Product vs. Service

Students in my classes often ask how to interpret the title of clause 7.5.1 of ISO 9001:2008, Control of production and service provision.

Clause 7.5.1 is the section of the standard where deliverables (products and services) are produced, supplied, and supported. The operations to be controlled could be manufacturing, repair, warehousing, inventory, transportation, training, services, etc.

Students also ask about the difference between the terms “product” and “service”.

According to clause 3 of ISO 9001:2008, Terms and definitionswherever “product” appears in the standard, it can also mean “service”. If we use a distributor as an example, the tangible products are those they buy and supply to their customers. However, from a service perspective, their “product” is the service they provide to warehouse and distribute the physical products.

ISO 9000:2005, clause 3.4.2, defines product as “the result of a process”. In a Note underneath that definition, it explains that there are four generic product categories:

1. Services, e.g., transport
2. Software, e.g., computer program
3. Hardware, e.g., engine mechanical part
4. Processed materials, e.g., lubricant

It continues by saying many products consist of elements belonging to different product categories. Whether the product is then called service, software, hardware, or processed materials depends on the dominant element. The note explains that the offered product “automobile” consists of hardware (e.g., tires), processed materials (e.g., fuel), software (e.g., engine control software), and service (e.g., operating explanations given by sales people).

A second Note states that “service” is the result of at least one activity performed at the interface between the supplier and the customer, and is generally intangible. It says the provision of a service can involve:

  • an activity performed on a customer-supplied tangible product
    (e.g., automobile to be repaired)
  • an activity performed on a customer-supplied intangible product
    (e.g., income statement needed to prepare a tax return)
  • the delivery of an intangible product
    (e.g., delivery of information in the context of knowledge transmission)
  • the creation of ambience for the customer
    (e.g., in hotels and restaurants)

The Note continues by saying software consists of information that is generally intangible and can be in the form of approaches, transactions, or procedures. It states that hardware is generally tangible and its amount is a countable characteristic. Processed materials are generally tangible and their amount is a continuous characteristic. Hardware and processed materials are often referred to as goods.