The American Society For Quality Debuts Quarterly Quality Index With 10-Year Analysis

Quality Performance Declines as Customer Expectations Rise

MILWAUKEE, Feb. 24 /PRNewswire/ -- The research study, conducted by the American Society for Quality (ASQ), the world's leading authority on quality, and derived from the American Customer Satisfaction Index (ACSI), the nation's leading measure of customer satisfaction, provides evidence of a dramatic drop in service quality along with an apparent stabilization in product quality. In most industries, quality improvement has failed to keep pace with customer expectations, indicating that there is significant room for opportunity in both sectors to improve business results through better quality systems and processes. "There is no anchor to customer expectations," said Jack West, ASQ past president. "What customers expect today is not what they expected 10 years ago. Successful companies must continually ramp up their quality practices to keep pace with ever-increasing consumer demands."

A Decade of Decline

The ASQ Quality Index demonstrates that customers' perceptions of quality have declined .8% over the past decade, with .3% regarded as a statistically significant decline. There is a notable discrepancy between product quality and service quality. Product quality has been relatively stable over time (86.9 in 1994; 86.3 in 2004) as manufacturers have had quality systems in place for decades, ensuring uniform production of tangible goods. Service quality, however, has not fared well. In 1994, customers rated service quality at 80.3; in 2004, it was rated 78.3, a steep decline of 2%. Corporations that provide services vs. products have traditionally been slower to adopt quality improvement programs. It is now "catch up" time as more nonmanufacturing, service-based corporations begin to incorporate quality systems into their operations and adopt quality programs such as Six Sigma to meet customer needs.

Given the focus on quality in traditional manufacturing environments, it is no surprise that tangible goods such as automobiles, soft drinks, food, and beer are highly rated over time, whereas airlines, restaurants, and cellular phone service -- all service industries -- are the lowest rated.

"Competition among producers of goods like soft drinks, food, and beer, is more intense because the switching cost for the consumer from one brand to another is very low, making it imperative that manufacturers compete for each and every sale not on the basis of price, but rather on the quality of the products that are produced," said West. "Historically, customers have had fewer options in choosing service providers or have been the captive of product manufacturers for service."

Industries on the Rise

The life insurance industry realized the greatest gain over the last 10 years, with an increase of 2.7% in customer perceived quality. This is likely the result of a well-defined process of interacting with customers after the initial policy sale.

Hotels have one of the highest perceived-quality scores for the service industry, showing gains in both perceived quality and value over the last decade. During that time, several hotel chains have implemented major quality improvement efforts. For example, Starwood Hotels and Resorts, which registered a 7.1% gain, implemented Six Sigma extensively throughout the organization.

Customers' perceptions of quality have also risen in the fast food industry (1.6%), with pizza chains like Papa John's, Domino's Pizza, and Little Caesar's realizing gains. Their traditional fast food counterparts haven't fared so well, with Burger King and McDonald's dropping 2.1% and 5.7%, respectively. "Pizza chains do a great job in meeting customer expectations," said West. "They offer amenities that typical fast food restaurants don't, such as the ability for customers to customize their products, and they often have loyalty programs and offer home delivery, leading to perceptions of higher-quality offerings."

Industries on the Decline

Local and long-distance phone companies took the biggest hit in customer perceptions of quality, both declining an average of more than 9% over the last decade. Consolidation and intense competition are the most likely reasons. Prior to the break-up of the Bell system, local and long-distance phone services were provided by the local telephone company, usually a monopoly of sorts. The circumstances allowed for high-quality service staffing at the grassroots level. Once competition started in earnest with the many mergers and acquisitions of the late 1990s, local monopolies became a thing of the past and national companies such as SBC became industry giants. The intensely competitive environment became price driven, with the big-name companies cutting customer service personnel to become more price competitive.

Airlines were second only to local and long-distance phone companies in decline. Cumulatively, airlines declined a total of 5.8% in the last 10 years. Even industry-leader Southwest Airlines took a hit, declining 5.7%. It appears customers have not reduced their expectations as rapidly as the airlines have reduced their service. Customers still expect "legacy" airlines to provide full service even at discount prices. This imbalance is likely to continue for some time as suppliers and customers seek a balance between service features and price.

"People do quality, machines don't," said ASQ President Daniel M. Duhan. "It is interesting to note that the automation of service, such as the now ubiquitous online and phone menu help programs, has coincided with the drop in service quality. In future releases of the ASQ Quality Index, we will follow what happens as quality systems and processes -- such as Six Sigma and ISO, developed from the product manufacturing side -- continue to migrate over to the services sector. I believe we will then begin to see quality rise accordingly as consumers have demonstrated their appreciation when service automation is done correctly, for example, ATMs, automated checkouts, and airline kiosks."

Perceived quality of personal computers declined 5.5% over the past decade, with Compaq, Hewlett-Packard, and IBM realizing the largest declines. Dell is the big winner in this category, with an increase in perceived quality of 4.4%. "Most of the decline is the result of quality of service, with Dell outperforming the competition," said West. "PC manufacturers have failed to meet customers' expectations. For example, they advertised easy-to-install plug and play, but often when customers bought and plugged, the computers didn't play," he said.

In the automotive industry, perceived quality declined 2.1%, with European and Asian manufactured cars outperforming U.S.-made cars. In lieu of high-quality products, U.S. automakers are driven to compete on price (i.e., rebates, 0% financing, etc.), while the Euro and Asian competition compete mainly on quality. The Cinderella story of the auto industry is Hyundai, the only auto manufacturer to increase its perceived-quality score significantly (7.6%) in the past 10 years, due in large part to an aggressive and highly focused quality improvement initiative.

Quality will become more of a focus as service companies realize that competing on price alone is not a viable, long-term business success strategy. And consumers will continue to pay higher prices for top quality, premium products. "We are seeing super quality, premium brands such as BMW doing extremely well, demonstrating that consumers are willing to pay for high quality," said West. "At the opposite end of the spectrum, certain categories such as traditional fast food and big-box retailers, whose focus is primarily on price, are not meeting expectations. I believe that the evidence is mounting that price alone is not a viable long-term business strategy. Successful brands must focus on quality as well as cost to provide superior value to their customers."

ASQ Quality Index

The ASQ Quality Index is an independent measure of customers' perceptions of the quality and reliability of products and services. Produced quarterly, the index measures more than 200 corporations in 41 industries. It is derived from the nation's leading measure of customer satisfaction, the American Customer Satisfaction Index (ACSI), produced through a partnership with the Stephen M. Ross Business School at the University of Michigan, the American Society for Quality, and CFI Group.

American Society for Quality

The American Society for Quality ( http://www.asq.org/ ) is the world's leading authority on quality. With more than 100,000 individual and organizational members, the professional association advances learning, quality improvement, and knowledge exchange to improve business results, and to create better workplaces and communities worldwide. As champion of the quality movement, ASQ offers technologies, concepts, tools, and training to quality professionals, quality practitioners, and everyday consumers, encouraging all to Make Good Great(TM). ASQ has been the sole administrator of the prestigious Malcolm Baldrige National Quality Award since 1991. Headquartered in Milwaukee, Wis., the 59-year-old organization is a founding partner of the American Customer Satisfaction Index (ACSI), a prominent quarterly economic indicator.

Other information about the ASQ Quality Index can be found on the ASQ Web site: http://www.asq.org/qualityindex/index.html .

CONTACT: Michael De Boer for American Society for Quality, +1-414-271-1314

Web site: http://www.asq.org/
http://www.asq.org/qualityindex/index.html


Rating:


Review Article Be the first to review this article

Featured Video
Editorial
Jeff RoweJeff's MCAD Blogging
by Jeff Rowe
Siemens Goes ECAD With Mentor Graphics Acquisition
Jobs
Mechanical Engineer for IDEX Corporation at West Jordan,, UT
Business Partner Manager for Cityworks - Azteca Systems, LLC at Sandy, UT
GIS Analyst II for Air Worldwide at Boston, MA
Senior Structural Engineer for Design Everest at San Francisco, CA
Upcoming Events
Design & Manufacturing, Feb 7 - 9, 2017 Anaheim Convention Center, Anaheim, CA at Anaheim Convention Center Anaheim CA - Feb 7 - 9, 2017
Innorobo 2017 at Docks de Paris Paris France - May 16 - 18, 2017
Display Week 2017 at Los Angeles Convention Center 1201 S Figueroa St Los Angeles CA - May 21 - 26, 2017



Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering EDACafe - Electronic Design Automation GISCafe - Geographical Information Services TechJobsCafe - Technical Jobs and Resumes ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy Policy Advertise