Quality infrastructure for the service sector

Quality infrastructure has its origins in the industrial revolution of the 19th century, first in England, then throughout Western Europe and the USA, and later spread to Japan and other parts of Europe and Asia during the transition from agrarian to industrial societies. For a long time, QI was mainly a matter of checking whether physical products met defined technical specifications. Testing served both the safety of products and their usability in value-added processes based on the division of labour. Thus, the measurement of physical units was at the centre of the entire quality system.

During the change of the industrial structure in the 20th century, the service sector became increasingly important. Today, economic sectors such as trade, transport, telecommunication services, banking, insurance, and tourism, which are key service sub-sectors, dominate value-addition in all leading industrialised and emerging countries. Services are also an essential source of value-addition in many developing countries. Even in the least developed countries, services account for at least one-third of total economic output.

At the beginning of the 21st century, trade in services has grown faster than trade in goods, averaging over 5 percent per year. [1] The contribution of developing countries to trade in services has increased by more than ten percentage points but is mainly concentrated in a few economies. The share of least developed countries has also increased but remains low. [1]

The impact of the COVID-19 pandemic has affected services trade more than merchandise trade. Trade in services fell by 30 percent in the second quarter of 2020, while trade in goods fell by 23 percent over the same period. [2] While the closures led to the cancellation of flights, foreign travel, restaurant visits and cultural and recreational activities, computer and financial services saw significant growth. The World Trade Organisation (WTO) expects trade in services to increase disproportionately as the economy recovers. [3]

Special features of quality management for the service sector

International standard organisations define “service” as “result of at least one activity, necessarily performed at the interface between the supplier and customer, that is generally intangible “[3]. In contrast to goods, production and consumption of services take place simultaneously and integrate the customer. As consequence, different to products, services cannot be transported or stored. At the end of a successful service process, the customer should be satisfied. 

In principle, all methods of quality management can be used almost without restriction in the service sector. Occasionally they require a particular adaptation. [4] An example is the tourism sector where the recently updated ISO 18513:2020 Tourism Management System Standard [5] can be easily integrated with the ISO 9001 Quality Management System. [6]

The new version of the ISO 9000:2015 standard explicitly considers the growing importance of services by expanding the definition of quality. According to this, quality is “the degree to which a set of inherent characteristics of an object meets requirements”, but also includes “the perceived value and benefit to the customer”. After the revision of the ISO 9000 family, the requirements for a quality management system no longer apply to manufacturing companies alone but also to all companies that offer services. [4]

The dichotomy between goods and services is a conceptual simplification. Economists, therefore, speak of a continuum with pure goods on one side and pure services on the other (see figure). Most products are located between these two extremes. This is because service provision often requires tangible aids, just as the delivery and provision of pure goods often also includes a service.

Figure: Continuum of goods and services based on https://www.slidegeeks.com/business/product/business-framework-the-goods-service-continuum-powerpoint-presentation

If a product has a high degree of tangibility, it is easier to evaluate. From this, three good characteristics categories can be derived:

  • Goods with search characteristics feature low pre-buying costs of quality detection. Hence, the buyer can learn by comparing and inspecting the goods’ attributes before buying. Examples of such goods are salt, clothes, and furniture.
  • Goods with experience characteristics feature high pre-buying costs of quality detection. Hence, the buyer learns the product’s attributes after buying and consuming. However, the post-buying costs of quality detection are low for such goods. Therefore, this information can be used for further consumption of the product. Examples are restaurant meals and haircuts.
  • Goods with credence characteristics feature high pre-buying costs and high post-buying costs of quality detection. The utility cannot be precisely determined even after consumption. Examples are legal advice and health services. [7]

In the case of service products, quality is often measured by soft factors. Central to this is customer and user feedback, which is measured systematically and regularly. At the same time, the necessary tools for the provision of services can be checked with the usual hard quality control procedures for goods. [8]

Fields of application of quality infrastructure in the service sector

Just as with goods, the typical functions of the quality infrastructure – standardisation, metrology, conformity assessment and accreditation – are also used for services. Let us take the provision of services in the hospitality sector as an example.

ISO has a set of standards that accompany user experience along the entire value chain. The figure visualises standards for different forms of accommodation, for wellness services up to beach operation. Increasingly important is also the consideration of the environmental friendliness of the activities.

Source: ISO [9]

Conformity with many of these standards can be verified through tests and audits. In addition, the professional competence and independence of these assessment bodies can be demonstrated through accreditation. Accreditation in this area refers to management systems and the certification of persons according to ISO/IEC 17024.

Metrology serves to guarantee the reliability of the auxiliary instruments and the properties of the tangible products used in the service process. For example, a doctor can only reliably diagnose a disease if the measuring instruments required for the examination are calibrated. The standards specify which tools are to be calibrated and at what intervals.

Conclusions

The growing service sector offers excellent growth potential for quality infrastructure institutions. Often, however, smaller service providers are not very familiar with the services provided by the quality infrastructure. Therefore, it is necessary for QI institutions to specifically address the service sector to take advantage of these opportunities.

For metrology, the trend towards services poses a particular challenge. On the one hand, metrology can contribute to transferring concepts such as measurement uncertainty to intangible products. At the same time, the service sector demands that the measurement instruments (i.e. sensors) be placed in a larger systemic context of the application. The interaction of man and machine must always be considered. 

Since QI facilities are service providers, they can benefit from the service standards themselves. The perspective of customer benefit and satisfaction should also be given greater weight in providing technical services.

The still young certification of persons offers unique potential. Here, people with their skills and competencies are at the centre of conformity assessment. Overall, the engagement in the service sector provides the QI with the opportunity to underline its human character.

References

[1] WTO 2919, World Trade Report 2019, Geneva,

[2] WTO 2021, World Trade Statistical Review 2021, Geneva 

[3] WTO 2021, Trade shows signs of a rebound from COVID-19, recovery still uncertain, 862 PRESS RELEASE

[4] Adam, T./ Baskaya, Sait/ Schmitt (2021) Qualitätsmanagement bei der Entwicklung von Dienstleistungen und Geschäftsmodellen [Quality management in the development of services and business models], in: Pfeifer, T./ Schmitt, R. (Ed.) Masing Handbuch Qualitätsmanagement, 7. Auflage, München, pp. 534-547

[5] ISO, ISO 18513:2021, Tourism services — Hotels and other types of tourism accommodation — Vocabulary

[6] TÜV Cert, ISO 18513 Tourism Service Management System

[7] Benz, Men-Andri (2007), Strategies in Markets for Experience and Credence Goods, Wiesbaden, https://link.springer.com/chapter/10.1007%2F978-3-8350-9580-9_1

[8] Parasuraman, A./ Zeithaml, Valarie A./ Berry, Leonard L. (1985),  SERQUAL – A Conceptual Model of Service Quality and Its Implications for Future Research, Research Article

[9] ISO (2016), TOURISM FOR EVERYONE WITH ACCESSIBILITY STANDARDS

Feature image by mrsiraphol

Cross-frontier accreditation: practice and impact

Accreditation builds trust in international trade

Accreditation is a valuable tool for building trust in international trade. Accreditation bodies assess and confirm the technical competence and independence of conformity assessment service providers, i.e. testing laboratories, inspection and certification bodies.

By multilateral agreements, accreditation bodies recognise the equivalence of their services. Mutual recognition prevents tests or certifications from being issued more than once and reduces transaction costs for companies.

In Europe, the principle of “one accreditation body per economy” applies, while in other countries such as the USA, India or Korea, several accreditation bodies are active and sometimes compete.

Accreditation bodies operate cross-frontier

In a recent study, we have looked for the first time into the phenomenon of cross-frontier accreditation activity. This activity refers to an accreditation body that offers its services in another country. The reasons for this are manifold, e.g., the receiving country does not have its own accreditation body, or the national accreditation body lacks competence in a specific accreditation scope.

Global network of cross-frontier accreditation

From the perspective of developing and emerging countries, cross-frontier accreditation is a form of know-how transfer. As a result, accreditation bodies from more developed countries often work closely with accreditation bodies or national accreditation focal points in less developed countries. Also, noteworthy is regional cooperation through regional accreditation bodies offering their services in several countries simultaneously. In individual cases, however, cross-frontier accreditation is also seen critically as competition.

Study visualises the international networking of accreditation

Our study uses the data of the Global Quality Infrastructure Index, GQII and visualises the international networking of accreditation for the first time. With this, Mesopartner provides an empirical basis for a debate on the practice of cross-border accreditation and possibilities for improvement within the framework of international accreditation cooperation. For this purpose, Mesopartner is organising a webinar on 1 September with internationally leading representatives of the accreditation and conformity assessment community. Registration for participating in this event is now open at https://gqii.org/online-event/

References

Harmes-Liedtke, U./ Matta, A. (2021) Cross-Frontier-Accreditation, GQII Data and Analytics Paper, No. 2

Quality Infrastructure in Small Island Developing States

The development of a national quality infrastructure needs always to be oriented towards the local specifics. This statement is especially true for small countries and island states. Mesopartner has had the privilege of accompanying national quality policies (NQPs) in several of these countries. Our first experience was the NQP of Trinidad and Tobago, followed by NQP’s for Antigua and Barbuda, Grenada and Suriname. We are currently advising the Government of Saint Kitts and Nevis to develop the NQP for one of the world’s smallest countries. In addition, we guide the process of identifying and analysing the need for quality infrastructure services in the Pacific Islands region.

In the following, we clarify the concept of SIDS and describe recent developments in building quality infrastructure in different world regions.

Small Island Developing States (SIDS)

Small Island Developing States (SIDS) are a diverse group of states that share some common characteristics and vulnerabilities, such as insularity, geographical remoteness and small size of the economy, population, and land area.

SIDS were first recognised as a distinct group of developing countries at the United Nations Conference on Environment and Development in June 1992. In 1994, the United Nations established a Programme of Action in Barbados to assist SIDS in achieving sustainable development. The United Nations Office of the High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS) represent this group. [1]

The SIDS group includes 38 UN member states from the Atlantic, Indian Ocean and South China Sea (AIS) (9), the Caribbean (16) and the Pacific (13).[1] In addition, 20 non-UN members belong to the territory of former colonial countries (Great Britain, France, and the Netherlands) and the USA.

The diversity of SIDS is reflected in the size of the population, the level of socio-economic development and the level of advancement of the National Quality Infrastructure:

  • With 11.3 million inhabitants, Haiti is the most populous and, at the same time, the most impoverished country.
  • Timor-Leste has only rudimentary quality infrastructure and ranks 184th and last in the GQII2020.

In the group, Singapore is the wealthiest country with a GDP per capita of 65,233 USD (2019) and has the most developed quality infrastructure (rank 32 in GQII2020). Due to its level of development, Singapore, which sees itself as a SIDS because of its geographical and historical characteristics, is a financial supporter of the SIDS community.

Special features of the small island states

Despite their differences, small island developing states share similar challenges to sustainable development, such as small but growing populations, limited resources, remoteness, vulnerability to natural disasters, vulnerability to external shocks, overdependence on international trade and a fragile environment. Their growth and development are held back by high communication, energy and transport costs, irregular international transport, disproportionately expensive public administration, and infrastructure due to their small size and little to no opportunity to create economies of scale.

In most SDIS, the private sector and civil society are developmentally organised so that the government often necessarily assumes the role of a “master strategist” [2]. The crowding out of private entrepreneurship and civil society engagement is, therefore, sometimes prevalent. In addition, the colonial past often acts as a cultural inhibiting factor for dynamic socio-economic development.[3]

Implications for Quality Infrastructure

In small island states, the development of the national quality infrastructure always needs to be based on the current and potential demand for quality-related services. However, due to the smallness of the national market and primarily export-oriented commodity industries, there is usually a lack of critical mass to develop all components and benefits of the quality infrastructure. Therefore, it is often cheaper to import quality-related services than to provide them oneself.

However, it is not always easy to import needed services cost-effectively and timely due to insularity and high transport costs. In this respect, and out of the necessity for self-directed development, it makes sense to establish basic laboratory, certification and inspection facilities in the country. In contrast, less critical-mass services such as accreditation of testing laboratories, certification and inspection bodies can be more cost-effectively obtained abroad.

Importance of regional cooperation

One way of dealing with the lack of critical size of small countries is regional cooperation. The CARICOM Regional Organisation for Standards and Quality (CROSQ) is an inspiring example in the Caribbean.

CROSQ was established in 2002 and is one of the 19 institutions of the Caribbean Community and Common Market (CARICOM) today. As Regional Standards Body, CROSQ supports the development and expansion of the 15 National Standards Bureaus of CARICOM and is the focal point for technical cooperation and manages various programmes to promote regional quality infrastructure. In 2017, with the support of the European Union and in collaboration with the National Quality Institute of the Dominican Republic (INDOCAL), CROSQ developed a regional quality policy to guide QI development in the Caribbean.

The 15 CARICOM member states today benefit from CROSQ’s work in the following areas of quality infrastructure:

In metrology, CROSQ is an associate member of the International Bureau of Weights and Measures (BIPM), which gives the small island states access to the BIPM Capacity Building and Knowledge Transfer Programme. In addition, CROSQ channels resources from international and regional cooperation to build the calibration and legal metrology capacity and acquire equipment for the metrology departments of the national standard bureaus/metrology institutes.

A significant success of the Capability Building was that in 2020, following independent successes by the Bureau of Standards Jamaica, the Trinidad and Tobago Bureau of Standards (TTBS) achieved international recognition for calibration and measurement capacities (CMCs) in mass and by participating in the International Committee for Weights and Measures – Mutual Recognition Arrangement (CIPM-MRA). This arrangement achieved those measurements from Trinidad and Tobago meets the highest standards internationally, which significantly facilitates trade.

In the field of standardisation, CROSQ contributes to the regional harmonisation of national standards. CROSQ coordinates the work of regional standard committees, with the NBS of individual member states taking the lead. Once the CARICOM Council of Ministers of Trade and Economic Development (COTED) officially recognises regional standards, member states are encouraged to adopt these standards.

Common standards also facilitate cooperation in conformity assessment. CROSQ supports a particular division of labour between the NBS of the member states by establishing so-called regional centres of excellence in testing and metrology.

It is unrealistic for each member state to establish its own accreditation body, as previously said. Only Jamaica and Trinidad and Tobago have their own accreditation body, but these bodies service the regional need in many different areas. In the remaining countries, CROSQ has supported the establishment of National Accreditation Focal Points (NAFPs). These NAFPs are contact points for local companies and inform them about suitable accreditation offers within and outside the region.

Overall, it is often more critical for tiny countries to establish well-functioning information points than to pursue the goal of providing as many quality-related services as possible to the local economy itself.

South-South Cooperation

Compared to the Caribbean, regional cooperation and the development of quality infrastructure in the Pacific Island countries are still in their infancy. This is partly since most Pacific Island countries only gained independence in the 1980s or later, and many of the economies there are small or even micro.

An initial study by the Pacific Islands Forum Secretariat on quality infrastructure dates to 2005. A 2019 update of this survey-based study [7] shows increasing awareness among governments of the importance of quality infrastructure for trade and development.

In 2019, the EU Tradecom II Programme, http://www.tradecom-acpeu.org, organised an exchange between African, Caribbean and Pacific Island countries. In this context, the representatives of the Pacific states took up with great interest the experiences from the Caribbean with regional integration in the development of quality infrastructure. As a result, there is now a multi-donor supported Pacific Quality Infrastructure project for regional QI promotion, with the collaborative support of CROSQ and its SIDS.

Strengthening trade-related quality infrastructure through intra-ACP partnerships

On March 5th, 2021, the Pacific Quality Infrastructure (PQI) project held its inaugural meeting, marking formal progress with the forum Islands Countries (FICs) virtual networking event. [8]

The experience with the small island states shows that the concept of national quality infrastructure is also relevant for this group of states. However, the range of services must adapt to local needs. Regional cooperation and integration frameworks are conducive to using scarce resources as efficiently as possible. National quality infrastructure institutions can also learn from experiences in other parts of the world, especially from regions with similar development situations. Here, bi- and trilateral development cooperation can be essential support.

References

[1] UN-OHRLLS (2011). Small Island Developing States. Small Islands Big(ger) Stakes, New York

[2] OTF Group (2010). Cluster Best Practices for the Caribbean Private Sector Development Discussion Paper #5, No.  IDB-DP-161 September 2010, Washington DC

[3] Farrell, Terrence W (2017). We Like It So? The Cultural Roots of Economic Underachievement in Trinidad and Tobago 1st Edition, North Charleston

[4] TTBS (2020). T&T Receives International Recognition for Mass and Related Quantities, Press release February 25

[5] Kovacevic, Michelle (2020): The evolution of Quality Infrastructure in the Caribbean; in Trade for Development News by EIF, 26 August

[6] Kovacevic, Michelle (2020): Pacific Islands countries band together to increase export quality; in Trade for Development News by EIF, 26 August

[7] Diekmann, Ulrich (2019). Pacific QI Survey. The state of play of the quality infrastructure in the Forum Island Countries. Unpublished. PTB, Braunschweig/ Germany

[8] ForumSec (2021) Pacific Quality Infrastructure Project Builds Momentum, Marcha 8, Suva

Benchmarking QI worldwide

For ten years, we, Ulrich Harmes-Liedtke and Juan José Oteiza have been working on measuring and comparing the development level of a country’s quality infrastructure (QI). This challenging task occupied not only us but also colleagues from metrology, standardisation and accreditation bodies, and other consultants. Those responsible for QI in international development cooperation asked themselves the same question.

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Women in the Quality Infrastructure System

Gender inequality is still present throughout the world

The world is equally composed of women and men. However, gender inequality is still present throughout the world. As published by the United Nations in October 2020, only 47% of working-age women participated in the global labour market, while for men, the percentage was 74%. This gender gap has remained relatively constant since 1995, i.e., the difference between men and women employed worldwide has not changed in the last 25 years.[1]

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