Service Industry and Quality

Service can be defined as “any primary or complementary activity that does not directly produce a physical product, i.e. the non-goods part of the transaction between the buyer (customer) and seller (provider).” Quality has traditionally been related to the manufacturing industry. Due to the improvements in technology and automation over the last century, more and more of the workforce in both the developing and developed nations have shifted towards the service industry. This trend will continue. It is, therefore, important to understand the spe­cial characteristics of quality as applied to the service sector.

Services and products have similarities as well as differences. In services, how the service is provided is more important whereas in products, the customer considers what is being pro­vided. “Quality” in a service organization is a measure of the extent to which the service deliv­ered meets the customer’s expectations. The nature of most services is such that the customer is present in the delivery process. Table 16.1 illustrates the differences between manufactur­ing and service organizations. One primary difference is that products are tangible and ser­vices are intangible. Another difference is that the manufacturing system is relatively closed, whereas the service system is relatively open.

The challenge ofbusiness is to deal effectively with customers. Customer standards are usu­ally transitory and changing. Identifying and controlling the factors that govern standards is very difficult. The challenge of service is translating customer needs such as timeliness, clean­liness and friendliness into service standards. Service is categorized as a variation of manu­facturing. Many service organizations use the manufacturing model approach and profit by it. The fast food outlets epitomize the use of services by the manufacturing model—make the hamburger efficiently, with low skills and minimum pay, and then market it heavily. Fast food outlets like McDonald’s and Burger King concentrate on manufacturing meals. Marks & Spencer used a similar philosophy to manage its stores during the 1980s and is widely known as the “factory less manufacturer.”

The competitive advantage of service organizations lies in their quality leadership in the marketplace. How the front-line employee delivers the service is the major issue. For instance, all of three companies discussed above are fully aware of this trend and provide intensive training for their staff focusing on quality, service and delivery. Every employee at McDonald’s believes in service, cleanliness and value for money. The most important thing to know about intangible products is that the customers usually do not know what they are getting until they get it.

Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.