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