Chapter 1.3: Understanding Goods and Services

Good

a physical product that you can see, touch, or possibly consume.

Durable good

one that does not quickly wear and typically lasts at lest three years

Nondurable good

one that is no longer useful once it is used, or lasts for less than three years

Service

any primary or complementary activity that does not directly produce a physical product.

tangible; intangible

Goods are ___, whereas services are ___

participate

Customer ___ in many serices processes, activities, and transactions

Service encounter

an interaction between the customer and the service provider.

Moments of truth

any episodes, transactions, or experiences in which a customer comes into contact with any aspect of the delivery system, however remote, and thereby has an opportunity to form an impression

more

The demand for service is ___ difficult to predict than the demand for goods

cannot

Services ___ be stores as physical inventory.

Service management

integrates marketing, human resources, and operations functions to plan, create, and deliver goods and services, and their associated service encounters

close proximity

Service facilities typically need to be in ___ to the customer

do not

Patents ___ protect services

longer-time

Forecasts involve ___ time horizons for goods.

shorter

Forecasts horizons generally are ___, and forecasts are more variable and time-dependent

can

Goods-producing facilities ___ be located close to raw materials, suppliers, labor, or customers/markets.

must

Service facilities ___ be located close to customers/markets for convenience and speed of service.

can

Goods: Factories and warehouses ___ be designed for efficiency because few, if any, customers are present.

must

Service: The facility ___ be designed for good customer interaction and movement through the facility and its processes.

Technology: Goods

Goods-producing facilities use various types of automation to produce, package, and ship physical goods.

Technology: Service

Service facilities tend to rely more on information-based hardware and software.

Quality: Goods

Goods-producing firms can define clear, physical, and measurable quality standards and capture measurements using various physical devices.

Quality: Services

Quality measurements must account for customer’s perception of service quality and often must be gathered through surveys or personal contact.

Inventory/Capacity: Goods

Goods-producing firms use physical inventory such as raw materials and finished goods as a buffer for fluctuations in demand.

Inventory/Capacity: Services

Service capacity such as equipment or employees is the substitute for physical inventory.

Process Design: Goods

Because customers have no participation or involvement in goods-producing processes, the processes can be more mechanistic and controllable.

Process Design: Services

Customers usually participate extensively in service creation and delivery (sometimes called coproduction), requiring more flexibility and adaptation to special circumstances.

Job/Service Encounter Design: Goods

Goods-producing employees require strong technical and production skills.

Job/Service Encounter Design: Services

Service employees need more behavioral and service management skills.

Scheduling: Goods

Scheduling revolves around the movement and location of materials, parts, and subassemblies and when to assign resources (i.e., employees, equipment) to accomplish the work most efficiently.

Scheduling: Services

Scheduling focuses on when to assign employees and equipment (i.e., service capacity) to accomplish the work most efficiently without the benefit of physical inventory.

Supply Chain Management: Goods

Goods-producing firms focus mainly on the physical flow of goods, often in a global network, with the goal of maximizing customer satisfaction and profit, and minimizing delivery time, costs, and environmental impact.

Supply Chain Management: Services

Service-providing firms focus mainly on the flow of people, information, and services, often in a global network, with the goal of maximizing customer satisfaction and profit, and minimizing delivery time, costs, and environmental impact.