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6Quality Management and International Standards
PowerPoint presentation to accompany PowerPoint presentation to accompany
Heizer, Render, and Al-Zu’biHeizer, Render, and Al-Zu’bi
Operations Management, Arab World EditionOperations Management, Arab World Edition
Original PowerPoint slides by Jeff Heyl
Adapted by Zu’bi Al-Zu’bi
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OutlineOutline
•Company Profile: New Mowasat Hospital
•Quality and Strategy
•Defining Quality
- Implications of Quality
- Cost of Quality (COQ)
- Ethics and Quality Management
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Outline – ContinuedOutline – Continued
•International Quality Standards
- ISO 9000
- ISO14000
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Outline – ContinuedOutline – Continued
•Total Quality Management - Continuous Improvement - Six Sigma - Employee Empowerment - Benchmarking - Just-in-Time (JIT) - Taguchi Concepts - Knowledge of TQM Tools
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Outline – ContinuedOutline – Continued• Tools of TQM
- Check Sheets
- Scatter Diagrams
- Cause-and-Effect Diagrams
- Pareto Charts
- Flowcharts
- Histograms
- Statistical Process Control (SPC)
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Outline – ContinuedOutline – Continued
• The Role of Inspection
- When and Where to Inspect
- Source Inspection
- Service Industry Inspection
- Inspection of Attributes versus Variables
- TQM in Services
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Learning ObjectivesLearning ObjectivesWhen you complete this chapter you should be able to:When you complete this chapter you should be able to:
1. Define quality and TQM2. Describe the ISO international
quality standards3. Explain Six Sigma4. Explain how benchmarking is
used 5. Explain quality robust products
and Taguchi concepts6. Use the seven tools of TQM
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Managing Quality Provides a Competitive Managing Quality Provides a Competitive AdvantageAdvantage
New Mowasat Hospital Virtually every type of quality tool is
employed Continuous improvement Employee empowerment Benchmarking Just-in-time Quality tools
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Quality and StrategyQuality and Strategy
An operations manager’s objective An operations manager’s objective is to build a total quality is to build a total quality
management system that identifies management system that identifies and satisfies customer needsand satisfies customer needs
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Quality and StrategyQuality and Strategy
Managing quality supports differentiation, low cost, and response strategies
Quality helps firms increase sales and reduce costs
Building a quality organization is a demanding task
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Two Ways Quality Two Ways Quality Improves ProfitabilityImproves Profitability
Improved Quality
Increased Profits
Increased productivity Lower rework and scrap costs Lower warranty costs
Reduced Costs via
Improved response Flexible pricing Improved reputation
Sales Gains via
Figure 6.1
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The Flow of ActivitiesThe Flow of Activities
Organizational PracticesLeadership, Mission statement, Effective operating procedures, Staff support, TrainingYields: What is important and what is to be
accomplishedQuality Principles
Customer focus, Continuous improvement, Benchmarking, Just-in-time, Tools of TQMYields: How to do what is important and to be
accomplishedEmployee Fulfillment
Empowerment, Organizational commitmentYields: Employee attitudes that can accomplish
what is importantCustomer SatisfactionWinning orders, Repeat customersYields: An effective organization with
a competitive advantage
Figure 6.2
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Defining QualityDefining Quality
The ability of a product or serviceto meet customer wants and needs
Render, Heizer, and Al-Zu’bi (2013)
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Different ViewsDifferent Views
User-basedUser-based: better performance, more features
Manufacturing-basedManufacturing-based: conformance to standards, making it right the first time
Product-basedProduct-based: specific and measurable attributes of the product
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Implications of QualityImplications of Quality
1. Company reputation Perception of new products Employment practices Supplier relations
2. Product liability Reduce risk
3. Global implications Improved ability to compete
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Key Dimensions of QualityKey Dimensions of Quality
Performance
Features
Reliability
Conformance
Durability
Serviceability
Aesthetics
Perceived quality
Value
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Costs of QualityCosts of Quality
Prevention costsPrevention costs - reducing the potential for defects
Appraisal costsAppraisal costs - evaluating products, parts, and services
Internal failureInternal failure - producing defective parts or service before delivery
External costsExternal costs - defects discovered after delivery
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External Failure
Internal Failure
Prevention
Costs of QualityCosts of Quality
Appraisal
Total Cost
Quality Improvement
Total Cost
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Leaders in QualityLeaders in Quality
Table 6.1
Leader Philosophy/ContributionW. Edwards Deming 14 Points for
ManagementJoseph M. Juran Top management
commitment, fitness for use
Armand Feigenbaum Total Quality ControlPhilip B. Crosby Quality is Free, zero
defects
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Ethics and Quality ManagementEthics and Quality Management
Operations managers must deliver healthy, safe, quality products and services
Poor quality risks injuries, lawsuits, recalls, and regulation
Organizations are judged by how they respond to problems
All stakeholders much be considered
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International Quality StandardsInternational Quality Standards
ISO 9000 series (Europe/EC) Common quality standards for products
sold in Europe (even if made in U.S.) 2008 update places greater emphasis on
leadership and customer requirements and satisfaction
ISO 14000 series (Europe/EC)
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ISO 14000ISO 14000Environmental StandardEnvironmental Standard
Core Elements:
Environmental management Auditing Performance evaluation Labeling Life cycle assessment
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ISO 14000ISO 14000Environmental StandardEnvironmental Standard
Advantages:
Positive public image and reduced exposure to liability
Systematic approach to pollution prevention
Compliance with regulatory requirements and opportunities for competitive advantage
Reduction in multiple audits
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TQMTQM
Encompasses entire organization, from supplier to customer
Stresses a commitment by management to have a continuing, companywide drive toward
excellence in all aspects of products and services that are important to the customer
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Deming’s Fourteen PointsDeming’s Fourteen Points
Table 6.2
1. Create consistency of purpose 2. Lead to promote change3. Build quality into the product; stop
depending on inspections4. Build long-term relationships based
on performance instead of awarding business on price
5. Continuously improve product, quality, and service
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Deming’s Fourteen PointsDeming’s Fourteen Points
Table 6.2
6. Start training7. Emphasize leadership8. Drive out fear9. Break down barriers between
departments10. Stop haranguing workers11. Support, help, and improve
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Deming’s Fourteen PointsDeming’s Fourteen Points
Table 6.2
12. Remove barriers to pride in work13. Institute education and self-
improvement14. Put everyone to work on the
transformation
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Seven Concepts of TQMSeven Concepts of TQM
1. Continuous improvement2. Six Sigma3. Employee empowerment4. Benchmarking5. Just-in-time (JIT)6. Taguchi concepts7. Knowledge of TQM tools
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Continuous ImprovementContinuous Improvement
Represents continual improvement of all processes
Involves all operations and work centers including suppliers and customersPeople, Equipment, Materials,
Procedures
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4. ActImplement
the plan document
2. DoTest the
plan
3. CheckIs the plan working?
1.PlanIdentify the pattern and make a plan
Shewhart’s PDCA ModelShewhart’s PDCA Model
Figure 6.3
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Six SigmaSix Sigma
Two meanings Statistical definition of a process that
is 99.9997% capable, 3.4 defects per million opportunities (DPMO)
A program designed to reduce defects, lower costs, and improve customer satisfaction
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Two meaningsTwo meanings Statistical definition of a process that Statistical definition of a process that
is 99.9997% capable, 3.4 defects per is 99.9997% capable, 3.4 defects per million opportunities (DPMO)million opportunities (DPMO)
A program designed to reduce A program designed to reduce defects, lower costs, and improve defects, lower costs, and improve customer satisfactioncustomer satisfaction
Six SigmaSix Sigma
Mean
Lower limits Upper limits
3.4 defects/million
±6
2,700 defects/million
±3
Figure 6.4
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Six Sigma ProgramSix Sigma Program
Originally developed by Motorola, adopted and enhanced by Honeywell and GE
Highly structured approach to process improvement A strategy A discipline - DMAIC 6
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Six SigmaSix Sigma
1. Define critical outputs and identify gaps for improvement
2. Measure the work and collect process data
3. Analyze the data4. Improve the process5. Control the new process to
make sure new performance is maintained
DMAIC Approach
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Six Sigma ImplementationSix Sigma Implementation
Emphasize defects per million opportunities as a standard metric
Provide extensive training Focus on corporate sponsor support
(Champions) Create qualified process improvement
experts (Black Belts, Green Belts, etc.) Set stretch objectives
This cannot be accomplished without a major commitment from top-level management
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Employee EmpowermentEmployee Empowerment Getting employees involved in product
and process improvements 85% of quality problems
are due to process and material
Techniques Build communication networks
that include employees Develop open, supportive supervisors Move responsibility to employees Build a high-morale organization Create formal team structures
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Quality CirclesQuality Circles
Group of employees who meet regularly to solve problems
Trained in planning, problem solving, and statistical methods
Often led by a facilitator Very effective when done
properly
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Use internal
benchmarking
if you’re big
enough
BenchmarkingBenchmarking
Selecting best practices to use as a standard for performance
1. Determine what to benchmark
2. Form a benchmark team3. Identify benchmarking partners4. Collect and analyze benchmarking
information5. Take action to match or exceed the
benchmark
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Best Practices for Resolving Customer Best Practices for Resolving Customer ComplaintsComplaints
Best Practice JustificationMake it easy for clients to complain
It is free market research
Respond quickly to complaints
It adds customers and loyalty
Resolve complaints on first contact
It reduces cost
Use computers to manage complaints
Discover trends, share them, and align your services
Recruit the best for customer service jobs
It should be part of formal training and career advancement
Table 6.3
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Just-in-Time (JIT)Just-in-Time (JIT)
Relationship to quality:
JIT cuts the cost of quality JIT improves quality Better quality means less
inventory and better, easier-to-employ JIT system
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Just-in-Time (JIT)Just-in-Time (JIT)
‘Pull’ system of production scheduling including supply management Production only when signaled
Allows reduced inventory levels Inventory costs money and hides process
and material problems Encourages improved process and
product quality
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Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example
ScrapUnreliable Vendors
Capacity Imbalances
Work in process inventory level
(hides problems)
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Just-In-Time (JIT) ExampleJust-In-Time (JIT) Example
Reducing inventory revealsproblems so they can be solved
ScrapUnreliable Vendors
Capacity Imbalances
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Taguchi ConceptsTaguchi Concepts
Engineering and experimental design methods to improve product and process design Identify key component and process
variables affecting product variation Taguchi Concepts
Quality robustness Quality loss function Target-oriented quality
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Quality RobustnessQuality Robustness
Ability to produce products uniformly in adverse manufacturing and environmental conditions Remove the effects of adverse
conditions Small variations in materials and
process do not destroy product quality
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Quality Loss FunctionQuality Loss Function
Shows that costs increase as the product moves away from what the customer wants
Costs include customer dissatisfaction, warranty and service, internal scrap and repair, and costs to society
Traditional conformance specifications are too simplistic
Target-oriented quality
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Unacceptable
Poor
GoodBest
Fair
Quality Loss FunctionQuality Loss Function
High loss
Loss (to producing organization, customer, and society)
Low loss
Frequency
Lower Target UpperSpecification
Target-oriented quality yields more product in the “best” category
Target-oriented quality brings product toward the target valueConformance-oriented quality keeps products within 3 standard deviations
Figure 6.5
L = D2Cwhere
L = loss to societyD = distance from target valueC = cost of deviation
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Tools of TQMTools of TQM
Tools for Generating Ideas Check sheets Scatter diagrams Cause-and-effect diagrams
Tools to Organize the Data Pareto charts Flowcharts
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Tools of TQMTools of TQM
Tools for Identifying Problems Histogram Statistical process control
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//
/ / /// /// ///// ////
//////
HourDefect 1 2 3 4 5 6 7 8
ABC
////
/
Seven Tools of TQMSeven Tools of TQM
(a) Check Sheet: An organized method of recording data
Figure 6.6
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Seven Tools of TQMSeven Tools of TQM
(b) Scatter Diagram: A graph of the value of one variable vs. another variable
Absenteeism
Prod
uctiv
ity
Figure 6.6
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Seven Tools of TQMSeven Tools of TQM
(c) Cause-and-Effect Diagram: A tool that identifies process elements (causes) that might effect an outcome
Figure 6.6
CauseMaterials Methods
Manpower Machinery
Effect
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Seven Tools of TQMSeven Tools of TQM
(d) Pareto Chart: A graph to identify and plot problems or defects in descending order of frequency
Figure 6.6
Freq
uenc
y
Perc
ent
A B C D E
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Seven Tools of TQMSeven Tools of TQM
(e) Flowchart (Process Diagram): A chart that describes the steps in a process
Figure 6.6
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Seven Tools of TQMSeven Tools of TQM
(f) Histogram: A distribution showing the frequency of occurrences of a variable
Figure 6.6
Distribution
Repair time (minutes)
Freq
uenc
y
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Seven Tools of TQMSeven Tools of TQM
(g) Statistical Process Control Chart: A chart with time on the horizontal axis to plot values of a statistic
Figure 6.6
Upper control limit
Target value
Lower control limit
Time
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Cause-and-Effect DiagramsCause-and-Effect Diagrams
Material(ball)
Method(shooting process)
Machine(hoop &
backboard)Manpower(shooter)
Missed free-throws
Figure 6.7
Rim alignment
Rim size
Backboard stability
Rim height
Follow-through
Hand position
Aiming point
Bend knees
Balance
Size of ball
Lopsidedness
Grain/Feel (grip)
Air pressure
Training
Conditioning Motivation
Concentration
Consistency
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Pareto ChartsPareto Charts
Number of occurrences
Room svc Check-in Pool hours Restaurant Misc.72% 16% 5% 4% 3%
124 3 2
54
– 100– 93– 88
– 72
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0 –
Freq
uenc
y (n
umbe
r)
Causes and percent of the total
Cum
ulat
ive
perc
ent
Data for October
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Flow ChartsFlow Charts
MRI Flowchart1. Physician schedules MRI2. Patient taken to MRI3. Patient signs in4. Patient is prepped5. Technician carries out MRI6. Technician inspects film
7. If unsatisfactory, repeat8. Patient taken back to room9. MRI read by radiologist10. MRI report transferred to
physician11. Patient and physician discuss
11
1020%
9
880%
1 2 3 4 5 6 7
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Statistical Process ControlStatistical Process Control
Uses statistics and control charts to tell when to take corrective action
Drives process improvement Four key steps
Measure the process When a change is indicated, find the
assignable cause Eliminate or incorporate the cause Restart the revised process
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An SPC ChartAn SPC Chart
Upper control limit
Coach’s target value
Lower control limit
Game number
| | | | | | | | |1 2 3 4 5 6 7 8 9
20%
10%
0%
Plots the percent of free throws missed
Figure 6.8
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InspectionInspection
Involves examining items to see if an item is good or defective
Detect a defective product Does not correct deficiencies in
process or product It is expensive
Issues When to inspect Where in process to inspect
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When and Where to InspectWhen and Where to Inspect
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from the supplier
3. Before costly or irreversible processes4. During the step-by-step production
process5. When production or service is complete6. Before delivery to your customer7. At the point of customer contact
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InspectionInspection
Many problems Worker fatigue Measurement error Process variability
Cannot inspect quality into a product
Robust design, empowered employees, and sound processes are better solutions
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Source InspectionSource Inspection
Also known as source control The next step in the process is
your customer Ensure perfect product
to your customer
Poka-yoke is the concept of foolproof devices or techniques designed to pass only
acceptable product
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Service Industry InspectionService Industry Inspection
Organization What is Inspected Standard
Zu’bi Law Firm Receptionist performance
Billing
Attorney
Is phone answered by the second ring
Accurate, timely, and correct format
Promptness in returning calls
Table 6.4
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Service Industry InspectionService Industry Inspection
Organization What is Inspected Standard
Manama Hotel Reception deskDoorman
Room
Minibar
Use customer’s name
Greet guest in less than 30 secondsAll lights working, spotless bathroomRestocked and charges accurately posted to bill
Table 6.4
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Service Industry InspectionService Industry Inspection
Organization What is Inspected Standard
New Mowasat Hospital
Billing
Pharmacy
LabNurses
Admissions
Accurate, timely, and correct formatPrescription accuracy, inventory accuracyAudit for lab-test accuracyCharts immediately updatedData entered correctly and completely
Table 6.4
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Service Industry InspectionService Industry Inspection
Organization What is Inspected Standard
Zooka Restaurant
Busboy
Busboy
Waiter
Serves water and bread within 1 minuteClears all entrée items and crumbs prior to dessertKnows and suggest specials, desserts
Table 6.4
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Service Industry InspectionService Industry Inspection
Organization What is Inspected Standard
Great Stores Display areas
Stockrooms
Salesclerks
Attractive, well-organized, stocked, good lightingRotation of goods, organized, cleanNeat, courteous, very knowledgeable
Table 6.4
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Attributes Versus VariablesAttributes Versus Variables Attributes
Items are either good or bad, acceptable or unacceptable
Does not address degree of failure
Variables
Measures dimensions such as weight, speed, height, or strength
Falls within an acceptable range
Use different statistical techniques
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TQM in ServicesTQM in Services
Service quality is more difficult to measure than the quality of goods
Service quality perceptions depend on Intangible differences between
products Intangible expectations customers
have of those products
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Service QualityService Quality
The Operations Manager must recognize:
1. The tangible component of services is important
2. The service process is important3. The service is judged against the
customer’s expectations4. Exceptions will occur
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ServiceServiceSpecificationsSpecificationsat UPSat UPS
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Determinants of Service QualityDeterminants of Service Quality
Reliability Consistency of performance and dependabilityResponsiveness Willingness or readiness of employeesCompetence Required skills and knowledgeAccess Approachability and ease of contactCourtesy Politeness, respect, consideration, friendlinessCommunication Keeping customers informedCredibility Trustworthiness, believability, honestySecurity Freedom from danger, risk, or doubtUnderstanding/ knowing the customer Understand the customer’s needs
Tangibles Physical evidence of the service
Table 6.5
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Service Recovery StrategyService Recovery Strategy
Managers should have a plan for when services fail
Marriott’s LEARN routine
Listen
Empathize
Apologize
React
Notify
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