The layered nature of servitization challenges and responses

International Journal of Operations & Production Management, 2022

This paper aims to empirically explore the evolution of servitization and how platforms affect the transition between the stages of servitization. Design/methodology/approach We conducted an in-depth case study of a Chinese manufacturer (i.e., Haier) using a longitudinal design. Three rounds of data collection were conducted between 2014 and 2020. We carried out 50 semistructured interviews and 11 workshops to collect data from senior and middle managers of Haier and its business partners. Findings We found that Haier's servitization journey includes three stages (i.e., productoriented solution, integrated solution, and smart connected solutions) that evolves in the target of the services and the digital components of the solutions. Haier has also developed three types of platforms (i.e., service platform, supply chain platform and platform ecosystem) to support the implementation of servitization. The empirical evidence reveals that platforms can address the complexities that emerged when Haier implements the different stages of servitization as well as enable Haier to transition from one stage of servitization to the next. Originality/value This study enhances the current understanding of the evolution of servitization and the roles of digital technologies in the transition between the stages of servitization. It also provides empirical evidence regarding how the platform approach enables the development of servitization. By clarifying the interplay between servitization and platforms, this study provides guidelines for managers on how to develop platforms to both advance and benefit from servitization.

Research and anecdotal evidence suggest that manufacturers undertaking the path towards servitization face several challenges, that may generate inconsistencies, e.g. between strategic intentions and internal organizational arrangements and even more with external elements, (at the customer and supplier sides). The paper addresses the misalignments faced by companies in the servitization journey, through a literature review and a case-based research. 16 challenges are pointed out from the literature, grouped into five dimensions. They are reflected by the analysis of five case studies, that allow to build a framework based on the five dimensions (strategy, offering, company, service network and customers).

Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering Manufacture, 2020

The introduction of advanced technologies and new production paradigms has led an increasing number of manufacturing companies to adopt business models that include an integrated provision of products and services. This process is generally referred to as servitization. This article addresses two primary research questions: (a) How do the commodity sector, geographical location and company dimension affect the variety of services offered by manufacturing companies? (b) What is the impact of these structural factors on the type of services offered by manufacturing companies? To address these questions, this article provides new insights into the understanding of the servitization process. The main elements of originality of this study are (a) an unprecedented size of the analysed sample, composed of more than 190,000 manufacturing companies; (b) a quantitative analysis of the effects of the three aforementioned factors on the servitization process and (c) a definition of a pair of in...

2017

Servitization in the manufacturing industry implies a shift from an offer based mainly on standard goods, to a wider value proposition composed of solutions aimed at solving specific customers' problems, obtained by integrating tangible and intangible elements. The purpose of this paper is to investigate the servitization strategies of manufacturing firms, more specifically about: (i) how manufacturing companies move toward servitization (servitization pattern); (ii) how they achieve the capabilities needed; and (iii) which factors enable this transition. We did so by comparing the state of the art of academic research with a qualified sample of case studies of global companies that famously improved their competitiveness by shifting from products to solutions. The results show some gaps between research and practice, concerning in particular: the impact (either transformational or integrative) of servitization on the manufacturing organization; the role of financial resources in shaping the capability achievement strategy, particularly for external acquisitions, and; the role of servitization enablers poorly considered by the extant literature, such as time, leadership and continuity, operational excellence and digital technologies. These findings lead to the definition of seven formalized research directions, thus outlining an agenda for future research.

Service Business, 2013

Finne, M., Brax, S., Holmström, J., 2013. "Reversed servitization paths: A case analysis of two manufacturers". The literature on service business in manufacturing companies posits that manufacturers "servitize" by increasing the proportion of services offered. This study presents two paths that are contrary to such forward-unidirectional servitization, indicating "reversed servitization." In the first case, a capital goods manufacturer lost visibility to its installed base due to evolving product technology. We use the case of photocopier manufacturer Xerox to support our findings; a regulation change forced Xerox to move from a service-based toward a productbased business model. We thus propose that influencing environmental factors need to be researched and that the literature of organizational ecology may serve as a complementary perspective.

Strategic Change, 2014

Servitization is the move towards selling traditional product to selling a wide range of product-service bundle combinations. This movement contributes to firm sustainability and profitability and hence the competitiveness of nations. This article summarizes the contributions published in this special issue containing academic research on the topic. Key points: 1. Servitization directly effects firm performance and territorial competitiveness. The special issue includes articles at both levels of analysis. 2. The effect of servitization is industry specific and hence insights from a wide range of industries are included here; among them engine production, construction, the music industry and cloud computing 1 J.E.L. classification codes: D21 (Firm Behavior);M21 (Business economics) 3. The reduction of cost and the maximization of revenues are the main drivers of servitization. Contributions provide useful methodological insights into implementation of new service business models.

This paper focuses on servitization, which by many traditional manufacturers from the traditional industrial 'triad' of North America, Western Europe and Japan is perceived as a strategy for survival in the world of far-reaching transformation. Servitization or, in other words, re-focusing the attention from running fabrication and assembly processes to developing integrated product solutions with a large service component has been recognized in the literature (e.g. Neely, 2008; Baines et al., 2009; Schmenner, 2009). Nevertheless, little or no answers have been offered as to what the strategic implications of servitization are and how traditional manufacturers can recoup the desired level of return from the developments associated with servitization. On the basis of multiple cases of Danish companies, this paper aspires to contribute to bridging these gaps. The paper seeks to identify the main reasons and strategic implications of servitization, as well as to discuss how the...

IFIP advances in information and communication technology, 2018

Product Service System (PSS) development involves both manufacturing and service workers, carrying them great potential to pursue industrial competitiveness, customer satisfaction and sustainable improvement. The belief is that the development level of PSS design is slowly evolving through a path strongly driven by the evolution of the technology and the progressive involvement of the industry in its application. However, on one side some companies still need to understand the relevance of the development process related to their service offer, on the other best practices able to improve the PSS development processes performances more systematically are needed. The paper proposes a case study, first providing a mapping of the service offer of Company A, an Italian company in the humidifiers industry. Then, it investigates, through a content analysis, what could affect companies both positively or negatively to switch their approach from a product-centric to a service integrated one. This transition would enable them in the future to develop more advanced PSSs, opening new market opportunities and being more capable of satisfying customer needs.

International Journal of Operations & Production Management, 2021

Purpose-This study shows various pathways manufacturers can take when embarking on digital servitization (DS) journeys. It builds on the DS and modularity literature to map the strategic trajectories of product-service-software (PSSw) configurations. Design/methodology/approach-The study is exploratory and based on the inductive theory building method. The empirical data were gathered through a workshop with focus groups of 15 servitization manufacturers (with 22 respondents), an on-site workshop (in-depth case study), semi-structured interviews, observations and document study of archival data. Findings-The DS trajectories are idiosyncratic and dependent on design architectures of PSSw modules, balancing choices between standardization and innovation. The adoption of software systems depends on the maturity of the industry-specific digital ecosystem. Decomposition and integration of PSSw modules facilitate DS transition through business model modularity. Seven testable propositions are presented. Research limitations/implications-With the small sample size from different industries and one in-depth case study, generalizing the findings was not possible. Practical implications-The mapping exercise is powerful when top management from different functional departments can participate together to share their expertise and achieve consensus. It logs the "states" that the manufacturer undergoes over time. Originality/value-The Digital Servitization Cube serves as a conceptual framework for manufacturers to systematically map and categorize their current and future PSSw strategies. It bridges the cross-disciplinary theoretical discussion in DS.

2018

This edited book intends to provide knowledge on tools and practices of servitization to facilitate the formulation and implementation of servitization-based strategies, service infusion and manufacturing service transition globally. Including 22 practically relevant contributions, this book aims to help scholars and practitioners seeking to facilitate servitization in companies through original perspectives and advanced thinking in related issues such as business models, strategic change, practices, processes, routines, value creation and appropriation. Employing practice theory as a useful frame, the contributions span theoretical approaches such as product-service systems, service science, services-dominant logic and cocreation, resource-based views, industrial organization and institutional theory. The book presents tools and frameworks to enable and support servitization and engender understanding of servitization-as-practice.