of precision is exponentially higher than lower sigma levels. For example, a process operating at a 3-sigma level will have around 66,807 defects per million opportunities, a significant gap compared to Six Sigma. Capability Index Defects per Million Sigma Level Yield Process Capability (Cp or Cpk) (DPMO) 1 0.33 30.85% 691,462 Not Capable 2 0.67 69.15% 308,538 Marginally Capable 3 1 99.33% 66,807 Capable 4 1.33 99.38% 6,210 Capable 5 1.67 99.98% 233 Highly Capable 6 2.0 99.99% 3.4 World-Class Capable Solved Six Sigma Examples To make these concepts more tangible, here are four examples of service processes, each with reported voice of process (i.e., average and standard deviations) versus the voice of customer (i.e., USL, and LSL) Service Process 1: Hotel check-in time VOP: Average: 5 minutes with Standard Deviation: 1 minute VOC: USL: 7 minutes, LSL: 3 minutes Analysis: This process is on-target as its current average (equal 5 min) falls right in the middle of customer expectation range This process has a 2-sigma level performance because we can only fit 2* 𝜎 = 2*1 = 2 from the process average (5 min) to the nearest specification limit (3 or 7) Another way to confirm that is to calculate the capability index for on-target process: !"#$#"# '$( Cp = %& = %∗* = 0.66 Such performance level produces 69% positive outcomes, the area colored as red shows the range where this hotel is failing to meet the customer expectations, amounting for 31% of occasions!  0.4 LSL USL 0.3 0.2 Target Value 0.1 2 4 6 8 10 Service Process 2: Call center wait time VOP: Average: 6 minutes with Standard Deviation: 2 minutes VOC: USL: 8 minutes, LSL: 2 minutes Analysis: This process is not on-target as its current average (equal 6 min) doesn’t fall in the middle of customer expectation range. This process has a 1-sigma level performance because we can only fit 1* 𝜎 = 1*2 = 2 from the process average of 6 to the nearest specification limit of 8 Let’s calculate the capability index for this off-target process: 𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑈𝑆𝐿−𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒−𝐿𝑆𝐿 8−6 6−2 2 Cpk =Min { , } = Min ' , ( = 6 = 0.33. 3𝜎 3𝜎 3∗2 3∗2 Such performance level produces only 30% positive outcomes (yield rate of 30%) 0.20 LSL USL 0.15 0.10 Target Value 0.05 2 4 6 8 10 12 14 Service Process: Food delivery preparation time VOP: Average: 22 minutes with Standard Deviation: 1.5 minutes VOC: USL: 30 minutes, LSL: 10 minutes Analysis:  This process is not on-target as its current average (equal 22 min) doesn’t fall in the middle of customer expectation range. This process has a 5-sigma level performance because we can fit almost 5* 𝜎 = 5*1.5 = 7.5 from the process average of 22 to the nearest specification limit of 30 Let’s calculate the capability index for this off-target process: +,-./00 !"#$23/,45/ +,-./00 23/,45/$#"# (6$77 77$*6 : Cpk =Min { (& , (& } = Min ' (∗*.9 , (∗*.9 ( = ;.9 = 1.77 0.25 Target Value LSL USL 0.20 0.15 0.10 0.05 10 15 20 25 30 35 DMAIC Six Sigma uses a DMAIC (Define, Measure, Analyze, Improve, Control) cycle to structure the improvement efforts for existing processes that are not performing as well as desired. 1. Define: Clearly define the problem, set project goals, and understand customer requirements. The Define phase sets the foundation for the DMAIC project by ensuring everyone understands the problem and the scope of improvement. This phase involves identifying stakeholders, clarifying objectives, and defining success criteria. 2. Measure: Collect data to understand the current state of the process and establish a baseline for improvement. In the Measure phase, the goal is to gather relevant data to quantify the problem and establish a baseline performance level. This phase involves defining metrics, identifying data collection methods, and ensuring data accuracy. 3. Analyze: Identify the root causes of the problem and analyze data to uncover patterns and correlations. The Analyze phase is about diving deep into the data to determine why the problem is occurring. This phase involves using statistical analysis and problem-solving tools to find and validate root causes. 4. Improve: Implement solutions to address root causes and test changes to confirm effectiveness. In the Improve phase, the team generates and tests solutions that target the root causes identified in the Analyze phase. This phase often includes brainstorming, testing, and piloting solutions before full-scale implementation. 5. Control: Ensure the improvements are sustained over time and prevent the problem from recurring. The Control phase focuses on standardizing the improvements, monitoring performance, and creating plans to sustain results. This phase ensures that the gains achieved are maintained and prevents backsliding. Case Study: Reducing Appointment Cancellations at a Dental Clinic Business Context: "Bright Smiles Dental Clinic" is facing a high rate of appointment cancellations, leading to inefficient use of resources and revenue loss. To address this problem systematically, the clinic management decides to implement the DMAIC approach, aiming to better understand and control the factors contributing to cancellations. Define In the Define phase, the team’s goal is to thoroughly understand the cancellation process from the patient’s and clinic’s perspectives. First, they map out the process steps involved in an appointment cancellation, from the patient notifying the clinic (via phone or online) to the internal steps the clinic’s staff take to update schedules, adjust resources, and manage rescheduling. This process map highlights the impact cancellations have on both the front-end (patients and reception) and back-end (scheduling software, staffing adjustments). They also consider the backstage technology—such as the clinic’s scheduling and reminder systems—and identify potential gaps where notifications might fail or delays in rescheduling occur. By clarifying these process steps, they can better pinpoint areas where cancellations disrupt the workflow. A Project Charter is then created to establish the project’s goals, scope, and objectives, setting a target to reduce the cancellation rate from 20% to 10%. Measure In the Measure phase, the team focuses on quantifying the cancellation problem and gathering data on surrounding variables. They develop a Data Collection Plan to systematically track information such as the frequency, timing, and reasons for cancellations. A Check Sheet is used to record specific reasons for each cancellation, providing a structured way to organize data. They create a Bar Chart to visually compare cancellation reasons, identifying the most common ones. Additionally, a Histogram is used to observe cancellation patterns across different days and times, revealing peak periods for cancellations. To track cancellation trends over time and establish a baseline, they set up Control Charts. These tools give the team a clearer picture of the scale of the issue and help them identify the timing and variables surrounding cancellations, laying the groundwork for in-depth analysis. Analyze In the Analyze phase, the team uses quality tools to dig into the root causes of cancellations. They begin with a Fishbone Diagram (Ishikawa) to explore potential causes, categorizing them under key headings: Patient Behavior, Technology Issues, Staff Workflow, and External Factors. This brainstorming tool helps them uncover key factors such as patient forgetfulness, technical issues in the reminder system, and potential scheduling conflicts. To further investigate each main cause, the team conducts a 5 Whys analysis. For instance, by asking “Why” five times about the issue of patients forgetting appointments, they trace the root cause back to insufficient reminders or timing of notifications. This phase concludes with a clear understanding that forgetfulness and scheduling conflicts are primary drivers of cancellations, while technology gaps also play a role in some cases. Improve In the Improve phase, the team considers multiple solutions and tests them to determine their effectiveness. The first solution is an Automated Reminder System that sends patients SMS and email reminders 48 hours and 24 hours before their appointments. To evaluate the effectiveness of this solution, they conduct a pilot test, measuring its impact on cancellation rates over two weeks. The second solution involves introducing a Flexible Rescheduling Option via an online portal, allowing patients to reschedule up to two hours before their appointment, reducing the need for last-minute cancellations. During the pilot, the team assesses the technical feasibility of integrating these solutions with the clinic’s current system, as well as the need for customer education to ensure patients understand and use the new rescheduling options. They also address staff resistance by holding training sessions to help staff adapt to the new workflows and use technology effectively. After testing, the team finds that the combination of automated reminders and flexible rescheduling reduces the cancellation rate to 9%. Control The Control phase ensures that these improvements are sustained and monitored over time. The team sets up a Control Chart to track monthly cancellation rates, enabling them to identify any patterns or changes that may indicate a recurrence of issues. To standardize the new process, they update the clinic’s Standard Operating Procedures (SOPs) to incorporate the automated reminders, flexible rescheduling, and any necessary backend adjustments. They also implement Process Audits on a quarterly basis to verify that the procedures are consistently followed and to catch any early signs of system failures. Additionally, they use training plans for new staff members to ensure everyone understands the updated workflows. By establishing these control mechanisms, the clinic is able to sustain the improvements, maintain a low cancellation rate, and ensure smooth operations moving forward. Lean Philosophy and Its Application in Service Quality Lean is a philosophy that emphasizes the elimination of waste within a service or manufacturing process to maximize value for the customer with minimal resources. Originally developed in manufacturing, particularly by Toyota, the Lean approach focuses on enhancing efficiency, reducing costs, and improving overall quality by identifying and removing non-value-adding activities or waste. In essence, Lean is about maximizing value with less work. In a manufacturing context, Lean focuses on the following types of waste (TIMWOODS): 1. Transport: Moving products or materials more than necessary e.g., shipping products to multiple distribution centers before reaching customers.  2. Inventory: Holding more products than are immediately needed, leading to tied-up capital e.g., a retail store with excess winter clothing during summer. 3. Motion: Excessive movement of people or equipment e.g., a worker walking back and forth to retrieve tools. 4. Waiting: Idle time when resources aren’t ready e.g., workers waiting for delayed shipments to start production. 5. Overproduction: Producing more than is demanded, creating excess inventory. e.g., a bakery making 200 loaves daily when only 150 are sold. 6. Overprocessing: Doing more work than valued by the customer e.g., polishing unseen parts of a product, wasting time and resources. 7. Defects: Errors or faults that require rework or repair e.g., a car with a faulty brake system that needs fixing before sale In a service context, the Lean philosophy is adapted to address similar wastes but with a focus on the flow of information, interactions, and processes that contribute to service delivery. Here’s how each type of waste applies to services and examples of how they affect service quality: 1. Handover: Inefficient transfers of information or work between individuals or departments, causing delays and potential errors e.g., a patient in a hospital is transferred between multiple departments for tests, increasing wait times and risk of information loss. 2. Backlog: Accumulated work waiting to be processed, often causing delays e.g., a software development team with a long list of unresolved bugs that delays new feature releases. 3. Searches/Movement: Time and effort spent searching for information, materials, or people due to poor organization e.g., a lawyer spends hours looking for a specific document due to disorganized filing practices.  4. Waiting: Delays that occur when one step in the service process is waiting for the completion of another step e.g., a customer is put on hold while a customer service representative gathers necessary information. 5. Overproduction: Providing more service or information than the client needs or values e.g., a consulting firm delivers a 100-page report when the client only wanted a summary of key findings. 6. Overprocessing: Performing more work or providing a higher level of service than the customer values or requires e.g., a car rental company thoroughly washes and details every vehicle between rentals, although customers would be satisfied with a basic cleaning. 7. Errors: Mistakes made during service provision that require correction, leading to additional time and costs e.g., a bank teller processes a deposit with the wrong amount, requiring a correction transaction. Lean Six Sigma Lean Six Sigma combines the principles of Lean and Six Sigma to create a comprehensive approach that both reduces waste and minimizes variability in service processes. By integrating Lean’s focus on efficiency with Six Sigma’s emphasis on quality and consistency, Lean Six Sigma provides a powerful framework for continuous improvement in service businesses. This hybrid approach is especially effective in environments where customer satisfaction depends on both speed and reliability. For instance, in a call center, Lean Six Sigma can help streamline call- handling processes to reduce unnecessary steps (Lean) while ensuring that agents consistently follow best practices for customer interactions (Six Sigma). The goal is to create a seamless, efficient process that delivers high-quality service with minimal delays, improving both the customer experience and the organization’s operational performance.