SBP 13a: The Unforgiving Product Syndrome

This principle occurs because customers are involved in production, by virtue of supplying inputs to the process. In most cases, customers are aware of the need for rework, and remember the defect even after it is repaired.

Service Business Principles in this unit deal with “service recovery,” which is the service equivalent of product rework. Before expounding on techniques for service recovery, it is important to understand the costs involved in assuring service quality.

There are three general categories of costs in quality assurance: prevention, inspection, and rework. Prevention costs are costs associated with implementing systems to avoid quality problems. Inspection costs encompass measurement or evaluation of what is produced, so that defects might be identified. Rework (or recovery) is the costs of repairing the service or product that is found to have a defect. Service providers may focus on any of the three in quality improvement efforts, but should consider the following:

• It is virtually impossible to inspect quality into a service. Customers resist being inspected (as covered later in SBP: Resistance to Measurement). A great portion of customers with defects will choose to “walk” rather than bring the problem to the service provider's attention.¹⁾ The standardized production of manufacturing allows the inspector to “sample,” which is to only inspect a small portion of each production run–but the nonstandard production of services makes sampling much less effective. Further, if a defect is found through inspection, it is often impossible to repair the problem without affecting the customer.
• Service recovery can be very costly, for reasons discussed later. (in SBP: Rework Plus)
• It is impossible to prevent all defects in service processes, but can be much more cost-effective to prevent defects than to recover from defects.

The reason defect prevention strategies are so appealing in service businesses is because they are often the only strategies that shield defects from customers. Defects that occur and are repaired have a lingering effect, due to the memory of the customer.

Service providers must decide how to allocate resources among defect prevention, inspection, and recovery.

A key effort in making the shift from a recovery strategy to a prevention strategy is to have systems for assuring the problems that occur (and are recovered) are not repeated. This means that all quality problems which are discovered are documented and assigned to an employee who is responsible for the process and for assuring appropriate improvements are made. The assigned employee needs to be held accountable for any selected improvements, and that the improvements accomplish the prevention objective.

A family member of mine had a dentist remove her wisdom teeth. At least that was what was supposed to have happened. Instead, the dentist removed one of her molars. A dental retainer was subsequently employed to rectify the resulting problem. Yet even with the teeth repaired, you can bet we would think twice before seeing that dentist again.

My wife and I went to a business dinner at a Florida location of an Italian restaurant chain that we previously thought well of. When the waitress brought the food, she informed my wife that they were out of what she had ordered, and asked if she would like to select something else. (But everyone else at the table already had their food.) Further, my pasta had a piece of cardboard in it, which they were happy to fix. Even though we ultimately were given food without cardboard, the memory of the experience influenced our ceasing to patronize that restaurant chain.

I once took my Honda Accord to the Charlottesville, Virginia Honda dealer to have a missing carburetor inlet tube replaced. The missing part cost about $24. In the course of the service department's pitch, I wound up agreeing to about $800 of additional preventative maintenance (including new tires). When I picked up the car a few days later I learned that they had charged for every minor detail, including $40 for tire installation, which would have been free had I bought the tires where they got them–from the Goodyear dealer next door. As I left, poorer but wiser, I stopped to check the carburetor inlet tube. It was not there! The service (and I use that term loosely) manager apologized and agreed to install it for free once it came it. (It took about 15 seconds to install.) They fixed the problem, but my dissatisfaction kept me from ever returning.

On another occasion, I took my Honda to a repair shop for some simple repairs. I told the employee to call me for approval if it was going to be more than $100. (And I wrote that on the service order above my signature.) When I came to pick up the finished vehicle, I learned that it was to cost somewhat more than $100. I reminded the employee about my request to be called. He said he was sure I would approve, so he went ahead and completed the repairs. (I had been near a phone, so would have received any call he had made.) I did not consider that adequate justification for ignoring my request. So he cut down his labor charges so that the total was just under $100. I paid but never returned (partially because the shop changed ownership not long after that).

Airlines are usually eager to recover when they misroute a passenger's baggage. They have a van that will deliver the baggage as soon as it is sent to the correct destination. In some cases, the passenger is happy with the recovery. But, if the passenger is on a short business trip, and does not get the bags until halfway through the trip, he is likely to be put out. He may trust the airline a little less, and insist on more carry-on baggage on future trips.

With manufacturing, the production process has the luxury of being separated from the customer in both space and time. As a result, defects can be hidden from customers by repairing them prior to shipment.

1. What is an example of a “defect” in the service process?
2. At what points in the service process are defects typically detected?
3. What is involved in correcting a defect?
4. What impact does the remedy have on the customer?

Design a plan for assuring that quality problems which are discovered (a) are adequately remedied with the customer, and (b) are appropriately avoided in the future. Who in the service organization will administer the defect prevention efforts, assigning problems to appropriate service employees? How will the problem reports be tracked? In what time frame and manner will they be followed up on? How will it be determined if the defect prevention efforts are effective?