Wednesday, May 2, 2012

Analysis of: “Purchasing’s Performance as Seen by its Internal Customers"

“Purchasing’s Performance as Seen by its Internal Customers:
A Study in a Service Organization”

SERVQUAL is a “gap” survey model that defines service quality by the difference or “gap” between what customers feel a service should offer (their expectations) and their perceptions  of the actual performance, based on five service quality dimensions:  reliability, responsiveness, assurance, empathy, and tangibles.  If the numerical score on a generic Likert-type scale for perceptions meets or exceeds the score for expectations, the customer service experience is considered positive.  Conversely, negative numbers indicate improvement is needed.  Service quality measured in this way is an attitude or a value judgment of a service rather than an objective assessment based on measurable standards.

Service quality as seen by external customers of an organization has been a focus of research since the 1980s.  The SERVQUAL survey instrument was developed using 22 items describing five service quality dimensions to determine service characteristics that are important to “external”  customers of retail businesses.  Limited research had been done on using the SERVQUAL model to study the service quality experienced by “internal” customers of an organization. This research study is important because of the increasing emphasis on the benefits of Total Quality Management (TQM).  This article describes a study to determine if SERVQUAL’s five dimensions of service quality are useful in measuring the qualities of service provided to  internal customers in the purchasing department of a service organization.

Research method. 
To determine if the SERVQUAL model holds true for internal customers, 132 questionnaires, describing 22 service-quality characteristics, were sent to internal customers of the purchasing department of a major university in the Midwest.  The response rate was 61 percent or 80 usable questionnaires.   Respondents rated the overall importance of the five service quality dimensions, and then were asked to rate each individual characteristic of the five qualities for an “ideal” purchasing department and for the university’s purchasing department.  The difference between the two was calculated to determine the service gap score of each item.   Both a mean gap score for individual characteristics and a gap score, each weighted by the overall dimension importance to the respondents,  were obtained.

The authors’ initial results indicate that all five dimensions apply to internal as well as external customers and can be useful to purchasing department managers to identify  “perceived” shortcomings of the department.   The results of the individual items assessed for an ideal purchasing department generally corresponded to the respondents’ overall assessment of the importance of each the five service quality dimensions.  Reliability is identified as the most important dimension with a 33 percent mean score, followed by responsiveness at 23 percent; assurance, 20 percent; empathy, 15 percent; and tangibles, 9 percent.  A comparison of the respondents’ expectations of an “ideal” department’s service characteristics with their perceptions of the “actual” service delivered showed a “service gap” for all characteristics.  However, the scores are toward the positive end of the scale, indicating that overall most internal customers felt that the department was doing a reasonably good job in meeting their service needs.

Cautions and questions about using the SERQUAL instrument by a purchasing  department to obtain service feedback from internal customers include defining what score  constitutes an acceptable gap and what actions may be taken to close an unacceptable one, as well as setting a general tolerance level cutoff for service items that need to be improved.  Previous service quality surveys may be used to help establish a tolerance level and a benchmark.  The process for interpreting the results should be clearly defined and a schedule set for regular review of service quality using SERVQUAL along with more traditional survey formats.  These decisions should be made before the SERVQUAL instrument is administered, keeping in mind that even the best departments may never be able to achieve the “ideal.”

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Case Study Reference:

“Purchasing's Performance as Seen by its Internal Customers:  A Study in a Service Organization”
by Joyce A. Young and Dale L. Varble,  Aug., 1997
International Journal of Purchasing and Materials Management