MILWAUKEE-The Quality Index research study, conducted by the American Society for Quality (ASQ), and derived from the American Customer Satisfaction Index (ACSI), 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, according to the study.

"There is no anchor to customer expectations," says 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."

The ASQ Quality Index shows that customers' perceptions of quality have declined 0.8% during the past decade, with 0.3% 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 decline of 2%. 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.

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, such as rebates and 0% financing, 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.

More information about the ASQ Quality Index can be found at www.asq.org/qualityindex/index.html.