Performance and Service Excellence in the Service Industry - Case Study Example

  Performance and Service Excellence in the Service Industry Introduction A service industry is the set of companies that earn revenue through the provision of intangible products and services. Service quality is the aptitude of an organisation to meet customer needs while remaining economically competitive (Governance Institute 35). FedEx was founded by Fred Smith in 1973. With workforce of over 145 thousand worldwide, delivering over 3.5 million packages daily and logging over 2.7 million miles on the ground every day. FedEx is the world’s largest express transportation company. It prioritizes customer service and satisfaction (FedEx para8). Its Same Day Service makes door-to- door deliveries for urgent packages within 24hrs. The Overnight Service delivers all packages by 8.00 AM to about 5000 zip code areas. Its Priority Overnight service delivers by 10.30 AM on the next business day in most US cities and by noon in other cities and regions. The standard overnight delivery delivers packages by 3 PM in most cities or by 4.30 PM in other areas. The air charter service accepts all commodities that will fit in an aircraft and provides the plane and the crew while the customer chooses the time, route and terms of service (FedEx para8). Leadership for performance excellence FedEx maintains profitable commitment to excellence by applying the eleven management principles underlying its success. It makes customer satisfaction the central focus of business as this is good for business. The flat management structure minimizes distance between leaders and front line workers while empowering employees and expanding their responsibilities. FedEx has been very committed to reasonable job security by cross-training employees for more flexibility allowing for a redistribution of work during low periods and hiring of part-time workers during peak workloads, thus eliminating the need for lay-offs during off-peak times (FedEx para8). The human resources department designs thoughtful and creative compensation schemes, supple duty hours and permanent part-time work. Benefits are structured to accommodate personal preferences. FedEx has a policy of promotion from within, and problem resolution is given ultimate importance with the CEO sometimes intervening to resolve grievances. Open communication is enhanced through an internal broadcasting company, FXTV that reports and discusses all company news (Goldsack para 12). Even though, everyone has their own responsibilities, the fences are low so that employees can help each other in case somebody is stuck. This is where cross-training comes in handy. The focus is customer satisfaction. For example, senior managers can be seen serving customers at the hub during the holiday season or making personal, business calls. When problems arise such as cost of sorting, everyone including customers contributes their perspective towards a suitable solution (Goldsack Para 11). FedEx regularly invites employee and customer assessment of its operations and personnel, and habitually rewards success with the spot recognition of excellence. Different contributions attract different rewards. For example, the Bravo Zulu award is for above and beyond performance. Discretionary awards can be cash, dinner theater tickets or other forms of reward. Finders Keepers awards is cashed to anybody who brings in new customers. Best Practice Pay is an award for exceeding organisations set goals. The rewards are set on what is precious to the beneficiary and are not time constrained. These spontaneous random rewards create an element of surprise and keep such moments memorable (Goldsack Para 13). FedEx is renowned for its absolute dependability and attention to detail. This is achieved by making several parts work together with different sub-cultures. Each micro-culture contributes something to the system. The emphasis is through transformational and not transactional leadership through raise of awareness of importance to achieve teamwork, selflessness, and handwork. Leaders are expected to be loyal to employees by inducing partnerships rather than imposing patriarchy. They should have a well-honed sense of duty, bearers of change, and be willing to take and give criticism (Goldsack Para 14). Unlike the US postal service that used zone and volume pricing, FedEx used fixed pricing simplifying the process much to the delight of customers and the owner Fred smith lobbied congress to deregulate the airfreight industry resulting in competitors sharing benefits and ten-fold expansion of the industry. FedEx welcomes customer problems and handling such problems opens the door to use of their other services, improving existing service and innovatively transforming problems into opportunities (Goldsack Para 13). The FedEx software allows customers to track shipments and has leveraged information systems into a vastly profitable logistics consulting business. The Next Day Service was introduced by smith to generate revenue and eliminate down time between standard overnight service and economical afternoon service. This was despite fears by his advisers that it would cannibalize existing business (Goldsack Para 14). FedEx commitment to ISO 9001-2000 requirements The ISO 9001-2000 requirements define technical specifications and criteria to be used as rules, guidelines and definitions of characteristics to ensure that materials, products, processes and services are fitting for the intended purpose. The system is founded on the basis that certain generic traits of management performance can be consistent, well designed, implemented, and carefully managed in a quality system to provide confidence that the out-put meets customer expectations and standards (FedEx Para 2). Commitment to customer service at FedEx radiates from the most senior managers to all employees. This ensures that staff members understand what customers want and provide it for the sustenance of the company’s high level of brand equity. The company’s achievement is constructed on its ability to deliver packages anywhere in the world on time and undamaged. In order to maintain this reputation in a highly competitive market place, understanding customer needs is paramount and employee service should meet required standards (Goldsack Para 15). David Rebholtz, the executive vice president FedEx, US, observes that in a big company like FedEx with over $20 billion turnover, sustaining quality standards requires elaborate and good quality processes to help in identifying the most important things to work on. Therefore, using ISO9001 tools helps the company get the results while working on the right things. FedEx moves over 3.5 million packages a day in 211 countries using 365 airports, 662 air crafts and over 45000 fleet vehicles. The scale and complexity of the process to ensure timely and convenient delivery is enormous (FedEx para8). The process utilises a hub and spoke method to connect all points of the network through a central hub. When passels get at the hub, they are sorted, allocated to the correct destinations, and reloaded to the correct outbound flight. There is always pressure and emphasis on delivering packages on time for forward delivery. Once the courier collects a package, he is given a bar code, which enables the system to trace the movement of packages in transit. The information about the package is available online so that customers can track their own packages (Goldsack Para 16). The use of the latest technology to track packages helps FedEx get nearer to clientele, comprehend their preferences, and in the efficient management of business. FedEx uses a single ISO9001 approval system for its worldwide operations employing the services of Lloyd’s Register Quality Assurance as the company’s certification body. The elaborately structured ISO9001 process complements the FedEx system helping them focus on continual improvement and customer satisfaction to achieve sustainable business benefits and growth (FedEx para8). All staffs undergo intensive training for their role in the organization. For example, a trace agent who talks to customers on the phone undergoes 6 weeks training before that can serve. Similar programs for couriers and other staff are in place. All staff members participate in the annual staff survey, which is completed anonymously online. These surveys help the management review the system and rectify weak areas. Continuous training is available to all staff with support from the internal online Quality University. Staff members take courses, which are assessed on completion and the score automatically added to the employee staff record. FedEx operates a program that helps identify and encourage non-management employees assess their suitability and readiness for a management role. FedEx includes ISO in training of staff and each employee has access to an electronic version of policies and procedures. (FedEx para3) To enhance communication with staff, FedEx operates an internal television channel for its employees to keep them updated on relevant information and events happening in the organization. The purple promise award celebrates and rewards employees who have performed above and beyond expectations in customer service. For example, a service agent in a station delivering an important package to a customer using her own car, this reward scheme aims to engender a customer satisfaction mindset among employees (Goldsack Para 20). Service assurance FedEx uses the comprehensive Service Quality Indicators (SQIs) to measure and monitor its effectiveness. SQIs consist of primary components of transactions between FedEx and its customers. It captures aspects such as lost packages, lost deliveries on the right day and packages delivered on the wrong day. Each component is then weighted depending on the degree of importance to the customer. Components that cause most frustration to customers get a superior weighting than those that are less exasperating (IT Governance Institute 12). For example, a misplaced parcel is weighted at 50 points while a parcel delivered late on the right day is weighted at one point. This gives FedEx a better perspective when reviewing customer service (Goldsack Para 22). Every year, the top management, establishes a specific target for each SQI helping the company achieve continual improvements against specific goals. The company gathers daily feedback from staff on customer feelings, opinions and frustrations while top managers make sales calls to customers gaining first hand feedback on service satisfaction. The company carries out two major qualitative studies. For instance, a customer value analysis surveys a base of customers and non-customers and the SQI values of each component are compared between the groups (Goldsack para 26). The performance compared to price of the service experienced is compared against competitor performance. This helps evaluate issues such as those attributes that are no longer deemed to be unique and provides a reference point in case of under performance in relation to competitors or emergence of new trends. Another qualitative study gathers information about customers’ negative experiences and the corresponding risk to the revenue. Teams are then formed to find solutions to the issues highlighted. Each team is expected to formulate ways to improve the customer experience. These qualitative processes help identify process changes that can reduce customer loss or improved approach to competition (Goldsack Para 25). To ensure customer satisfaction with every transaction at a lower price and improved profit performance, then predictability and consistency of delivery is critical, this is achieved by engaging in an ongoing evaluation of processes, parameters and information. Daily and weekly meetings are convened and action teams established, these teams analyze data, make decisions and ensure that decisions are implemented. This helps the company understand the market place and put in place processes that help it stay ahead of the competition (Goldsack Para 29). The daily recap meetings are held between key operations in the world in order to analyze how well the system is performing, problems are solved, and recurring problems are noticed with more pragmatic action taken to prevent them recurring in the future. Each Friday, the company vice president leads a weekly analysis review meeting consisting of quality professionals, mid-level management and relevant staff to review performance of the SQIs in the previous week. The meeting addresses problems and possible solutions, the presence of key executive means that major decisions can be made and action taken immediately. The next meeting follows up on the progress of the previous week’s decisions and the improvements recorded (Goldsack Para 32).  Conclusion Achieving performance excellence in an organization is a rigorous process that requires the input and engagement of all staff members across the spectrum. It is a continuous recurring process that involves routine daily analysis and review in order to achieve sustainable business success. Therefore, all the stakeholders need to be proactive in ensuring that organisations maintain their competitive advantage. However, the management of organisations should be in the front line in the effort to lead employees in the right direction. Works cited: IT Governance Institute. 2005. Governance of the extended enterprise: bridging business and IT strategies. Hoboken, NJ: John Wiley & Sons FedEx Personalised proposal for the Express distribution Requirements of FedEx Express. 2012 Web 14th Dec 2012 http://www.scribd.com/doc/66093063/FedEx-Corp-Profile FedEx Customer Service Commitment. 2012 Web 14th Dec 2012 https://www.supaswift.com/fx/CustomerService/CustomerServiceCommitment/tabid/69/ Default.aspx Goldsack, Barbara. ISO 9001:2000-focus on the new standards. 2004. Web 14th Dec 2012.www.lr.org FedEx 2012 Web 14th Dec 2012 Introduction to ISO 9001-2000. http://www.flexstudy.com/catalog/schpdf.cfm?coursenum=96041   Read More