CASE STUDY FOR CHAPTER 1

Case: A Total Quality Business Model

Two young entrepreneurs, Rob and Diane, were contemplating an idea of developing a

new type of take-out restaurant with limited dining facilities that would provide a wider

variety of home-cooked cuisines than found in currently available businesses. In

developing their business model, they realized that a TQ-focused management

infrastructure would be vital to success. Here are some of the ideas they arrived at.

Customer Engagement

Rob and Diane realized that they must focus on the customers' perceived quality of both

the product and service. They believe they must provide unexpected value to their

customers and go beyond customer expectations to create lifetime customers. As part of

training, employees will focus on "moment of truths"???the many instances that a

customer forms an impression of the company, either through its products or interactions

with its employees. These moments include a friendly greeting to each customer on

arrival, recognizing repeat customers, offering samples of different items, answering

questions, serving the products, and a genuine thank-you on leaving. Another way to

exceed expectations would be to accommodate any reasonable request. Employees would

have the authority to do whatever it takes to satisfy the customer. When a complaint is

raised, the employee should act immediately to solve to the problem, listen attentively to

the customer, and apologize. No matter what, the customer should always be thanked for

bringing the complaint to the staff's attention.

To evaluate the customer's experience, the company would require shift managers to

be the first customer on each shift, starting from the parking lot to check its cleanliness.

In addition, they would use technology to track service times and complaints, and

"mystery shoppers" each month throughout the system. Every quarter, all regional store

and shift managers would meet to discuss their experiences and seek improvements.

Leadership and Strategic Planning

The leadership system would consist of regional vice presidents responsible for all of the

stores in a geographical area, regional managers in charge of about a dozen stores within

a region, store managers responsible for the day-to-day operations, and shift managers to

manage the employees on each shift. This "cascading" structure would allow

communications to be disseminated rapidly throughout the company, both top-down and

bottom-up. A manager training and development program would ensure that each level of

manager obtained the necessary skills for their job responsibilities. This training would

not only address the needs of entry-level managers, but also those who move up the

career ladder in the firm into higher leadership positions.

The company's vision would be simple: to be the consumer's choice for all varieties

of fresh convenience meals. The strategy would be based on product quality (variety,

freshness, value) and outstanding customer service. Rob and Diane realized that every

employee needed to understand the company strategy, which would be conveyed during

the employee orientation and management training and development programs. Managers

would be responsible for ensuring that all hourly employees focus on these two goals

through daily meetings, written quality check sheets that must be completed on every

shift, and an employee stock-option program that would be tied to meeting these goals as

well as profit targets.

Workforce Management

All managers would be trained in several positions in order to gain a solid understanding

of the duties and requirements of all employees, to be able to cover certain positions if

needed, to train hourly employees, and to gain credibility with them. The training

program for a new manager would be designed to be somewhat self-directed. The

manager trainee would be given a skill checklist that includes each skill he or she should

learn. Experienced trainers would be available to answer any questions and assist the

manager trainee with any difficulties. Trainees would be given short evaluative tests and

feedback from the trainer. Before their first day of work, all hourly employees would

attend an orientation session focused on making them feel welcome in their new work

environment. The session would include a history of the company, mission, policies, and

training procedures. To keep good people, the compensation program would need to be

competitive in the industry. Managers would be required to visit local competitors to

identify their compensation structure and compare them.

Job performance of all hourly employees would be reviewed periodically using

performance appraisals by the store manager after the first 30, 90, and 180 days of

employment, followed by annual appraisals. The appraisal would cover such topics as

customer focus, quality of work, teamwork, and responsibility. It would also require the

employee to identify future goals and objectives and plans for improving performance.

Process Management

All food production processes would be carefully documented so that all employees are

aware of what specifications must be met, particularly those health and safety

requirements that regulated temperature of food and proper storage. Managers would be

responsible for taking periodic measurements and observations to ensure that all

employees are following procedures. Managers would also be responsible for their

relationships with food suppliers. Rob and Diane are thinking of identifying one large

supplier for most of their food supplies.

Information and Knowledge Management

All key data and information, such as inventories, financial reports and projections,

customer feedback, employee and operational performance, would be collected and

displayed in the kitchen area, so all employees can understand the results of their efforts.

Information from all stores would be consolidated at corporate headquarters for

evaluation and analysis.

QUESTIONS TO ANSWER FOR HW1 FROM CHAPTER 1

1. What advice might you give Rob and Diane about the management practices they

are proposing within each element of the TQ infrastructure? What additional practices might you suggest? (20 Points)

1. How might viewing the organization at three levels of quality, including the

strategic (senior leadership), tactical (middle management), and the operational

levels help improve their business plan?(15 Points)

CASE STUDY FOR CHAPTER 2

Case - Mercantile Stores

During the 1980s, Mercantile Stores was a major retail organization located throughout the Southeast, Midwest, and Gulf Coast regions and included seven divisions: Gayfers, Maison, Blanche, Castner Knott, McAlpin's, Jones, Joslins, and J. B. White. Mercantile's mission statement was "Mercantile Stores is dedicated to creating excitement in merchandising by providing the highest level of service to our customers and a broad assortment of fashionable products that offer superior quality and value." In 1983 Mercantile initiated a program for processing incoming merchandise at regional distribution centers. This was seen as more efficient than receiving merchandise in the individual stores. In 1986 the company remodeled and expanded existing stores to accommodate a greater selection of fashion merchandise. Designer apparel offerings were increased in 1987.

In 1989 a major technological initiative called Quick Response was instituted. It integrated all facets of operations, from inventory planning to purchasing and inventory control, to provide customers with better service. Some of the technologies introduced were price look-up and point-of-sale laser scanning systems, electronic purchase ordering and replenishment, and electronic invoicing and funds transfer. Stronger partnerships were developed with suppliers to help ensure that suppliers have sufficient merchandise for stocking the stores. The company was in constant contact with its suppliers for mutual benefit. For example, Hanes hosiery used selling information furnished electronically and shipped 97 percent of Quick Response orders. Sales increased 17 percent, and the inventory level decreased by 15 percent.

The Quick Response program eliminated bottlenecks within the merchandise processing functions. Previously, shipments had required a high amount of labor-intensive efforts: opening cartons, physical counts, sorting, and manual ticketing. Advance shipping notice capability provided the means of knowing exactly what was coming and when. Shipments arrived preticketed by suppliers with external shipping container marking. Entire containers were scanned for contents and matched to purchase orders.

Mercantile Stores also established a University Business School for training its

management associates to implement quality practices within the company The school's motto, Investing in Excellence Through Education, reflected the company's commitment to the development of its people. Sales associates, department managers, and store managers were empowered and challenged to embrace ownership and responsibility in their jobs. For example, they planned and monitored their own forecasts from start to finish. Complete customer satisfaction was seen as the responsibility of all associates. Decisions were made as close to the customer as possible, and promotions were made from within the company.

QUESTIONS TO ANSWER FOR HW1 FROM CHAPTER 2

1. How does Mercantile view quality? Explain the roles of people and information

technology in achieving quality in the Mercantile organization. (15 Points)

2. Compare the importance of "internal quality" (what the company sees) and "external quality" (what the customer sees). Do they conflict? What is needed to ensure that they are consistent? (10 Points)

CASE STUDY FOR CHAPTER 3

Quality in Practice: Improving Customer Satisfaction at a Software Support Call

Center

This case study describes how one company improved customer satisfaction statistics at a

software support call center by 43% in one month in an industry where the monthly norm

is a low single digit percentage. The company, which provides technical support

services to software publishing companies, had managed to slowly improve customer satisfaction

figures over a three-year period. The improvement had occurred through efforts

initiated by management to implement common sense business practices such as consistent

follow-up, better technical training, and improvement of what they call the

personal factor. But the improvement had plateaued, and a crisis emerged -- a major

customer, who accounted for 45% of revenues, threatened to pull the account unless

further improvement was made.

Facing a potential disaster, management formed committees of technical support staff

and asked them for suggestions. The results were initially discouraging. Suggestions only

mirrored those already thought of by management. The logjam was broken when

someone discovered the work of Gary Klein. Klein specializes in the anatomy of expert

decision making with the aim of developing ways to speed up the training process. He

reasons that experts in high-pressure emergency occupations are often unable to explain

how they arrive at a decision because the process by which decisions are made is mostly

intuitive. Although incidents of help line support do not ordinarily qualify as

emergencies, the company assumed that this use of intuition was the reason even expert

staff members directly involved in customer service could not explain their success. The

best support engineers, like experts in other fields, were usually unable to completely

explain their reasons for success in making good instant decisions. The company

carefully analyzed calls, looking for patterns that would explain the success of the most

successful support engineers. Once they could effectively describe these patterns to the

non-expert support engineers, they were able to improve their customer satisfaction

ratings quickly.

They began by interviewing experts in a department that supported a popular word

processing package. They could do no better than management in suggesting new

approaches. They were, however, able to examine more closely the faulty assumptions

implicit in the suggestions. The suggestions fell into two groups -- more adequate training

and more personalization with the customer.

The suggestions in the first group rested on one basic assumption: Since the customer's

objective is to get the right answer, technicians could produce satisfied customers by

simply giving the right answer. This assumption seemed reasonable because all

technicians could recall certain types of problems that could be resolved instantaneously,

and customers were always very satisfied with these calls. There were, however, three

problems with this solution:

1. Some technicians of below average technical ability nevertheless consistently earned

high customer satisfaction ratings. Even more puzzling, some technicians earned high

ratings even when they could not supply the correct answer. Paul, for example, sometimes

spent days on a problem before informing the customer that he could not supply

a solution, yet customers usually gave him high satisfaction ratings.

2. Customers frequently gave low satisfaction ratings despite the fact that they received

the correct answer. Take, for example, Joe, a technically competent support engineer

who solved a customer's problem with a complex development software product in 10

minutes. This was excellent service for the level of complexity involved, yet the customer

complained that the service was inadequate because "it took too long."

3. Even with the best training, most technicians need some experience with

troubleshooting before they can give correct answers. Beginners, then, will always

degrade the overall performance of the group. This can produce a significant hit

because turnover rates in the software support business are frequently high (almost

50% in our case), and some products may require up to six months of ramp time

The company concluded, that although the correct answer could be important under

certain conditions, another factor seemed to be involved -- the personal factor. These

suggestions assumed that the technician did something on a personal level; such as using

a particular tone of voice or a friendly greeting that satisfied the customer. One

successful technician said it was just a matter of "loving the customer to death." The

company had already heavily emphasized the personal factor. Management had prominently

displayed signs in the office that read, "Treat the customers as you would like to

be treated," "Smile because a customer can hear your smile" and "Don't say no." These

types of guidelines and suggestions comprised 60% of the procedures listed in the

employee manual. Yet these apparently did little for customer satisfaction ratings.

In the ensuing research, 20 engineers responsible for supporting a well-known word

processing package were chosen out of 200. Were divided into two groups -- experts and

sub-experts. The first group was comprised of those engineers who achieved an average

customer satisfaction rating of greater than 74 percent during a six-month period. The

second group achieved ratings below 75% during the same period. The company taped

and analyzed two support calls per engineer. Because the engineers were not chosen

randomly, the focus was not on gathering a statistically significant sample, but trying to

discover what information would be most useful and effective for training support

engineers. They compared and contrasted the two groups to seek out the distinctive

factors that led to the higher satisfaction rates of the experts, and validated the initial

results with interviews of supervisors and the support engineers themselves.

The greatest surprise was discovering how little the personal factor counted. They

found that those experts who do establish a more personal relationship fare no better than

those who do not. One engineer acted almost robotic while another took every

opportunity to use the customer's name in an effort to be more personal. Yet these

differences did not affect the ratings. It seemed that short of openly obnoxious behavior,

the personal dimension was irrelevant. This result surprised us until they thought about it

further. It appears that the customer seeking help for a technical problem has no reason to

expect someone who can or will display social skills. Rather, he or she simply wants a

solution to a technical problem. That this is often not possible because of the current low

quality of software support facilities only makes a correct answer even more appreciated.

This idea led them to the central method that all experts used to solve problems whether

they were personable or not, which they called the transparency principle.

When following the transparency principle, the expert support engineer signals

throughout the call that he or she is constantly applying troubleshooting skills to the

customer's problem. Some of these signals are obvious --restating the problem in the

beginning, asking questions to clarify the problem, and giving explanations. Some are

less obvious -- admitting that a wrong course of action has been recommended, or simply

grunting something like "uh huh" instead of restating the entire problem initially. This

method is simple but powerful - so powerful in fact, that when it is properly executed,

the customer may walk away highly satisfied even after the engineer has failed to solve

his or her problem because the customer believes that the engineer did everything

possible to solve the problem. They called this the transparency principle because the

expert gives the impression that he or she is not hiding any thoughts and actions from the

customer.

Although simple in principle, this method is more complex in practice. Following is

an example of how it~ works when the engineer must probe a moderate amount to find a

solution for a caller.

Stage 1- Immediate establishment of status of engineer as a problem solver and expert.

The expert engineer communicates that he or she understands the-problem the customer

is describing. The standard previously set by management was that the engineer should

explicitly restate the problem. Only about half the experts in this study did this consistently.

The other half simply issued a series of uh huhs. The important thing is for the

engineer to issue audible signals as evidence of paying attention to the customer's words.

This technique may present a problem for the beginner who encounters a particularly

complex situation. In this case, the engineer should act exactly as an expert who has

encountered a difficult problem by asking the customer to describe the steps that led to

the problem. The engineer should then explain that this exercise may lead to the discovery

of a simple mistake that has a simple solution.

Stage 2: Initiating the troubleshooting. After completing Stage 1, the engineer must

quickly show evidence of mental activity directed toward problem resolution. There are

several ways to indicate this activity, and the engineer may use any combination of them:

1. The engineer asks the customer to do a series of operations on his or her computer. The

commands are issued rapidly and without hesitation. The implicit message is, "I want

you to do x, y, and z to verify a hunch I have about what is wrong."

2. In a variation of No. 1, the engineer offers an explicit diagnosis before issuing the

commands. This sets the expectation that the engineer has a definite solution in mind.

3. In a variation of No. 2, the engineer gives a hint that he or she is thinking of an as yet

ill-defined solution by talking to the customer almost as if he or she were thinking

aloud. The engineer then issues the commands. This sets the expectation that he or she

might have a solution.

4. The engineer cannot think of a way to attack the problem and must consult information

databases or other technicians. He or she apprises the customer of this so the customer

understands the reason for the long silence. If Stage 2 leads to a solution, the call

produces a satisfied customer. If not, Stage 3 begins.

Stage 3 Open admission of a wrong hypothesis. The engineer immediately shows he or

she is working on finding another strategy by recycling through a variation of Stage 2.

The research showed that the difference between the expert and subexpert groups in

terms of adherence to the transparency principle was large enough to suggest training.

The effects of the training were immediate and dramatic -- a 90 percent satisfaction rate

one month after the training. This was 43 percent above the average and 27 percent

higher than ever before. The training brought a gratifying result and an unexpected

surprise -- the experts themselves also improved significantly. It seemed that once the

high performing experts realized the reasons for their success, they used this knowledge

to do even better.

Joe, the support engineer mentioned previously, exemplified this improvement.

Despite his expertise as an engineer, at least 20% of the surveyed customers gave him a

low rating. After learning about transparency, he realized where he went wrong.

Whenever Joe put a customer on hold to research a problem, he did not apprise him or

her of his plans. The customer, therefore, had no idea why he or she was on hold-at times

for as long as 10 minutes. From this point on Joe made sure always to describe his

research plan before putting the customer on hold, and he found that the customer sounded more relaxed when he returned to the phone.

QUESTIONS TO ANSWER FOR HW1 FROM CHAPTER 3

1. What does this case suggest about the importance of understanding customers' true needs and expectations? (15 points)

2. What are the implications of the "transparency principle"? (15 points)

3. The concept of studying the best people in an organization as a method of learning to improve others' skills has long been advocated by Joseph Juran. How might the learning from this case be applied to other organizations? (10 points)