Services Procurement

What is a Service

We classify the things we buy as either Goods or Services but what exactly is a Service?

We might say that a service is anything that involves a person doing some kind of work, for example, someone designed and built the chair you are sitting in right now.  But, desks, chairs, and bottles of Pantene are typically called Goods! We might also say that a service is what someone does for us – like bring us food in a restaurant.  When we pay the bill are we paying for the service, or the food, or the experience of having someone else cook for us?

So, let’s keep things simple.  For our purposes, a Service (with a capital ’S’) is something we buy where the primary value added came from a person thinking and acting to provide something of value to the recipient.  The value, however, is often intangible – you can’t hold on to it.  For example, it can be a commercial aired on-screen, a call center for consumer complaints, the cleaning of our facilities, travel arrangements for your next business trip, development of code to track product shipments or the contracted labor who assemble products in a warehouse.

Chairs, desks, Pantene bottles & the chemicals inside all have a specification sheet that provides details you can compare to the actual product.  You can measure, test or otherwise evaluate if what you received is actually what you ordered. With a Service, however, you might have an idea of what is needed but the extent to which you can evaluate if the delivered Service matches the requirement is a real challenge!  Just think about the last time you got your hair cut – was your hairdresser able to make you look like the picture you had in mind?

Buying Services often means you learn by experience – and sometimes that experience means you paid for something that wasn’t exactly what you were hoping to receive.  In my next post, I’ll describe the various models we use to obtain Services – from traditional to increasing levels of sophistication.  And, hopefully, over time, I’ll provide you words of experience that will help you get the Service you had in mind.

4 thoughts on “What is a Service”

  1. I think it is very difficult to measure the service quality or the cost of measure is high. However, with advanced AI & Big Data technology, measure of service quality maybe easier – making the service more tangible.

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      1. Though no particular measure/ application in mind, I see the trend of measure the services with algorithm Q&A in Banking & Social media industry. Another example is assessing writing quality with certain AI algorithm. Writing quality and service quality are similar on subjective judgement but seems now, we cracked the writing quality.

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