Service Quality Management
JOSEF SPURNÝ
PA181 SERVICES - SYSTEMS, MODELLING AND EXECUTION

Learning objectives
q Understand Service Quality Management
q Cost of Service Quality Optimization
q Model the Service Value Chain + Example
q

SERVQUAL






Why Service Quality Management?
 Reasons for service quality becoming a first priority for most organizations:
 Competition – Today’s market demand high quality services at low cost. Having `high quality’
reputation is not enough! Internal cost of maintaining the reputation should be low.
 Changing customer – The new customer is not only establishing priority based on volume but is more
demanding about the “quality service.”
 Changing product mix – The shift:
 low volume/high price      high volume/low price
 has resulted in a need to reduce the internal cost of poor quality.

Why Service Quality Management?
 Product complexity – As services have become more complex, the reliability requirements for
suppliers of components have become more demanding.
 Higher levels of customer satisfaction – Higher customers expectations are getting increased by
competition.

Three Quality Management Gurus
Source: Modified from John S. Oakland, Total Quality Management (London: Heinemann Professional
Publishing Ltd., 1989), pp. 291–92.

Deming PDCA Circle



Total data quality management



Total Service Quality Management
 We can easily adapt the quality management to service quality management


Cost of Service Quality



The Cost of Quality
 Cost of Quality
◦Framework for identifying quality components that are related to producing both high quality
services and low quality components, with the goal of minimizing the total cost of quality.
◦Costs of poor quality:
◦Detection/appraisal costs
◦Internal failure costs
◦External failure costs

Cost of Service Quality
Category
Definition
Example
Prevention
Costs associated with preventing defects.
Training, early reviews, quality planning, tools, process improvement initiatives.
Detection/ appraisal
Costs associated with analyzing and testing the product to ensure it conforms to specifications.
Inspections, testing, audits, quality control.
Internal Failure
Costs associated with fixing defects found prior to release.
Repair, retesting, updating documentation.
External Failure
Costs associated with fixing defects found after release.
Technical support, defect reporting and tracking, field updates, loss of future sales.

Cost Management of Service Quality
msoEF260
Quality Cost Management shows how increased Prevention Costs reduce the Total Quality Costs.
satisfied early adopters
+

Optimization for Cost of Service Quality



Service value chain



Service Unit Model
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q The provider offers the solutions to the users’ needs by combining its knowledge, resources,
competences, and capabilities.
q The concept of ‘value proposition’ in terms of provider’s proposals to market based on their
knowledge, competences, and capabilities.
Provider’s perspective

q From user’s perspective, users evaluate the solutions to their requirements based on their
perceived utility, emotional state, past experience, and memories.
q This perspective analyses the ways in which users define their needs.
User’s perspective
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q The relationship between service providers and users
q The concept of ‘value co-creation’ underling that “value is ultimately derived with the
participation of, and determined by, the beneficiary (often, the customer) through use (often
called ‘consumption’) in the process of acquisition, usage, and disposal”
Provider-user relational perspective

q Value is influenced by contextual and social dynamics.
q The concept of ‘value in context’ stated that the “value creation being understood in the context
of a larger value-configuration space” (Vargo 2008).
Contextual perspective
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Value Process Model
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Service Value Chain - Example
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