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Improvement in Service Quality Advent of the Internet Thesis: The advent of Internet has given a clear competitive edge to companies employing its facilities and extending it to its customers. There are numerous success stories. The quality management movement began in the manufacturing sector, but a growing concern with quality in other areas of the economy has led to its application in service industries, government, education, and other nonprofit agencies. Quality has emerged as and remained a dominant theme in management thinking over the past fifty years. While the initial approaches arose from American theorists and practitioners, it was predominantly Japanese companies that undertook the early commercial applications. The need for enhanced quality was initially largely ignored or rejected in the West.
More recently, organizations throughout the world have begun to embrace the theories and practices of quality, and quality initiatives in the public sector are being actively pursued by many national governments. During the years immediately following the Second World War, consumer demand grew to such an extent that the manufacturing focus in the Western world was on productivity. Effectively, growing markets were starved of products, and with increasing economic prosperity, everything that could be produced could be sold. Simply, with unfulfilled demand, organizations were under no pressure to focus on the quality of their product and perhaps perceived that they had already achieved the ultimate standards. Coupled to this, consumer expectations of product longevity and reliability were relatively low compared with those of today, as was the technology level of both the products and the manufacturing processes.
With the help of increased access to information technology and the Internet, customers are becoming increasingly more knowledgeable and demanding. Witness the many service-quality initiatives that are currently in vogue. The combined effect of increasing wealth, an aging society, higher wages, higher education levels, and a younger generation that is comfortable with technology has increased pressure on companies to adapt operations accordingly. Juran (1964) defined quality as fitness for use, and he was known for his trilogy of quality: planning of quality, quality control and improvement of quality (Beckford, 2002).
In 1974, Juran pointed out five characteristics of quality: technological, psychological, time oriented, contractual and ethics. Deming (1982), on the other hand, defined quality as fitness for purpose, and specified 14 points to guide the search for quality, where he pointed out that an organization should: be driven towards quality, look for the problems to solve them, constantly worry about improving the production systems and the training of its employees, and not be based on numeric production quotas. Crosby (1979) refers to quality as conformance to requirements and pointed out that the only standard of performance is the one that produces zero defects (Beckford, 2002). The foundation of Deming's approach can be seen in his statistical background and his training in the science of physics. These essentially hard sciences based in scientific method will have informed the development of his early approaches. It must be acknowledged that they continue to make a major contribution to work in the field of quality.
The principles and practice of SPC have been demonstrated over time to have considerable value to organizations in both the service and manufacturing sectors. They also have value for the workers who use them, providing rapid and personal performance feedback information, enabling them to recognize their own successes and failures and to take corrective action where appropriate, provided always that the outputs are expressed in a language which they can understand. Deming's work in relation to the softer issues is considered to be narrow and underdeveloped, failing to take account of much of the thinking in that area over the period of his career. It must, though, be acknowledged that Deming did not claim to be an expert in this area.
Nevertheless, the value of his approach could have been further enhanced by a clearer focus on that aspect. The Plan, Do, Check, Action cycle is a clear directive to both management and workers that achieving continuous improvement is the purpose of the quality activity. This contrasts directly with the hints of a discrete programme suggested in Crosby's work (Cooper & Edgett, 2003). Deming makes quite clear reference to the service sector in his work, but again places much emphasis on quantitative aspects of this area.
For example, he refers to aspects such as how long a telephone is out of action before it is repaired. While this is of great importance, of equal importance is the tone of voice which a person uses in answering the telephone when it rings. This may be a stronger determinant of how the customer perceives the level of service quality than the number of times that it rings, or even the words that are said. It is often the case that managers take measurements of the things which are easy to measure, rather than the things which, while difficult to measure, are of greater importance. In a world which relies ever more heavily on telecommunications devices, these aspects, which are more difficult to quantify, will have increasing importance. The reliability and clarity of modern digital telecommunications systems are such that these are no longer significant issues, and many businesses are run entirely through them for example, telephone-based banking and insurance services.
Of increasing importance, then, is tone of voice, since technical issues are less problematic and digital technology makes tone of voice transparent to the listener. The more recent development of videophone technology and Internet telephony, which are not yet widespread, will have further impacts on this area of service. It is accepted that Deming has probably made the most substantial contribution to quality management. However, enthusiasm must be tempered with the knowledge that if he had provided a clearer method, a more explicit and developed recognition of the human aspects, and a precise focus on what constitutes quality of service in the contemporary world, the value of his work would have been enhanced. The government played a key role in encouraging several industries such as the railroads and airlines. The computer is a government-inspired product opposed by IBM from fear that its tabulating machines would become technologically obsolete.
The Internet was originally developed by the government to assure a means of communications during the Cold War and was subsequently turned over to the public domain. A constant evaluation and review of customer needs and desires is part of successful customer service management (CSM). Using a comprehensive CSM strategy can bring about customer centering, customer retention, and decreased costs of customer relations for an organization (Kinney, 2000). For example, Amazon. com individualizes service by recommending books to customers based upon past ordering patterns and interests using its highly trained staff and new technology, including the Internet and special customer service software. Another example of enhancement though IT and Internet changes is Dell.
Dell Computer has totally eliminated finished goods inventory by building computers in response to customer orders via telephone or the Internet. The computers are built after customers place an order and are shipped directly to the customers eliminating intervening layers of wholesalers and retailers. A hot-line number covers customers' questions and minor problems. Dell supplies the names and telephone numbers of independent consultants who will set up the computer and provide training if desired by the customer.
Dell has an arrangement with designated independent service centers to cover hardware problems and warranty obligations. There is no finished goods inventory. Dell has complemented its rapid response to customer orders with rapid replenishment of small quantities of components from suppliers. The only inventory at Dell is limited numbers of components for assembly of computers that have already been sold. The competitive advantage to Dell of eliminating finished goods inventory, minimizing component inventories, and marketing directly to consumers is affecting inventory and materials management not only in personal computers, but other products as well. Purchasing managers deal with outside suppliers or vendors, whereas materials managers deal with internal suppliers.
Purchasing can be organized as an independent department or be part of the marketing, production, or finance departments. The latter is the worst place to have purchasing in JIT manufacturing, as price becomes central to the decision making process. In JIT manufacturing, price is just one element to be considered in purchasing; another is dependable delivery of shipments free of defects. Purchasing practices differ depending whether a part is an "A, "B, " or "C" item in the ABC inventory classification system. The ABC classification system takes into account both the price and volume of purchased parts. "A" items may not be necessarily expensive but are used in large volumes such as components in manufacturing.
The ABC classification for an inventory can be obtained by using the spreadsheet sorting function on the price X volume column for each item in inventory. Office supplies and other "C" items and "D" items such as an occasional can of paint can be removed from purchasing through arrangements with local wholesale or retail vendors. Vendor reps can visit a company's storeroom and replenish items that have been used. For instance, suppose that storeroom shelf space has been set aside for three one-gallon cans of paint. If the number of cans of paint falls to one, two cans of paint are added.
The company is billed via a blanket invoice according to a previously agreed schedule of prices. Some effort has to be expended to ensure vendor honesty. Many companies are dispensing with "C" and "D" inventory items altogether and depend on vendors to deliver supplies on demand. If the time to draw inventory out of a storeroom is the same as the time for a vendor to respond to a request, then there is no need to keep inventory. Buyers can join organizations that purchase "C" and "D" items in bulk and offer them to their members at reduced prices. The Internet is becoming a means by which companies can purchase office supplies and other "C" and "D" items.
There has been a long-standing trend for companies to shift inventory upstream from the retailer to the distributor or manufacturer. This affected who held the inventory but not necessarily the amount of inventory in the system. A more recent trend is a reduction in manufacturers' and distributors' inventory by their reacting faster to changes in demand. The benefit is savings in carrying costs. However, the cost is a system of production and distribution that has become more vulnerable to interruption from unforeseen events. Customers are more Knowledgeable and demanding than ever before.
To ensure that an organization can meet new challenges, the entire organization should be "customer-centered, " a shift from the more traditional "process-centered. " Making this shift requires a complete rethink of the organization. The rethink should concentrate on the critical success factors of people, process, technology, and environment. The pace of technological change is expected to continue, leading to the creation of many opportunities that previously did not exist for companies ready to take advantage of them. The financial industry is a prime example of how technology is driving many new service development initiatives: Some good examples are the aggressive moves made by Charles Schwab using E-commerce, or movement toward a cashless society (Money trials are occurring in the United States, Canada, and England).
A simpler product innovation is the Canadian Imperial Bank of Commerce's experiment with Canada Post in a joint venture to have their ATMs sell postage stamps. Added to all this is the threat in all sectors of totally new competitors entering the market, for example, the possibility of Microsoft entering the banking business via the Internet. Technology charges ahead at a breakneck pace, opening up myriad of new possibilities: banking and insurance on the Internet, new information products for retail and business clients, and new electronic delivery channels, to name but a few. Customer needs are changing, too, as businesses and consumers deal with the realities of a more competitive, faster-paced, chaotic and information-intensive world. The firms that succeed at developing new services at seizing the market and technological opportunities presented will be the ultimate winners. Those who choose to ignore service development, or who seem unable to get innovation right, will be left behind.
The Internet and electronic commerce have introduced many new possibilities in the service sector, but they also present major challenges. The obvious opportunities are in the roll-out of the new service (launch) through the use of an e-commerce channel. But there are other less obvious and potentially higher-impact marketing and distribution implications: More Direct Delivery Routes. The supplier can now sell directly to the end user or ultimate customer. The traditional intermediary can be cut out or "dis-intermediate. " No More Geographic Monopolies. There are no geographic monopolies anymore.
The fact you are the only bank or travel agent in town, or the major brokerage company in a metropolitan area, no longer guarantees you a market or customer loyalty. Via e-commerce, service providers in other parts of the country, or even other countries, can invade your market domain. And you can access their markets too. This opens up a myriad of new market opportunities for the innovator.
Instant Custom Design. With e-commerce, services and products can be custom-designed for customers almost instantaneously. Witness the example of Dell computers. Via the Internet, the consumer can custom-tailor a new computer by specifying memory size, processing and modem speeds, and types of drives. "Virtual" Market Testing. E-commerce means that customer requirements can be gauged and concept tests can be done with "virtual products. " One advantage of Internet technology is that the developer can seek customer input or feedback on service/ product design without actually having the service available! Concept tests.
These are also possible via the Web, by means of a virtual product: One develops the service concept and displays it to prospective users via e-mail or the Internet. But it is a "pretend service" no development has taken place yet. Potential customers can then indicate their degree of interest, liking, and purchase intent. They could also indicate what features they like best, and what they do not like. Works Cited Beckford, John. (2002) Quality.
Routledge. Kinney, W. (2000). Information Quality Assurance and Control for Management Decision Making. New York, NY: Irwin McGraw Hill. Robert G. Cooper, Scott J.
Edgett. (2003) Product Development for the Service Sector: Lessons from Market Leaders. Perseus Publishing.
Free research essays on topics related to: decision making, e commerce, finished goods, tone of voice, service sector
Research essay sample on Improvement In Service Quality Advent Of The Internet
