{"id":1182,"date":"2017-04-04T20:39:00","date_gmt":"2023-09-04T20:39:12","guid":{"rendered":"https:\/\/www.salesforce.com\/?p=1182"},"modified":"2023-11-04T20:57:28","modified_gmt":"2023-11-04T20:57:28","slug":"servitization-the-changing-face-of-manufacturing-and-service","status":"publish","type":"post","link":"https:\/\/www.salesforce.com\/eu\/blog\/servitization-the-changing-face-of-manufacturing-and-service\/","title":{"rendered":"Servitization: The Changing Face of Manufacturing & Service"},"content":{"rendered":"\n

Once upon a time, the manufacturing service chain was comparatively black and white: manufacturers would make things for people, and service companies would do things for people. Not any more.<\/p>\n\n\n\n

Today, boundaries are blurring, as trailblazing manufacturers embark on a transformation<\/a> known as \u2018servitization\u2019.<\/p>\n\n\n\n

During a recent webinar<\/a>, we asked Dr. Howard Lightfoot, manager of the Operations Excellence Institute at Cranfield University, what servitization means, and why it\u2019s becoming such a competitive priority for the manufacturing industry as a whole. He explained:<\/p>\n\n\n\n

\u201cIn recent years, more and more manufacturers are competing through a portfolio of integrated products and services. This is a conscious and explicit strategy for manufacturers, with the provision of product-centric services providing a main differentiating factor in the marketplace. And it\u2019s this which has become known as the servitization of manufacturing.\u201d<\/p>\n\n\n\n

The nature of servitization<\/h2>\n\n\n\n

Servitization has been a long time coming. In fact, as Dr. Lightfoot argues in his book, Made to Serve<\/a>, academics have been encouraging manufacturers to focus on the customer end of the supply chain for over two decades.<\/p>\n\n\n\n

If companies have been slow on the uptake, it could be because the move from making products to delivering product-centric services is no small shift \u2013 it means transforming both your organisational structure and processes.<\/p>\n\n\n\n

At Cranfield University, Dr Lightfoot investigated a number of pioneering companies that were excelling in servitization, including Rolls Royce, Xerox and the London Underground. He found that these organisations followed a common competitive strategy, with greater emphasis placed on customer intimacy. In fact, the strategy aimed to push performance in three key areas:<\/p>\n\n\n\n

    \n
  1. Customer Intimacy<\/b>. Combining detailed customer knowledge with operational flexibility, to create the best total solution for the customer.<\/li>\n\n\n\n
  2. Operational Excellence<\/b>. Controlling processes to effectively deliver the best total cost to the customer.<\/li>\n\n\n\n
  3. Product Leadership<\/b>. Selling the best product on the market.<\/li>\n<\/ol>\n\n\n\n

    The three services of servitization<\/h2>\n\n\n\n

    Dr Lightfoot also examined the various services offered by servitized organisations. He divided these services into three types: base, intermediate and advanced. The more advanced the service, the more value offered to the customer \u2013 for example:<\/p>\n\n\n\n

      \n
    1. Base Services<\/b>: Product Provision<\/li>\n\n\n\n
    2. Intermediate Services:<\/b> Product Repair, Condition Monitoring, Field Service and Customer Help Desk<\/li>\n\n\n\n
    3. Advanced Services<\/b>: Pay Per Use, Fleet Management, Availability Contract and Integrated Solution<\/li>\n<\/ol>\n\n\n\n

      As product providers climb through this service hierarchy, they take on more responsibility and risk. As Dr Lightfoot says:<\/p>\n\n\n\n

      \u201cIf you\u2019re offering an availability contract, and the customer is paying you on that basis, you have to ensure that you can deliver against that. What you get paid depends on what you provide. It\u2019s not a case of \u2018you sell the product, it breaks, and you fix it\u2019 \u2013 those are the old days. You don\u2019t see that in a modern servitized world.\u201d<\/p>\n\n\n\n

      Technology \u2013 at the heart of servitization<\/h2>\n\n\n\n

      What makes for a successful servitization strategy? <\/p>\n\n\n\n

      One thing that all the servitization pioneers Dr Lightfoot studied had in common was their use of connected technology<\/a> to inform and improve use, maintenance and repair actions.<\/p>\n\n\n\n

      This technology enabled a higher level of service delivery, tailored to the customer\u2019s individual product needs. Dr. Lightfoot mapped the typical process:<\/p>\n\n\n\n