Quality: in the beholder's eye<\/p>\n
Roy Goni, Contributor, Jakarta<\/p>\n
A number of managers from U.S. service industries appearing on
\na CNN newscast in April 2000 voiced their concern over today's
\nbusiness realities.<\/p>\n
One of their statements raised the issue of good service amid
\nthe general lack of attention to customers' needs, while others
\ncomplained about the fact that only relatively unqualified
\npersonnel could be recruited.<\/p>\n
The grievances in fact constitute a description of how the
\nmarket is currently undergoing a major upheaval, leading toward
\nwhat some experts call 'the new economy', a new reality that
\nreforms the norms of productivity, growth and profitability, and
\nat the same time demands a change in business management.<\/p>\n
Many managers may not realize that the revolution of
\ninformation spreading over the business world since the 1960s
\nwith the emergence of information technology, such as
\ncomputerization, has brought about a structural change leading to
\na shift from the manufacturing to the service sector.<\/p>\n
This phenomenon requires a service-focused approach in
\nbusiness management. The problem is that the rates of
\nproductivity in manufacturing are not the same as those in
\nservices.<\/p>\n
According to Prof. Roland T. Rust, director of the Center for
\nService Marketing, Vanderbilt University, there are two reasons
\nfor the difference. First, the productivity of services is very
\nhard to measure, indeed, no standard can be applied yet. Second,
\ncomputerization in the service sector was less efficient during
\nits early implementation phase due to slower computer operations.<\/p>\n
A big change started in the 1990s when the information
\nrevolution struck across the globe, bringing with it a great
\nimpact on the world economy. In the past decade, the contribution
\nof service industries to gross domestic product (GDP) growth in
\nthe US reached 75 percent. Likewise, in Asian countries such as
\nHong Kong services shared 80 percent, and in Singapore, Japan and
\nTaiwan 60 percent, of GDP.<\/p>\n
In Rust's view, in facing the new economy companies must pay
\nattention to three aspects. First, they should be outwardly-
\nfocused in order to earn revenue; second, long-term orientation
\nis needed because relations with consumers are long term in
\nnature; and third, service excellence for the satisfaction of
\nconsumers is the key to future success.<\/p>\n
In response to this wave of change, management needs to revise
\nthe paradigm of quality so far followed. Quality guru Philip
\nCrosby says that quality is free. His principle is that enhancing
\nquality through products with minimum defects can be achieved by
\nimproved efficiency, which reduces costs and finally enables the
\nsupply of goods that satisfy consumers' demands and encourage
\nrepeat purchases.<\/p>\n
The ultimate goal of this approach is a business model capable
\nof maximizing its quality promotion and therefore ensuring
\nconsumer satisfaction, while optimizing productivity as well.
\nHowever, research conducted in Sweden through the Swedish
\nCustomer Satisfaction Barometer has proved that the 'quality is
\nfree' concept does not have any concrete impact on service
\nindustries. Service companies attempting to replicate this
\nconcept by maximizing quality\/consumer satisfaction and
\nproductivity at the same time tend to reduce their profits.<\/p>\n
What is quality? In manufacturing, quality is always
\ncharacterized by standardization, or adjustment to
\nspecifications, but in services it has the general aim of
\naccommodating the specific needs of consumers. So, in service
\nindustries quality is characterized by customization, or meeting
\ncustomers' expectations.<\/p>\n
The problem companies frequently face is how to make a
\ntradeoff between quality\/satisfaction and productivity. In
\nreality they can adopt two strategies. First: the high-service
\nstrategy, emphasizing revenue increases with prime service
\nquality and efficiently guaranteeing customer satisfaction.
\nCitibank is an example. Second: the lowcost strategy, stressing
\nminimum cost with minimum services at low prices, such as Makro
\nretail networks and Garuda Citilink.<\/p>\n
Both strategies can perform well but in this new economy era,
\nalso often dubbed the era of 'customer sovereignty' with great
\nemphasis on long-term customer loyalty, the high-service strategy
\nis more suited to companies planning to build strong ties with
\ntheir customers. The understanding of quality in this period
\nshould be put in the context of customization, by translating the
\nspecific needs of buyers into customer satisfaction.<\/p>\n
From this perspective, corporate marketing strategies should
\nbe reformed and placed within the paradigm of service-oriented
\norganizations.<\/p>",
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