Production Issues in the World of Associations
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By Eric Ewald, Vice President

Associations are typically service businesses (as opposed to manufacturing businesses) and there are some distinct issues affecting service businesses that, if understood, can help us more efficiently and effectively manage our associations.

Because the distinctions between manufacturing and service firms have implications for how we should operate, it is important to understand the four dimensions that separate the work of the service firm from that of a manufacturing firm. The dimensions that separate manufacturing and service firms are: intangibility, perishability, inseparability, and heterogeneity.

Dimension I: Intangibility means that buyers of services usually can not touch the product.

Implication: Service benefits are experiential and not long lasting.
This is the technical definition of something we have all learned; you are only as good as your last success. Your outstanding convention is not a hard good that will remain in continuous use in someone's home or office.

One key suggestion:
What we need is a consistent quality standard for all of the services that we offer, and careful monitoring of that standard. As association managers we might strike on a “great model” for an annual convention or other services, but we need to create an effective feedback loop to make sure that as times change, we are appropriately serving the needs of stakeholders. The experience that we give members in all of their interactions with the organization is what we produce and sell. We need to make sure the product is of high quality and continually meets the needs of the consumer.

Dimension II: Perishability means that services can not be stored for future consumption

Implication: There are typically “peaks” and “valleys” when it comes to demand.
Since we can not create inventory like a manufacturer of tires or concrete blocks, service firms are particularly subject to the labor-need peaks and valleys of the year. Whether it is convention time, the legislative session, or another major event, staff tend to get stressed during peaks and may waste excess capacity during slower times of the year.

One key suggestion:
We have all found ways to “staff up” during the peak times of the year with the help of volunteers or temporary employees. The key is to plan ahead for the slower times of the year. Do not waste whole weeks after a convention “decompressing.” Vacation time or a fun staff function is appropriate, but make sure to quickly get back online and plan ahead for your next big projects.

Dimension III: Inseparability means that producers of services and buyers of services must be in direct contact for the transaction to take place

Implication: Centralized mass production of services is difficult.
Service products are more “high-touch” than other products. While we can create many convenient electronic and other mechanisms for serving our customers (e.g. online dues payment, event registration, directories and chat rooms), there still has to be careful person-to person work. Helping members access and use services requires direct contact. Additionally, there are often special requests and/or problems that need special, customized help or solutions.

Key suggestion:
Do not assume “if we build it, they will come.” They won't. Members of associations need continued direct contact to introduce them to your services — and more importantly, to get them to use them. Direct contact with members is also necessary for feedback to help the organization continually improve its service offerings. So keep in touch with them, and help manage a good experience.

Dimension IV: Heterogeneity means that there is a greater chance of variation in the performance of services than in the production of products.

Implication: Association service offerings could be changed by a variety of factors.
Service workers can be affected by the job undertaken, the mix of other individuals with whom they work, their education and experience, and personal factors like their family life. An organization might have a wonderful mix of successful service offerings but significant failure could result because of human factors.

Key suggestion:
Given the potential for a wide variation in performance of a particular service offering, productivity and quality measurement and control must be ongoing. Managers must make sure they have a system in place for evaluating the work of employees and the satisfaction of customers across their service offerings. This is particularly important during times of staff transition.

Conclusion

The work of associations is a meaningful and exciting component of our national economy. Collectively, as service businesses, we do great work on behalf of our members. Taking notice of the key differences between manufacturing and service businesses and contemplating how those differences apply to our own service offerings can help us define some of our own unique challenges and opportunities in offering our services.

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