The Difference Between Product and Service Procurement

There are three key differences between product and service procurement.

  • Tangibility

Because you can see and touch a product, you can determine its quality easily. In contrast, the quality of service is difficult to gauge. That’s why services require you to be far more particular in terms of what exactly you expect.

  • Ownership

Once you’ve bought a product, you normally own it. You can use it however and whenever you want. Different rules apply to services. You cannot separate the service provider from the service itself – and you don’t own it. Again, this requires you to be very specific about your requirements. You need to define when and where you need the service to be delivered.

  • Variability

While products have low variability, services have high variability. In other words, the level of service you receive can differ widely. Therefore, it’s imperative to conduct regular spot checks to ensure that the expected quality is maintained.

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