THE SERVICE QUALITY MODEL AND THE CHALLENGES

OF SIX SIGMA IN SERVICES

Behnam Nakhai, Department of Business Administration, Millersville University of

Pennsylvania, Millersville, PA 17551, (717) 872-3753, Behnam.Nakhai@millersville.edu

Joao S. Neves, Department of Management, The College of New Jersey,

Ewing, NJ 08628, (609) 771-2242, neves@tcnj.edu

ABSTRACT

Since its development by Motorola Corporation in late 1980s, six sigma quality has gained
considerable attention. The relentless drive in recent years towards adoption of six sigma in
services has led to unrealistic expectations as to what six sigma is truly capable of achieving.
Utilizing the SERVQUAL framework, also known as the Gap Model, this paper presents a new
look into six sigma and the potential benefits and limitations of six sigma applications in service
quality.

Keywords: six sigma, service quality, SERVQUAL, quality management

INTRODUCTION

Service quality continues to be a challenging topic in contemporary quality management theory

and practice. Unlike products, services are not easily measured, tested or controlled for quality
and this topic has been the subject of study from different perspectives since early 1980s.
Researchers in the field of marketing have contributed significantly to our understanding of the
core premises of service quality (e.g., Gronroos [20], Parasuraman, Zeithaml & Berry [34],
Woodall [44]). The most consistent findings of two decades of service quality research are that:
(i) service quality is more difficult for the consumer to evaluate than product quality; (ii) service
quality perceptions result from a comparison of consumer expectations with actual service
performance; and (iii) quality evaluations are not based solely on the outcome of a service but
also involve evaluation of the delivery process. This paper summarizes the growing literature of
six-sigma applications in services, highlighting the potential and possible limitations of six sigma
applications in service industry particularly in a knowledge-based environment.

SIX SIGMA IN SERVICES

Since its development by Motorola in late 1980s, six sigma has gained considerable attention,
especially since high profile adoption by companies such as General Electric in the mid-1990s,
six sigma has spread like “wildfire” [6] [19] [7]. Many organizations in manufacturing and
services, public and private, large and small have joined the six sigma band wagon. In addition
to Motorola and GE, many other Fortune 500 companies such as Allied Signal, Johnson and

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Johnson, Kodak, Caterpilar, Boeing, American Express, Fidelity Investments, Sony, J. P.
Morgan Chase are using it. The six sigma wave has spread from the U.S. to the European Union,
Japan, Canada and is gradually becoming popular in India and other LDCs in Asia, Middle East
and Latin America [42]. Mellat-Parast et al. [32] highlight similarities between the six sigma
improvement process and the Baldrige model. Table 1 summarizes recent studies that report six
sigma applications broken down by specific service industry or sectors. It includes examples
from service industries as well as from service operations of manufacturing companies.

There is a growing number of descriptive and prescriptive articles, mostly authored by

practitioners and consultants, that deal with six sigma applications in service industry (e.g. [4]
[23] [1] [7]). Some researchers employ conceptual models to investigate the organizational
requirements for effective six sigma implementation. Hensley and Dobie [23] propose a
conceptual model for assessing organizational readiness for six sigma and utilize the model to
analyze the readiness of a public transit company based on survey data. Chakrabarty and Tan [7]
examine the current state of six sigma application in services based on quantitative and
qualitative analysis of the literature and identify critical success factors and key performance
indicators as management guidelines for effective applications of six sigma in the service
industry. Biolos [4] prescribes ways how to effectively implement six sigma in service
organizations. Some studies have investigated the success factors for implementing six sigma in
world class organizations [10] [2] [1]. Antony [1] highlights the six sigma success factors:
strong leadership and management commitment, organizational culture change, aligning six
sigma projects to corporate business objectives, election of team members and teamwork, six
sigma training, understanding the DMAIC methodology, tools, techniques and key metrics,
selection of projects and project management skills, linking six sigma to customers, and
accountability (tying results in financial terms to the bottom-line). Wessel and Burcher [43] and
Fahmy [13] describe the situation surrounding small and medium enterprises and what can be
done to help them succeed in implementing six sigma.

While six sigma has been adopted by many companies both in the United States and around the
world, the main areas in the service industry where six sigma has seen the most work are banking
and financial services, healthcare, construction, supply chain management, accounting, customer
relations, public utilities, material procurement, education, libraries, order processing, the airline
industry, safety and even the government and non-for-profits.

Antony [1] describes some of the potential areas in the service sector prime for six sigma
adaptations and provides a comparison of six sigma with other quality approaches such as TQM.
Edgeman et al. [11] describe how the government is using six sigma in order to increase the
quality of service they are providing this country in this time of uncertainty. Furterer and
Elshennawy [15] explain how the city’s finance departments are trying to increase their
efficiency through lean six sigma initiatives. Reece [38] describes how six sigma is aiding the
Department of Defense with their fiscal constraints. Matchette [30] on the other hand describes
the various other ways that the Department of Defense benefits from six sigma.

The healthcare industry in particular is an area where there is considerable research into six
sigma application. Benedetto [3] examines the potential benefits and drawbacks of implementing
six sigma into a radiology film library and how that environment compares to some other

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hospital environments. D’Eredita [9] describes ways to use six sigma in the healthcare industry
in order to lower costs in non-core departments, while Johnstone et al. [26] study the situation
surrounding the implementation of six sigma into various areas of healthcare in order to save
lives and money.

There are numerous manufacturing companies applying six sigma to their various non-
manufacturing departments such as human resources, payroll, accounting, customer relations,
supply chain management, safety and hazard engineering, organization change and innovation.
Lanyon [29] describes how Raytheon is using six sigma to make their human resources
department more efficient. Juras et al. [27] describe how chief financial officers can apply six
sigma in order to guarantee compliance with the Sarbanes-Oxley Act. Fleming et al. [14] report
how companies are applying six sigma to improve customer relations.

Financial services is another area of the service sector that has been implementing six sigma
rapidly. Taghaboni-Dutta and Moreland [41] report how six sigma is applied to improve the
process surrounding student loan refinancing, while Roberts [39] reports how Credit Unions
apply six sigma. Carlivati [5] specifically describes the situation surrounding six sigma in the
banking industry and how six sigma can be applied to various non-core divisions like marketing.
Antony [1] reports areas of potential application of six sigma in service processes.

The adoption of six sigma by the service sector has been considerably slower than that by their
manufacturing counterparts [15]. The biggest example of six sigma in the U.S. is without a
doubt GE and that lead to enormous expansion of this approach to service operations of many
large corporations [4] [40] [1] [30] [25] [7]. Large companies that have embraced six sigma in
the United States include names like Honeywell (previously known as Allied Signal), Texas
Instruments, Caterpillar, Maytag, Lockheed Martin, and Northrop Grumman. Since early on
however, the application of six sigma is not without difficulties. An important part of the
literature on six sigma applications regards the specific difficulties and useful advice for its
implementation in the service sector.

Patton [37] studied some of the limitations of six sigma in service industries; however, it is
crucial to examine the effectiveness of six sigma in service quality in the context of available
models in the service quality literature. In none of the articles we found on six sigma
applications in the service sector did we find a development of a theoretical service framework;
in only one article [28] did we find a brief reference to the service quality model, which is widely
accepted in the marketing field. However, no formal treatment was presented or suggested. It
appears that the application of six sigma to services will be severely limited if there is no deep
understanding of the nature of services and the nature of how people judge quality in services.

SIX SIGMA AS A CHANGE AGENT AND MOTIVATIONAL TOOL

Six sigma is a means to reduce process variation, but it is much more than that also. It is a
philosophy that benefits everyone from the customer to the shareholder and even the suppliers
and employees [7]. Unlike lean management which focuses on cost savings, six sigma is a
means of saving both the company and the customer not only money but also all the problems

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that come along with poor quality. Chakrabarty and Tan [7] emphasize that six sigma “is also a
customer focused methodology that drives out waste, raises levels of quality, and improves the
financial performance of organizations to breakthrough levels.”

Six Sigma is not just a way of measuring the level of quality, it is a way of determining
weaknesses; where the organization could do better; and how serve the customer better [11] [1].
Six sigma is a way of instilling on the people in the organization a new perspective on what’s
acceptable [19] [11] [43]. While the major benefit of six sigma may be the bottom line through
process improvement there are also many other benefits: increased customer satisfaction, a
higher understanding of problem solving, increased teamwork, and increased employee morale
[7]. However, as Hensley and Dobie [23] remind us, six sigma is not a “quick fix” approach and
will not save the organization over night: “It is not UPS with next day delivery”.

Six sigma’s hierarchy of expertise is based on the belt system. Hoerl [24] presents a sample
black belt curriculum for manufacturing application and compares it with the GE finance-
oriented curriculum model. Gitlow and Levine [18] and Evans and Lindsay [12] show full-
blown six sigma curricula for black belts and master black belts. This system is credited with
fostering a culture of quality where the ownership of quality is viewed as the responsibility of the
entire organization, not just of those directly working in the quality related functions, and
provides a common purpose and language [2]. The belt system is divided into five levels [22]:

Champions—fully trained business leaders responsible for promoting and directing the six
sigma strategy, selection of critical projects, and deployment
Master Black Belts—fully trained quality leaders responsible for six sigma implementation,
training, mentoring, and results
Black Belts—fully trained experts who are experienced in leading improvement teams
Green Belts—fully trained experts in six sigma tools and methodologies deployed in six
sigma project teams
Team members—individuals supporting specific projects working in teams in their areas

THE GAP MODEL

Various functions of the organization use different measures of the quality depending upon their
respective definitions of quality. Thus, many organizations fall often short of reflecting
customer’s perspectives in defining the quality [16] [17]. In the quality literature, five different
perspectives in defining quality are indentified: transcendental (only through experience, not
definable), product-based (performance, features, reliability, durability, serviceability, perceived
quality), user-based (fitness for use, defined by the customer), manufacturing-base
(conformance, defined by the producer), and value-based (balancing conformance and
performance with price) [17] [16] [21] [31]. Another useful framework is that proposed by
Nelson [33] and Darby and Karni [8] who distinguish among search, experience, and credence
attributes of goods and services that use to judge their quality.

Few studies have attempted to define and model service quality because of difficulties involved
in identifying what to measure let alone how to measure it. In their now classics study on the

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notion of service quality, Parasuraman, Zeithaml and Berry [34] identified ten widely cited
service quality determinants, i.e., the key criteria that customers use to evaluate quality
regardless of the type of service: reliability, responsiveness, competence, access, courtesy,
communication, credibility, security, understanding/knowing the customer, and tangibles. The
Service Quality framework is based on three propositions.

Proposition I: Service quality is a function of the difference between perceived service and
expected service.
GAP 5 – Difference between expected service and perceived service

Proposition II: The difference between perceived service and expected service is a function of
four different gaps (i.e., Gap 5 = f(Gap1, Gap 2, Gap3, Gap4)).
GAP 1 – difference between consumer expectations or quality determinants, and
management’s perception of such consumer expectations
GAP 2 – difference between management’s perceived quality determinants and service
specifications (i.e., the critical-to-quality specifications)
GAP 3 – difference between quality specifications and actual service delivery
GAP 4 – difference between actual service delivery and the company’s external
communications about services delivery (e.g., word of mouth, past experience,
promises, reputation, standard of care)

Proposition III: People tend to evaluate service quality primarily based on experience
characteristics.
In this model, search attributes are credibility and tangibles; experience attributes are access,
communication, courtesy, reliability, responsiveness, understanding; and credence attributes are
competence and security. Using factor analysis, Parasuraman et al. [35] [36] developed a 22-item
service quality scale in which the ten original determinants of quality were collapsed into five
dimensions:

Reliability - consistency of performance and dependability; performs service right at the

first time; honors its promises; keeps accurate records, correct billing, and
performs services at the designated times
Responsiveness – readiness to provide the service; timeliness; setting up appointments
promptly
Assurance – knowledge, competence and courtesy of employees; convey trust and
confidence; has the required skills and knowledge; polite, respectful, considerate,
friendly; trustworthiness, believability, honesty
Empathy – caring; individualized attention, approachability, ease of contact; effort in
understanding the customers’ needs
Tangibles – physical evidence of the service; physical facilities, tools and equipment;
appearance of providers; appearance of other customers in the service facility

For each dimension, the SERVQUAL scale provides a score for customer expectations (E) and a
score for customer perceptions (P) of service quality. The differences between the two scores on
each dimension are called gap scores. According to Parasuraman and his colleagues, the key to

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optimizing service quality is to maximize these gap scores, and the associated gap equation (Q = P
– E) has become the e = mc2 analog for service quality.

As shown in Figure 1, perceived service quality is the result of the consumer’s comparison of
expected service with perceived service. The comparison of expectations with perceptions is
suggested in the service quality literature: the relative importance of these criteria in shaping
customer expectations prior to the delivery of service may differ from their relative importance
in actual customer perceptions of the delivered service [34] [20]. The gap between producer’s
specifications and customers’ expectations for the service level may lead to dissatisfaction even
when the producer meets the exact design specifications.

Brand image Past experience Industry standards

Word of mouth Customer’s needs Company’s messages
Dimensions of
Service Quality
1. Tangibles Expected
2. Reliability service
3. Responsiveness Service
4. Assurance Quality
5. Empathy
Perceived
service

Figure 1. The Service Quality Model

CONCLUSION

The gaps and quality dimensions identified in the SERVQUAL framework provide an avenue to
address the difficulties that service organizations encounter when using six sigma to improve
quality and reduce costs. Many of the methods used in six sigma are applicable to services as
well as to manufacturing. In services, the DMAIC model and tools such as VOC, QFD, value
added flow charts, root cause analysis, and process measurement are valuable. The number of
successful applications reported in the literature attest to the usefulness of six sigma in services.
However, the nature of services and the ways customers tend to evaluate service quality pose
important challenges for six sigma. As evidence of this, all studies of six sigma applications to
services that are reported in the literature focus on manufacturing-like situations, i.e., highly
repetitive processes with no or very low human behavior component. This indicates that the six
sigma methodology has limited application or that six sigma provides insufficient help in
improving services and meeting customer expectations.

REFERENCES

References are available upon request from Behnam.Nakhai@millersville.edu.

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