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the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation
Prof. Dr. Ir. Roland Van Dierdonck
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation
•WHAT ?
•WHY ?
•HOW ?
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
MOST PRODUCTS ARE A BUNDLE OF GOODS and SERVICES
100 % Goode.g. Base chemicals
100 % Servicee.g. consulting
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: What?
-Redefinition of the “product offering”: from focus on the “hardcore” to a focus on “solving the problem of the customer”
-From the manufacturing core to the augmented products
-Servitisation is more than adding traditional service elements such as .
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Colora: Selling Solutions
-Originally small firm produced paint sold in paint shops and DIY, but could not compete with large multinational companies
-Realized that customers are not just looking for paint; they are looking for help in solving a problem.
-Set up a chain of franchisee operated paint shops
-Sold paints, but employees trained to help:- advice on the best paint for your needs- if needed come to your home to give advise on the spot.
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
The augmented The augmented productproduct
Hardware core
Traditional components of customer service:•delivery lead time and reliability•installation•after-sales service•repair•payment arrangements
Service in the broad sense:solution of the customer’s problem
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: What
Fourth Stage: beyond manufacturing .
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
The augmented The augmented productproduct
Hardware core
Traditional components of customer service:•delivery lead time and reliability•installation•after-sales service•repair•payment arrangements
Service in the broad sense:solution of the customer’s problem
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
SERVITISATION
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: Why
•Customers are more (service) demanding
•Servitisation helps to differentiate and build up
entry barriers .
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven11
A mass customized barbie doll …
My Twinn: Personalized Gifts Including Twin Collectible Dolls
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
THANK YOU FOR YOUR ATTENTION
ANY QUESTION ???
OR NOIR
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
13
Or Noir
– Imagine that you can create your very OWN chocolate !
– Or Noir™ is a method allowing Artisans to create the taste profile of their dark or milk couvertures, by assembling/blending 2 or more pure Origin couvertures chocolate and/or cocoa liquor.
– Chocolate ‘tailor made’ – Exclusivity for 5 years
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
14
Threadless: The Customer is the Company
– Small very successful company in Chicago designing and selling T shirts
– Community of 500.000 customers who may make their own design
– Members of the network submit their ideas and then voted on which ones they liked best.
– Site became a community center where they blogged, chatted about designs, and bought T shirts.
– Company realized high margins,; little/no overstock
– Threadless rethought the relationship with the customer. Customer end up playing a critical roleacross all its operations
– Or Noir™ is a method allowing Artisans to create the taste profile of their dark or milk couvertures, by assembling/blending 2 or more pure Origin couvertures chocolate and/or cocoa liquor.
– Chocolate ‘tailor made’ – Exclusivity for 5 years
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Strategy development.
• Setting up a customer information system
• Organizing the service delivery system
• Human resources mgt: -Putting the right skills in place
-Empowerment
• The virtual factory
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Strategy development .
– “In many companies services have not been sufficiently integrated into corporate competitive analysis and strategy design. It is seen as a part of the marketing effort and often an unpaid and expensive activity.”
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Strategy development.
– Manufacturing competences are worthless if they do not add value to the customer.
– The strategic planning process to be meaningful should be about customers and employees, about external wants and needs, and internal capabilties and skills, and company’s capacity to link the needs of its customers with the capabilities of the employees.
– There is a need for tighter coupling of customer needs and organisational capabilities.
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Strategy development.
– Servitisation affects the fundamental strategic questions such as:
• What business are we in?
• What business should we be in?
• What business do we want to be in?
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Setting up a customer information system
- Need to know more about customers and be able to act on that information.
- Need to make the service concept explicit
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
The service conceptMaking the intangible tangible
A service concept is a blueprint that communicates to employees what service they should give
and to customers what service they should expect to receive.
Van Looy, Gemmel and Van Dierdonck, Services Management: An Integrated Approach, FT Prentice Hall, second edition, 2003
A service concept is the mental picture that is held by customers, employees and shareholders
about the service provided by the organisation
Johnston and Clarck, Service Operations Management,FT Prentice Hall, Pearson Education, Second Edition, 2005.
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Organizing the service delivery system
– Enlarged front office: four walls of a factory no longer limit the domain of manufacturing
– Customers participate in the production process
– Manufacturing operators become service providers and customers become part time employees
– Servitisation moves manufacturing firms from an impersonal market to a relational market
– Vertical lines and structures should be replaced by horizontal lines involving customers and suppliers.
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: How
• Empowerment
– Should be enhanced so that personnel can make decisions and act in the interest of the customer at the spot
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Servitisation: A Cure for All?
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
an example for an industrial-resin manufacturer
Price of Product
On-time delivery
Consistence of product perfomance over time
Selection of products
Level of technicalsupport
Frequency of contactwith sales representative
Service-orientedcustomers
Product-orientedcustomers
Price-sensitivecustomersStrong positive
Deviation from average Source: Study mentioned in Forsuth et al., The McKinsey Quarterly, 2000
Handholders
Risk avoiders
Basic needcustomers
Design a portfolio of service products
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
2. Design a portfolio of service products
Position service products according to response times and prices
level of service
Standard High
Volume of contracts
Handholders
Risk avoiders
Basic-need
customers
High
Low
Price
Low
High
Source: Bundschuh et al., The McKinsey Quarterly, 2003, number 4, pp.3-13
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
Select a coherent model of servitisation to support service
products
Machine Supplier
Solutions Provider
Maintenance Partner
Value Partner
Performance Partner
Parts &Machinery
Operations Process Business
Customer's Purchasing
Customer's Operations
Customer's Process
Customer'sBusiness
Supplier CompetenciesF
oc
us
of C
us
tom
er R
ela
tion
sh
ipMachine Supplier
Solutions Provider
Maintenance Partner
Value Partner
Performance Partner
Parts &Machinery
Operations Process Business
Customer's Purchasing
Customer's Operations
Customer's Process
Customer'sBusiness
Supplier CompetenciesF
oc
us
of C
us
tom
er R
ela
tion
sh
ip
Figure Different models of servitization. (BestServ Feasibiity study 2003)
the Autonomous Management School of Ghent University and Katholieke Universiteit Leuven
After Sales Services
Integrated Services Independent Services
Machine/Part Supplier
System Supplier
Maintenance Partner
Performance Partner
Value Partner
Ser
vice
Con
cept
Delivering a piece/machinery
which fits customer’s technical
requirements (functionality)
Delivering a ‘system’ (e.g.
production line) which is designed (to some extent)
for the specific
customer’s process
Expanding the focus to include
involvement during the
continuing life cycle of the
Machine/System
Expanding the focus to
include involvement within the operating process - Taking
responsibility for the
performance of the
system, i.e. securing
operations.
Supplier takes care of part of
the customer’s business through
operating and maintenance agreements.
Impl
ied
Ser
vice
s Installation &
Start Up Training Warranty
Repair Spare Parts
Project Engineering
Turnkey delivery
Rebuilding & Modernization
Helpdesk, Consultation
Maintenance Contracts – Outsourcing
Spare & Consumable
Contracts Financial Services (Leasing)
Performance Contracts &
Planning
Operational & Maintenance
Responsibility -
Development Partner
From Towards
Standardisation Customisation
Transaction Relationship
Overall Responsibility by Customer
Overall Responsibility
by Provider
Source: Bart Van Looy
Select a coherent model of
servitisation to
support service products
SOLUTION