The world in which manufacturers operate is changing rapidly. Your customers demand value and this requires you to make strategic changes. In short, you need to transform from product to a total supplier. What steps should you avoid when undertaking this process?
From Product Supplier to Service Provider
Several drivers exist that motivate manufacturers to change from selling products coupled with a few essential services (e.g. training, spares), to using services as the basis of their competitive strategy. Servitization creates a balanced revenue stream, sets you apart from your competitors and builds loyalty. There are multiple benefits of servitization, but ultimately it’s all about adding value to the customer.
Organisational restructuring to deliver a services strategy
The adoption of a servitization strategy seems to raise significant cultural and corporate challenges. There can be particular barriers in defining the organisational structure required to support the delivery of a combination of products and services, and a shift of mindset is necessary to take on services, not to mention a change in the mindsets of customers and suppliers.
Further changes include transactional marketing to relational marketing, developing a long-term relationship with customers and suppliers. Providing services means you are in it for the long game and it is important that your business processes are in line with the new strategy. Organisations should ensure they allow enough time to meet these challenges and make these changes.
Maintenance and Repairs
Maintenance and repairs are examples of basic services. For example, automotive manufacturers considering these services as a way of adding value to their product .
However, as a supplier you are still too reliant on the product, focusing on your own definition of a service rather than the customers. From a customer’s perspective, providing maintenance and repairs is seen as something that is obvious and almost expected rather than a service that adds value.
Types of Services
The type(s) of service(s) a company provides can have a bearing on its success in implementing servitization. Research shows that companies are successful when they provide skilled services such as design and system solutions. The risks of providing more basic services may outweigh the potential benefits of servitization.