List five important differences between goods production and service operations?

Answer 1

There are five essential differences between services and goods. The first is that a service is an intangible process that cannot be weighed or measured, whereas a good is a tangible output of a process that has physical dimensions. This distinction has important business implications since a service innovation, unlike a product innovation, cannot be patented. Thus, a company with a new concept must expand rapidly before competitors copy its procedures. Service intangibility also presents a problem for customers since, unlike with a physical product, they cannot try it out and test it before purchase.

The second is that a service requires some degree of interaction with the customer for it to be a service. The interaction may be brief, but it must exist for the service to be complete. Where face-to-face service is required, the service facility must be designed to handle the customer's presence. Goods, on the other hand, are generally produced in a facility separate from the customer. They can be made according to a production schedule that is efficient for the company.

The third is that services, with the big exception of hard technologies such as ATMs and information technologies such as answering machines and automated internet exchanges, are inherentlyheterogeneous-they vary from day to day and even hour by hour as a function of the attitudes of the customer and the servers. Thus, even highly scripted work such as found in call centers can produce unpredictable outcomes. Goods, in contrast, can be produced to meet very tight specifications day-in and day-out with essentially zero variability. In those cases where a defective good is produced, it can be reworked or scrapped.

The fourth is that services as a process are perishable and time dependent, and unlike goods, they can't be stored. You cannot "come back last week" for an air flight or a day on campus.

And fifth, the specifications of a service are defined and evaluated as a package of features that affect the five senses. These features are

• Supporting facility (location, decoration, layout, architectural appropriateness, supporting equipment).

• Facilitating goods (variety, consistency, quantity of the physical goods that go with the service; for example, the food items that accompany a meal service).

• Explicit services (training of service personnel, consistency of service performance, availability and access to the service, and comprehensiveness of the service).

• Implicit services (attitude of the servers, atmosphere, waiting time, status, privacy and security, and convenience).