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Servitization: Take the Journey

Servitization: Take the Journey

Your business has been running for ten years now. Like all new manufacturing businesses, things started off a little rough, but for the last seven or eight years you have seen steady growth in your market share. You have released several new products in the last few years, and you are looking to expand with more growth in the next decade. But then the quarterly report comes in. Your field numbers have dropped sixty percent in the last three months and you will have to slow down manufacturing on ninety percent of your products.

How could this happen? Things were going so well for your company. But despair not, there are ways to revitalize your manufacturing company and get your field numbers back up there, all in time for that company expansion you had planned for a couple quarters down the road.

Examples of Successful Servitization

Servitization will transform your company by revitalizing it and redeveloping its capabilities. This process involves the creation of new products and services that supplement, but do not replace, your current products and services. Instead of just offering a product, you will be offering a product joined with a solution.

According to researcher Arnold Tukker, there are product-related advice, training, and consulting services. Product-related services will help your customers manage a product. This can include the supply and management of spare parts, product inspections, repair management, on-site installation, refurbishing, cleaning, updates or upgrades. For example, General Electrics has put in place a Remote Monitoring and Diagnostics program that monitors products by providing data from plants and connectivity systems. Similarly, Miele has established a remote diagnostics model for its professional customers. This program helps avoid many unnecessary customer service calls.

Your manufacturing company can also give advice, training, and consulting services for the product regarding its most efficient use. For example, these activities can include knowledge-based services, such as documentation, help desk, or hotline services. It could also include training for product use, advice regarding product choice, and training and consulting for developing teams and organizations. For example, Xerox Managed Print Services support their customers in detecting the total cost of printing; while Xerox Communications & Marketing Services help to improve the customer’s marketing and customer communication processes performance.

Servitization Requires Investment and Patience

But how are you going to servitize when you can barely keep your company afloat, now? Servitization is an investment in your company's future. And like all investments, it is going to take some capital. The opportunity to servitize your company—in other words, offer a service that meets a need that no one else meets—will set your company apart from your competition and you will recoup the initial investment very quickly. It is also a question of setting up efficient service processes that will save you time and money. For example, implementing a field service solution will help you deliver those new services in real-time and in an efficient way.

Servitization is something that any company can do, but it is especially beneficial to manufacturing companies. When a field agent realizes that there is a need to be met, and your company can meet that need quickly at a reasonable cost, then you have just gotten yourself a new contract. Generally, more than one customer experiences the problems you solve. Once you have identified a client’s need, you can sell that service to other clients with the same problem. You have created a product and solution pairing that belongs to you and your company that will benefit numerous other companies.

Servitization takes some work. Your field agents will need to be trained in how to identify problems that clients are having, and whether your company has the resources to help meet that client's needs. But with properly trained field agents, you will be identifying new products and solutions in no time. This will generate new revenue from those products just in time for that expansion, which may end up being a little bigger than you thought it would be.


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