Distinction between services and product

There are not many pure products available in the world. For example a bank’s acceptance of a deposit could be considered a pure service product but actually the deposit receipt is also a component there. Deposit services as a product are no less tangible to a customer than a piece of steel. Product quality has been deter-mined in many different ways and by many researchers but in service, quality is still undergoing development. Some skills are given as basics for service; such as:

• Adjusting and regulating production process using feedback from inspec-tion to improve quality of product/service shipped

• Specifying and determining quality of design

• Setting standards

• Rejecting defects

• Redesigning the product/service and the process using feedback from quality engineering to improve the quality of product made.

• Measuring for conformance

Using the degree of customer involvement as a criterion of distinction among services shows that goods production, low customer contact and production-centred service operations have more in common than do low customer contact, production-centred operations and high customer contact, customer-centred ser-vice operations. (Stamatis 1996: 22-24)

To understand how services are actually structured, different logic is required than in understanding physical goods. The main reason for this is that consump-tion of services can be characterized as consumpconsump-tion of a process, while physical

goods and their consumption can be understood as outcome consumption. In the same way, observations for services are made according to the observation of the process, not according to re-produced products. (Grönroos 1998: 335-336)

Table 3. Degree of customer involvement in operations (Stamatis 1996: 24)

Customer- Centered Service Operations

• Economics of scale are readily attainable

• Production is frequentlty

• Customer involved in many production processes

• Delivery and production process overlap to varying degrees and might even be identical

• Training is psychological

• Most producers deal directly with customers

• Production results show more variability

• Both product process design and process design are centered on the customer

• Less amenable to measurements, standards, control and inspection

• Technically less complex

• Customer-employee relationships are generally very complex

Goods and production centered operations

• Economics of scale are readily attainable

• Production is independent of consumption

• Customer involved in very few production processes

• Delivery and production processes are separate

• Training is physical

• Most producers do not deal directly with customers

• Production results show less variability

• Process design is centered on employees and product design is centered on the customer

• More amenable to measurements, standards, inspection and control

• Techically more complex

• Customer-employee relationships are genereally not complex

Degree of customer involvement (Table 3) ranges from zero to continuous in-volvement. For example restaurant cooking is close to zero and restaurant dining is close to continuous. The concepts presented and the consequences of their characteristics are that customers who are involved can disrupt, slow down, alter and rush production processes. The customers involved can influence the treat-ment of subsequent customers through their impact on service providers. Because of these differences in quality, service needs to become aware what a process is and how variation affects the quality. (Stamatis 1996: 24)

There can be found differences between service and manufactured products. Cus-tomer can influence the service and can participate in the production of a service and be present at the production site. The measurements and settings of the stan-dards are difficult due to the intangible elements of service. Service must be con-sumed or it can be lost, so it cannot be stored. There are also series of moments of truths and multiple encounters are occurring to ensure the service. The sum of these will influence the customer’s perception of quality. (McManus & Hutckin-son 1996: 2-4)

Service management is a perspective that provides for organization facing service competition an opportunity to have understanding and to manage service elements in organizations’ customer relationships. All this is to achieve advantage in

com-petition, similar guidelines to areas of human resource management, operations, marketing and management as well as quality management including TQM.

(Grönroos 1993: 5)

In service marketing, there is no physical products to manage, only a system that governs the actual process that makes or produces a result for the cus-tomer.(Grönroos 2001: 151)

Process is defined as a traditional process view with actions which repeatedly come together as a combination of all parts, such as environment, measurement, manpower, machine, material and method. Focus in this traditional process view is to generate an output, if with a given input there is a greater ratio of output, the input is more efficient than the operation is (Figure 12).

Figure 12. Process model (Stamatis 1996: 25).

In service quality, actions may be viewed as a combination of the resources put together to deliver the service-structure, the service itself – process and the value results of the service-outcomes (Figure 13). Focus in this service process is to generate benefit (outcome) that meets or exceeds expectations, wants and needs of the customer. (Stamatis 1996: 25-26)

PROCESS

Inputs ^PROCESSSt ruct ure Process Out come

Outputs

Inspection

Error detection

Action on service

Customer(s)

Inspection

Error detection

Action on service

Figure 13. The traditional method of ensuring service quality (Stamatis 1996:

27).

It is interesting that in the definition of service process, traditional components of manufacturing process may have to be accounted for. Also relevant is the issue that quality of service is the concern of the owner. Owner seems quite often to be the same owner as it is in the traditional manufacturing environment. Owner of the process is the person who is given or has the responsibility and authority for leading continuing improvement of the process given. Process is driven by the boundaries of the process (Figure 14). (Stamatis 1996: 27-28)

Cross functional process Functional process

Individual process Individual ownership

Unit-based ownership Unclear ownership

Figure 14. Process boundaries (Stamatis 1996: 28).

When operating in the service environment, it is not unusual to operate both in parallel and separately at the same time. This is more difficult as it becomes more complicated to define exact boundaries of the process.

It all totally depends on how boundaries are drawn when defining what the actual process is and who the customer is. There are examples from the health care in-dustry of the processes presented in Figure 15.

Patie nt diagnosis flow Coronary artery bypass graft

Ambulatory surgery Delivery and labour

Supply/mate rial flow Supply restocking

Linen exchange Meal tray delivery Se rvice de livery flow

Test result turnaround Operating room turnover

Emergency room w aits

Information flow Budget development Transfer/admission/discharge

Revenue cycle

Figure 15. Flows and customers in health care (Stamatis 1996: 28).

It totally depends on how boundaries are drawn when defining what the actual process is and who the customer is. (Stamatis 1996: 27-28)

In document Quality and customer satisfaction perspective in organisations by gap and total quality improvement methods (sivua 73-77)