Quality Is Meeting or Exceeding Customer Expectations - Essay Example

Q Quality is meeting or exceeding expectations" (Evan & Lindsay 2005, p.16). Quality is not easy to define because it means different things to different people under different sets of circumstances. It is the customer receiving the goods or services who decides whether or not the promised quality of goods or services are being provided by the organization, regardless of what the organization thinks of itself. (www.arthivite.ukonline) Customers are the main driving force for the production of goods or services and in order to delight the customer, the quality must exceed the customer's expectations. In order to define quality, we must consider who the customers are, and what their quality requirements are. (Course book 1.3) There are several dimensions to identify what customers want for the products and services. David A Garvin (1984) suggests that there are 7 dimensions of quality which are performance, features, reliability, conformance, durability, serviceability and aesthetics (Garvin, 1984). Performance means a product's primary operating characteristics, for example, the characteristics of an automobile would be acceleration, braking distance, steering and handling. Features is the "bells and whistles" of a product, for example, a car may have power options, a tape or CD deck, antilock brakes, and power seats. Reliability means the probability of a product's surviving over a specified period of time under stated conditions of use, for example, a car's ability to start on a cold winter morning and frequency of failures are reliability factors. Conformance means the degree to which physical and performance characteristics of a product match with the pre-established standards, for example, a car's fit, finishing and freedom from noises and squeaks can reflect this dimension. Durability means the amount of use one gets from a product before it physically deteriorates or until replacement is preferable, for example, a car with corrosion resistance and the long wear of upholstery fabric. Serviceability means the speed, courtesy, and competence of repair work, for example, the concerns on access to spare parts, the number of miles between major maintenance services, and the expense of service for an automobile owner. Aesthetics means how a product looks, feels, sounds, tastes, or smells, for example, a car's color, instrument panel design, control placement, and "feel of the road" may make it aesthetically pleasing (Evans & Lindsay 2005, p163) For Billing department of a major copiers company, Company A (Co A), in Hong Kong, its primary responsibility is to provide fast, accurate and easy to understand invoices to external customers who in turn use them to process their payment. The meaning of "Fast" for Co. A means invoices must be sent out after one week of the report meter reading cutoff date, under our normal process. "Accurate" means the amount of invoices billed to customers must be correctly calculated using the meter reading reported from customers under service agreement. Not only the amount of invoices must be correct, but also the customers' information such as customers' name, billing addresses, installation addresses, serial numbers and models of equipments, billing period and invoice due date etc., must be correctly stated on the invoices for customers to review. However, only accuracy in calculation is not a good quality service from a customer's perspective. The ease of understanding of invoices is also defined as quality for Co. A. If the invoices are not easy to understand or read, customers may confuse or take lots of time to read them which causes inconvenience or dissatisfaction to customers. "Understandable" means the invoice must be accurately reflecting the actual amount charges, and different types of charges shown must be distinguishable and the layout is in a readable format for customers with sufficient information that customers required. The information like last meter readings, the current meter readings , current month's meter usage, the unit charge, the total amount and the invoice due date on them must be there for verifying the correctness of the amount charged and processing payment. However, these are only to define quality regarding the physical invoices which is tangible to customers to perceive quality. The quality of services provided to external customers by the Billing department on the other hand is something that the customer can feel, even if it is not in a physical form. The first quality requirement for the customers is easy to access services. In order to have the customers' monthly meter usage for calculating the charges on invoices, customers are required to report their meter usage to our company by 25th of every month. If customer cannot do that, we would estimate their monthly meter usage accordingly. Our customers can report their meter usage to the company by filling in the accumulated meter readings of their copiers on our meter cards with relevant customers' information such as customers' account number, customers' name, the copiers' serial number. This information can subsequently be sent back to the company by fax, post or internet. Another way of reporting meter readings is to call our customer service center where our customer care executive will handle their calls. We provide different ways of reporting meter readings to customers so that they can select the most convenient and easy ways to access our services. After receiving their meter readings, we will key in this information in our computer system for calculating the customers' billing. The second requirement is reliability, which means to perform the service right the first time and every subsequent time. (Course book 1.23) Customers rely on us to input the correct numbers in the system with no delay and issue invoices to them accurately. Then, we have to send out invoices to customers as soon as possible so that customers would have more time to prepare payment before the payment is due. We have to be consistent in providing accurate invoices to each customer any time. The third requirement is responsiveness which involves the willingness and readiness on the part of employees to provide timely services. If customers call in to enquire about any invoice related matter, we will respond to customers as quickly as possible and provide the solution that fits their needs. For example, a customer realized that he did not report the number of spoil copies to us when he received his billing. We would suggest him either to amend the current invoice or wait until next month, depending upon the remaining time. The costs of poor quality are reflected in the form of efforts in avoiding poor quality or costs incurred as a result of poor quality. Management team sets out to identify all such costs that would disappear if their company improved its performance in key areas towards quality improvement. This information helps the management in evaluating the relative importance of quality problems and thus identifing major opportunities for cost reduction. It can help in budgeting and cost control activities. Finally, it can serve as a scoreboard to evaluate the organization's success in achieving quality objectives (Evans & Lindsay, 2005, p.301). Quality costs can be separated into prevention, appraisal and failure costs. Prevention costs are incurred to keep away nonconforming products from occurring and reaching the customers, and reducing the appraisal costs to a minimum. Quality planning costs include salaries of individuals associated with quality planning and problem-solving teams, the development of new procedures, new equipment design, and reliability studies. Process control costs are incurred to analyze production processes and implement process control plans. Information systems costs are incurred to develop data requirements and measurements. Training and general management costs include external and internal training program, clerical staff expenses, and miscellaneous supplies (Evans & Lindsay, 2005, p.338-339). Appraisal costs are spent to determine the degree of conformance to quality requirements. Testing and inspection costs are costs related to incoming materials, work-in-process, and finished goods, including equipment costs and salaries. Instrument maintenance costs arise due to calibration and repair of measuring instruments. Process measurement and control costs involve the time spent by workers to gather and analyze quality measurements (Evans & Lindsay 2005, p.339). Internal basic failure costs occur when a result of unsatisfactory quality found before transfer to the customer takes place. Scrap and rework costs include material, labor and overhead. Cost of corrective action arises from the time spent in determining the reasons of failure and correcting the production problems. Downgrading cost is related to the revenue lost when spelling a product at a lower price because it does not meet the specifications. Process failures is unplanned machine downtime or unplanned equipment repair. External failure costs are associated with defects found after the customer receives the product or service i.e. cost due to customers complaints and returns, including report on returned items, cancelled orders, and freight premiums. Product recall costs and warranty claims are costs related to repair or replacement as well as associated administrative costs. Product liability costs arise as the result of legal actions and settlements. To cope with the increased demand of customers, the department needs to improve the billing system to suit the needs. Therefore some cost is incurred on studying and setting the procedures to ensure the quality of invoices and services . For example, customers request for alternative ways of billing plan is one such cost. The department needs to spend man hours to investigate if the existing system can still be reliable to ensure the quality of the billing services. If not, the department needs to review and amend the existing procedures or develop a new one. Testing, inspection and audit costs are incurred to ensure the change or new procedures to run smoothly while maintaining the quality of billing. If the change is massive, training is needed for the existing staff. The costs of training program provided by the department for new starters on using the system, the billing process and the calculation methods of meter charges are known as prevention costs, which prevents them to make mistakes such as wrongly taking meter readings, wrong contract formation in system and wrong input in customers' information during the billing process. This kind of error can affect the accuracy of invoices and the costs associated with it such as the man hour used to check the invoices before sending out to customers. The costs of training also affect the responsiveness of services. If staffs do not have good understanding of the billing process and the terms and conditions of the charging agreement, then the staff cannot answer customers' enquiries timely and accurately. Customers will perceive this as poor quality because they may need to wait to get the correct and reliable answers. If staffs provided wrong answer to customers, customers will complain and staffs need to spend time to resolve customer complaints such as the time to investigate the complaint, communicate with the customers, provide feasible solution to resolve the case. Sometimes it involves monetary compensation too. These are the costs related to external failure costs. In the worst case, the cost would be lost of customers which means lost of future opportunities for selling. Because the department emphasizes on the accuracy of data input, the department will perform spot checks in every billing batch to minimize occurrence of error before sending out invoices to customers. The cost associated in this procedure is also called prevention cost. In case error is found in invoices due to input error by staffs, rework costs and costs for taking corrective action would arise, which is associated with the man hour used to determine the causes of error, to get the correct data for invoice calculation, the cost of printing the invoice and the cost of the paper itself. Sometimes the unexpected downtime of publishing equipment that prints out invoices would be one of the internal failure costs. The print job is needed to be scheduled outside office hours and staffs need to stay to monitor the equipment and invoices are not able to send out the invoices to customers as scheduled. This is also perceived as a poor quality. If error is found in invoices after reaching to customers, that will result in customers complaining about the invoices. Again, staffs need to spend time to resolve the complaint and it might involve monetary compensation too. Not to mention that it may lead to the lost of customers. It is better to make fullest use of prevention costs to prevent errors happened. This will result in reducing the internal failure cost and external failure cost, which in turn can help companies to have better cost control. In addition, the products and services are delivered correctly the first time, which means lesser appraisal costs. Read More