1servicemanagementCHAPTER32Servitization:orwhyservicesmanagementisrelevantformanufacturingenvironments3thepreviouschapterswehaveidentifiedthespecificcharacteristicsofservices.Thismayhavegiventhefalseimpressionthatmanufacturinggoodsanddeliveringservicesaresodifferentthatthisbookwillonlyberelevanttocompaniesclassifiedasbeinginthetertiaryorservicessectoroftheeconomy.Thisisanoutdatedview.4Traditionally,manufacturingcompaniessuppliedgoods,whileservicewasseenashavingonlyminorimportance.Thisattitudehaschanged.5Thisattitudehaschanged.Serviceshavebecomeimportantformanufacturingcompanies.Moreandmoreofthesecompaniesareofferinganintegratedpackageofproductsandservices.6SandraVandermerwe,oneoftheleadingscholarsonthistopic,hascalledthismovement‘theservitizationofbusinesses’7Thischangeaffectsthemanagementoftraditionalmanufacturingcompanies.Theofferingtothecustomerhastoberedefinedtoincludethis‘bundle’concept.Asaresult,manufacturingbusinessesandservicecompaniesarenolongersoverydifferent,andeachhassomethingtoteachtheother.8weshalltakeacloserlookatthischange,describingthewayinwhichservitizationisevolving.Weshallalsoexaminesomeofthecausesofthistrendandsomeoftheimplicationsithasforacompany’sorganizationanditsproductionprocesses.9FROMGOODSTOSERVICESTraditionally,thefocusinmanufacturingcompanieshasbeenonmakingagoodqualityarticle.TheobjectivehasbeentomakeacarthatwouldtakethecustomerfrompointAtopointB,aliftthatwouldgoupanddown,oracoffeemachinethatwouldmakecoffee.10Thereisnothingwrongwiththis;weallwantourcarstofunctionsmoothlyorourcoffeemachinestomakegoodcoffee.11Everymanufacturerhastoensurethatthegoods–thesubstantiveelementoftheproduct–workwell.However,manufacturershavecometorealizethattheofferingofaproductisenhancedwhenitiscomplementedbyservices.12Aclassicalformofcustomerserviceofferedbymanufacturingcompaniesisaftersalesservice–theinstallation,maintenanceandrepairofgoodssold.13Itisapparent,however,thatcustomerservicesinthiscontextareseenas‘servicesthataccompanygoods’–forexample,acceptabledeliverytime,after-salesrepairs,correctinstallation,etc.Servicesareseenasanadd-onorsometimesevenasanecessaryevil,sinceinthemindsofmostconsumersorsalespeople,aninterventionafterthesaleisoftenassociatedwithadefectintheproduct.14Thisnotionofservicecanobviouslybeextended.Servitizationgoesbeyondthetraditionalapproachofproviding‘additional’services.Inthecaseofservitization,theofferisdefinedasa‘bundle’consistingofbothgoodsandservices.Servitizationthusrequiresadifferentmindset.15Redefining‘products’willoftenmeantakingafreshlookatcustomers’needs.Insteadoftryingtoselltheitemwiththeserviceasanadd-on,weshouldaddresstheproblemthataparticularproductsolves.Thiswilloftenleadtotheconclusionthatthehardwareisonlypartofthesolution.16Solutionsareprovidednotmerelybyagoodandsomeadded-onservices,butbymeansofapackagewhichincludesbothgoodsandservices.Bothcontributetothefulfilmentofcustomerneeds.17Fromgoodsto…abundleofgoodsandservicesSERVITISATIONManufacturersbecomeserviceproducers!18Anexaminationofthedifferentwaysofdefiningtherelationshipbetweengoodsandservicesrevealsthreedifferentapproaches:consideringyourselfasameregoodsmanufacturerandsupplier;offeringadditionalservices;andembracingthenotionofservitization.19WHYSERVITIZATION?20Whyisitthatmanufacturingcompaniesarebecomingincreasinglyinterestedingivingtheircustomersgoodservice?21Broadlyspeaking,therearetwomainreasons22Firstofall,mostcustomersjustwantmoreserviceandarenolongersatisfiedwiththegoodalone.Second,offeringahigherlevelofservicethanthatofyourcompetitorsisawayofmakingyourofferingmoreattractiveforyourcustomers.Itcandifferentiateyoufromyourcompetitors.23SatisfyingcustomerneedsToday’scustomerssimplydemandmoreservices.Theydonotsimplywanttobuyacomputeroracar;theyalsowantaguaranteethatitworks.Theywanteaseofuse,easeofrepair,anda24-hourinformationdesk.24ThisisnottosaythatthetangibleelementoftheofferinghasbecomelessimportantCustomersstillwantthesamearticle,buttheyalsowanttheservices,sothattheycangetthemostoutoftheirpurchase.25Redefininganofferingasabundleofservicesandgoodsmay,therefore,meetcustomers’expectations.26SeekingdifferentiationTraditionally,competitionbetweenmanufacturingfirmshastendedtofocusonthegoodsthemselves.Acompanygainedcustomersorincreaseditssalesbecauseitsgoodswerebetterthanthoseofitscompetitors.27Nowcompetitionhasshiftedtoanotherlevel,namelythatoftheproduct’sservicecomponent.28Manymanufacturersonlyhavelimitedcompetitiveadvantageintermsoftheirgoods.Goodsarerathereasytocopy;patentsoftengiveonlylimitedprotectionagainstcopying.Goodsarebecomingmoreandmorealikeintermsoftheirqualityandperformance.29Manufacturersarefindingitdifficulttodifferentiatethemselvesfromtheircompetitorsonthestrengthofthegoodsalone,andthushavetofindtheirsourceofdifferentiationelsewhere.30MAKINGTHETRANSITIONSettingupcustomerinformationsystemsOrganizingtheservicedeliverysystemPuttingtherightskillsinplaceThevirtualfactory?31•Describethethreestages(fromgoodstoabundleofgoodsandservices)atABB?•Whatareth