ArticlePDF Available

Exploring the financial consequences of the servitization of manufacturing

Springer Nature
Operations Management Research
Authors:
Andy Neely at University of Cambridge
Andy Neely
Download full-text PDF
Read full-text
Download citation

Abstract

Commentators suggest that to survive in developed economies manufacturing firms have to move up the value chain, innovating and creating ever more sophisticated products and services, so they do not have to compete on the basis of cost. While this strategy is proving increasingly popular with policy makers and academics there is limited empirical evidence to explore the extent to which it is being adopted in practice. And if so, what the impact of this servitization of manufacturing might be. This paper seeks to fill a gap in the literature by presenting empirical evidence on the range and extent of servitization. Data are drawn from the OSIRIS database on 10,028 firms incorporated in 25 different countries. The paper presents an analysis of these data which suggests that: [i] manufacturing firms in developed economies are adopting a range of servitization strategies—12 separate approaches to servitization are identified; [ii] these 12 categories can be used to extend the traditional three options for servitization—product oriented Product–Service Systems, use oriented Product–Service Systems and result oriented Product–Service Systems, by adding two new categories “integration oriented Product–Service Systems” and “service oriented Product–Service Systems”; [iii] while the manufacturing firms that have servitized are larger than traditional manufacturing firms in terms of sales revenues, at the aggregate level they also generate lower profits as a % of sales; [iv] these findings are moderated by firm size (measured in terms of numbers of employees). In smaller firms servitization appears to pay off while in larger firms it proves more problematic; and [v] there are some hidden risks associated with servitization—the sample contains a greater proportion of bankrupt servitized firms than would be expected.
Content uploaded by Andy Neely
Author content
All content in this area was uploaded by Andy Neely on Mar 14, 2014
Content may be subject to copyright.
The Servitization of Manufacturing
Professor Andy Neely
University of Cambridge and
University
of
Cambridge
and
Cranfield School of Management
Five questions…
1. What do we know about manufacturing in the UK?
2.
How is manufacturing changing?
2.
How
is
manufacturing
changing?
3. Why is manufacturing changing (the driving forces)?
4. Data on the servitization of manufacturing (scale and impact)
5. Why is servitization difficult?
Five questions…
1. What do we know about manufacturing in the UK?
UK manufacturing output: 1996-2007
Manufacturing Output
(Index 2003=100)
110
100
105
95
100
85
90
85
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
KPIs for Manufacturing, BERR, www.berr.gov.uk/sectors/manufacturing/ukstrategy
Talk of a decline in manufacturing is overstated – in terms of output…
UK manufacturing employment: 1996-2007
Manufacturing Employment
(
Index 2003=100
)
()
130
110
120
80
90
100
60
70
80
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
KPIs for Manufacturing, BERR, www.berr.gov.uk/sectors/manufacturing/ukstrategy
But not overstated in terms of employment!
UK manufacturing productivity: 1996-2006
Manufacturing Productivity
(Ouput per hour, Index 2003=100)
120
100
110
80
90
60
70
60
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Sttddbf lltihihdtiit
KPIs for Manufacturing, BERR, www.berr.gov.uk/sectors/manufacturing/ukstrategy
S
ame ou
t
pu
t
pro
d
uce
d
b
y
f
ewer peop
l
e resu
lt
s
i
n
hi
g
h
er pro
d
uc
ti
v
it
y
UK manufacturing profitability: 1996-2006
Manufacturing Profitability
% net rate of return
18%
For private sector non-manufacturing corporations
as a whole, profitability reached 14.5% in 2006.
12%
14%
16%
6%
8%
10%
0%
2%
4%
0%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
KPIs for Manufacturing, BERR, www.berr.gov.uk/sectors/manufacturing/ukstrategy
But not necessarily higher profitability!
Five questions…
1. What do we know about manufacturing in the UK?
2.
How is manufacturing changing?
2.
How
is
manufacturing
changing?
Declining profitability raises questions about the economic
sustainability of business models…
Sainsbury Review: The Race to the Top (2007)…
“In 1980, less than one-tenth of manufacturing exports came from the
developing world. Today it is almost one-third and in 20 years’ time it is
likely to be one-half”.
•UK manufacturing cannot compete on the basis of cost (Innovation
Review, 2003; Innovation Nation, 2008)…
Focusing on high value production (by integrating services)…
Interest in service-based competitive strategies is not new:
Andersen and Narus – Capturing the Value of Supplementary Services, Harvard
Business Review, 1995.
Wise and Baumgartner – Go Downstream: The New Imperative in Manufacturing,
Harvard Business Review, 1999.
But we may be at a technologically enabled tipping point…
Servitization/Servicization…
Product-Service Systems…
Service Science…
Remote Product Servicin
g
…
g
Intelligent Vehicle Health Management…
And the shift to services is not just in aero engines…
The opportunities for services
John Deere iGuide system (2007)
UGPSthlt
U
ses
GPS
t
ec
h
no
l
ogy
t
o
automatically shift the steering
pattern of the tractor to
com
p
ensate for im
p
lement drift
pp
Health and Usage
Monitoring Systems
Use sensors on equipment
to detect repair and
overhaul re
q
uirements
q
And the opportunities for services continue…
Yesterday’s Technology…
Th C (1836
1910)
Th
omas
C
rapper
(1836
-
1910)
Sanitary Pioneer
Footnote for Sir John Harington who is credited with inventing the first flush toilet in 1596!
Today’s toilet technology…
The intelligent toilet…
Neorest toilets…
•Lid opens automatically as you walk up…
•The seat’s heated…
•There’s a catalytic air purifier to remove any “unwanted odours”…
•With a manual power override for those particularly unpleasant visits…
•
There
’
sawarm
-
water massage spray and a hot air dryer
There s
a
warm
-
water
massage
spray
and
a
hot
air
dryer
…
•The temperature and intensity of both are controlled using a LCD panel…
•Once you’ve finished and left the “sensor zone” the toilet automatically closes
the lid and starts a three stage “Cyclone” flush; the strength of which depends on
how long you’ve been busy on the toilet and previous patterns of usage.
What about the toilet of tomorrow?
Put simply…
The servitization
of manufacturing
= adding
services to
prod cts
prod
u
cts
…
Five questions…
1. What do we know about manufacturing in the UK?
2.
How is manufacturing changing?
2.
How
is
manufacturing
changing?
3. Why is manufacturing changing (the driving forces)?
Why is manufacturing servitizing?
Economic
ti l
1. Manufacturing firms in developed economies cannot
compete on the basis of cost (technological
developments are enabling them to add innovative
ra
ti
ona
l
e
developments
are
enabling
them
to
add
innovative
services)…
2. The installed base argument (e.g. for every new car
sold there are already 13 in operation, 15 to 1 for civil
Strategic
aircraft and 22 to 1 for trains)…
3. Stability of revenues – services vs. products…
1.
Lock in customers (sell the original equipment at cost,
Strategic
rationale
1.
Lock
in
customers
(sell
the
original
equipment
at
cost,
make money on spares & suppliers - razor, printers)…
2. Lock out competitors…
3. Increase the level of differentiation (e.g. equipment
id ff t t k t ’ i k d i
prov
id
er o
ff
ers
t
o
t
a
k
e cus
t
omer
’
s r
i
s
k
an
d
g
i
ve
predictable maintenance costs)…
4. Customers demand it (e.g. contracting for capability)…
Environmental
rationale
1. Environmental rationale (change notions of ownership
and resource use – e.g. Mobility cars)…
Five questions…
1. What do we know about manufacturing in the UK?
2.
How is manufacturing changing?
2.
How
is
manufacturing
changing?
3. Why is manufacturing changing (the driving forces)?
4. Data on the servitization of manufacturing (scale and impact)
So what can we find out about servitization?
2007 dataset 2009 dataset
Source of data OSIRIS database OSIRIS database
Nos. companies 44,000 publicly listed firms 55,000 publicly listed firms
Nos. manufacturing firms
(US SIC codes 10-39) 22,952 firms 27,670 firms
Nos. manufacturing firms
with over 100 employees 12,521 firms 13,259 firms
Nos firms with no
1 478 firms
706 firms
Nos
.
firms
with
no
business description
1
,
478
firms
706
firms
Nos. firms
declaring
216 firms
222 firms
Nos.
firms
declaring
bankruptcy
216
firms
222
firms
Useable sample 10,827 firms 12,331 firms
Coding – identifying which firms have servitized
Coding – using business descriptions to identify
hth fi l ifid f t i ff
w
h
e
th
er
fi
rms c
l
ass
ifi
e
d
as manu
f
ac
t
ur
i
ng o
ff
er:
Pure manufacturing e g PetroChina principally engaged in a broad range of
Pure
manufacturing
,
e
.
g
.
PetroChina
principally
engaged
in
a
broad
range
of
petroleum and natural gas-related activities.
Some combination of man fact ring and ser ice e g Siemens
Some
combination
of
man
u
fact
u
ring
and
ser
v
ice
,
e
.
g
.
Siemens
-
predominantly electronics and electrical engineering, but provides a wide
variety of consulting, maintenance and other services.
Pure service, e.g. The Brink's Company, conducts business in the security
industry. The services offered by the Company include armoured-car
idllhi(ATM)ii d
transportat
i
on, automate
d
te
ll
er mac
hi
ne
(ATM)
serv
i
c
i
ng, currency an
d
deposit processing, coin sorting and wrapping, and arranging the secure air
transportation of valuables.
Despite having manufacturing SIC codes…
70%
50%
60%
40%
20%
30%
10%
0% Pure
Manufacturing Servitized Pure Service Bankrupt No description
2007 2009
In which countries have firms servitized (2006)?
50%
60%
30%
40%
50%
F
irms
10%
20%
30%
% of
F
0%
10%
% servitized firms
USA Finland Singapore Malaysia Netherlands
Belgium Norway Germany Bermuda Switzerland
Sd
Ti
CIld
Si
GtBiti
S
we
d
en
T
a
i
wan
C
ayman
I
s
l
an
d
s
S
pa
i
n
G
rea
t
B
r
it
a
i
n
Greece Australia Czech Republic Denmark Thailand
France Indonesia Austria Japan China
Where has the growth in servitization come from?
60%
70%
40%
50%
20%
30%
0%
10%
% Servitized in 2009 % Servitized in 2007
Where has the growth in servitization come from?
Deciles of turnove
r
Decile 10 2004
Decile 10 2006
Decile 8 2004
Decile 8 2006
Decile 9 2004
Decile 9 2006
Decile 6 2004
Decile 6 2006
Decile 7 2004
Decile 7 2006
%P f t i
Decile 4 2006
Decile 5 2004
Decile 5 2006
Decile
6
2004
%
P
ure manu
f
ac
t
ur
i
ng
% Servitized
% Pure service
Decile 2 2006
Decile 3 2004
Decile 3 2006
Decile 4 2004
Decile 1 2004
Decile 1 2006
Decile 2 2004
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
What types of services are offered?
Service Offered? % of Firms Offering
Service in 2009 % of Firms Offering
Service in 2007
Design and Development Services 23.21% 21.92%
Systems and Solutions 15.92% 15.70%
Mi dS S i
12 33%
11 94%
M
a
i
ntenance an
d
S
upport
S
erv
i
ces
12
.
33%
11
.
94%
Retail and Distribution Services 12.14% 12.18%
Installation and Implementation Services
5 35%
5 10%
Installation
and
Implementation
Services
5
.
35%
5
.
10%
Property and Real Estate 4.89% 3.83%
Financial Services 3.80% 3.89%
Consulting Services 3.37% 2.69%
Leasing Services 2.06% 1.07%
Outsourcing and Operating Services 1.46% 1.68%
Procurement Services 1.18% 1.15%
Transportation and Trucking Services
0 19%
0 20%
Transportation
and
Trucking
Services
0
.
19%
0
.
20%
Which services in which countries (2006 data)?
300%
350%
Transportation and trucking services
Systems and solutions services
Rtil dditibti i
200%
250%
R
e
t
a
il
an
d
di
s
t
r
ib
u
ti
on serv
i
ces
Property and real estate services
Procurement services
Outsourcing and operating services
Maintenance and support services
50%
100%
150%
Maintenance
and
support
services
Leasing services
Installation and implementation services
Financial services
Desi
g
n and develo
p
ment services
0%
Austria
A
ustrali
a
Belgiu
m
Bermud
Switzerl
China
Czech
R
Germa
n
Denma
r
Spain
Finland
France
Great B
Greece
Indone
s
Japan
Cayma
n
Malaysi
a
Netherl
a
Norway
Swede
n
Singap
o
Thailan
d
Taiwan
USA
gp
Consulting services
a
m
a
and
R
epublic
n
y
r
k
ritain
s
ia
n
Islands
a
a
nds
n
o
re
d
Two points to note:
1. Variation in the average numbers of services offered by firms in different countries - close to
3 different services/firm (US), to less than 1.5 (Czech Republic).
2. Some areas of service offering are universal – e.g. design and development services – while
others appear to be particularly prevalent in specific countries – e.g. systems and solutions
services in Sweden, Finland and Germany.
Services from China and Japan
f
e
rvice
n
number o
e
ring the s
e
Increase i
n
m
panies off
e
co
m
The transition to services is not straightforward!
A greater proportion of servitized firms
went bankrupt than might be expected
Servitized firms account for a
greater proportion of revenues,
but a lower proportion of profit
but
a
lower
proportion
of
profit
While the shift to services is clear the transition to services is not straightforward – the latest
research suggests that servitized manufacturers achieve lower profit margins and are more
likel
y
to
g
o bankru
p
t than
p
ure manufacturers
(
in the short-term
)
.
yg p p (
)
The story so far… a services paradox
1. Widespread efforts to servitize…
58% of US firms with manufacturing SIC codes offer services.
2. Although the extent of servitization differs markedly by country…
Less than 2% of Chinese manufacturing firms had servitized by 2007
Less
than
2%
of
Chinese
manufacturing
firms
had
servitized
by
2007
(Neely, 2009).
3
Whil i th ht t d li hi h i th i i d id
3
.
Whil
e serv
i
ces are
th
oug
ht
t
o
d
e
li
ver
hi
g
h
er marg
i
ns,
th
ere
i
s m
i
xe
d
ev
id
ence
on the impact of servitization…
(Gebauer et al, 2005; Neely, 2009; Visnjic and Van Looy, 2009).
4. With increasing evidence that the relationship is non-linear…
(Fang et al, 2008;
Suarez et al, 2008).
(Fang
et
al,
2008;
Suarez
et
al,
2008).
5. And that servitizing can be high risk…
Fi th t iti lik l t ff b k t (N l 2009)
Fi
rms
th
a
t
serv
iti
ze appear more
lik
e
l
y
t
o su
ff
er
b
an
k
rup
t
cy
(N
ee
l
y,
2009)
.
Five questions…
1. What do we know about manufacturing in the UK?
2.
How is manufacturing changing?
2.
How
is
manufacturing
changing?
3. Why is manufacturing changing (the driving forces)?
4. Data on the servitization of manufacturing (scale and impact)
5. Why is servitization difficult?
The challenges of servitizing…
• Of marketing – from transactional to relational
• Of sales
–
from sellin
g
multi-million dollar
p
roducts to sellin
g
service
ShiftingShifting
g
pg
contracts and capability
• Of customers – from wanting to own the product to being happy with
the service
Shifting
mindsets
Shifting
mindsets
• Managing and delivering multi-year partnerships
• Managing and controlling long term risk and exposure
• Modelling and understanding the cost and profitability implication of
long-term partnerships
TimescaleTimescale
• Understanding what value means to customers and consumers (not
producers and suppliers)
BusinessBusiness
producers
and
suppliers)
• Developing the capability to design and deliver services rather than
products
• Develo
p
in
g
a service culture
Business
model and
customer
offer
Business
model and
customer
offer
pg
• Embedding all of the above into a service organisation
offeroffer
Th C b id S i Alli
Th
e
C
am
b
r
id
ge
S
erv
i
ce
Alli
ance
The Cambridge Service Alliance is a unique global partnership between
businesses and universities. It brings together the world’s leading firms and
academics all of whom are devoted to deliverin
g
toda
y
the tools
,
education
gy ,
and insights needed for Complex Service Solutions tomorrow.
Professor Andy Neely – andy.neely@eng.cam.ac.uk
Institute for Manufacturing/Judge Business School
Ui it fC bid
U
n
i
vers
it
y o
f
C
am
b
r
id
ge
Professor Duncan McFarlane
–
dcm
@
en
g
.cam.ac.uk
@g
Institute for Manufacturing
University of Cambridge
... Instead of selling jet engines as standalone products, the company offers a usage-based service, in which customers pay for engine uptime and maintenance based on their actual usage (Smith, 2013). This approach reduces customers' initial investments and provides Rolls-Royce with continuous revenue through long-term service agreements, thereby creating a more stable and sustainable business model (Neely, 2008). These cases demonstrate how servitization combines technological innovation with customer engagement to create value. ...
... This phenomenon, also referred to as a productservice system, involves the integration of service elements into traditional product-oriented business activities and the expansion of service rms into the manufacturing domain (Baines et al., 2009). This convergence enables rms to offer more comprehensive solutions, leveraging the strengths of both manufacturing e ciency and service customization to meet evolving customer needs (Neely, 2008). ...
... In particular, rms are moving beyond the conventional model of selling standalone products or services and adopting integrated solutions that blur the lines between the two domains (Visnjic et Traditionally, PSS frameworks have conceptualized service as an extension of manufacturing, where services are added to enhance the value of physical products (Baines et al., 2009;. These models emphasize the shift from selling products to offering integrated solutions that combine products and services (Neely, 2008). However, these approaches are somewhat limited in scope as they primarily focus on how manufacturing rms incorporate services and often overlook the more complex bidirectional interactions between manufacturing and services across business activities. ...
Development of a two-way framework for the product-service system business model: Focusing on convergence perspective
Preprint
Full-text available
  • Mar 2025
The convergence of manufacturing and services, commonly referred to as product-service systems (PSS), represents a transformative strategy for businesses aiming to stay competitive and respond to evolving market dynamics. This study addresses the limitations of traditional unidirectional perspectives, such as servitization and productization, by proposing a two-dimensional framework for PSS business models. Using direction (servitization vs. productization) and procedure (internalization vs. externalization) as the key axes, the study categorizes PSS strategies into a two-by-two matrix, providing a comprehensive and practical tool for business model innovation. An inductive approach, grounded in business model cases, highlights the bidirectional nature of manufacturing-service convergence and emphasizes the importance of strategic procedures in internal and external resource integration. This framework offers insights for small and medium-sized enterprises and policymakers aiming to leverage PSS for growth engines and business sustainability. This study contributes to the broader PSS literature and establishes a robust foundation for business applications.
View
... Despite the remarkable potential of service businesses among manufacturing companies (Vandermerwe and Rada, 1988;Wise and Baumgartner, 1999;Oliva and Kallenberg, 2003;Baines et al., 2009;Lindholm et al., 2017) understanding, managing and realizing such potential has not received wide attention in the management accounting and control literature (Neely, 2008;Laine et al., 2012a;Lindholm et al., 2017;Tenucci and Supino, 2019). Furthermore, as digital tools and technologies, such as digital twins, remarkably change the way of doing business in manufacturing companies, there are several business implications to be better understood and managed in this area. ...
... As confirmed by the empirical findings, the digital twin of a service may include all main details of a new service offering, simulating the functionality of a service, hence optimizing the communication processes by making the performance and the implications of the new service concept understandable and clear for all the stakeholders (Laine et al., 2012b). Furthermore, the digital twin of the service (based on the empirical findings of the paper) enables defining the processes related to the service, setting targets about them, and thus, helps unveiling and communicating the value generation of the service at hand to the parties involved (Neely, 2008;Laine et al., 2012a, Lindholm et al., 2017Tenucci and Supino, 2019). This enables unveiling and discussing all the relevant cost implications of the processes under examination. ...
... Servitization initiatives in general and after-sales service business development in particular has been hindered due to the lack of supportive managerial tools and techniques (Baines et al., 2009). It is noteworthy that especially tools and techniques related to the management accounting and control for those service businesses have been lacking (Neely, 2008;Laine et al., 2012a, Tenucci andSupino, 2019). Therefore, there is a need for new academic knowledge on the new means and experiences on how service business development could be successfully supported and executed. ...
Towards a digital twin of a service: a case of communicating cost and control implications of a new after-sales service with an animation
Article
Full-text available
  • Dec 2023
Purpose New service businesses carry opportunities for industrial companies. The different cost management and management control implications of those service businesses deserve attention, which is a widely under-researched area in management accounting and control literature. Digital twins could hold potential in unveiling and supporting those new service business opportunities, as a unique approach of this paper. Thus, the purpose of this paper is to examine the possibility and potential for creating a digital twin of a service, especially to unveil the management accounting and control implications of the digital twin in developing new service businesses. Design/methodology/approach This paper investigates the potential of a digital twin in unveiling cost and control implications of new service businesses by examining the characteristics of a digital twin in the service business development context. The paper use an in-depth interventionist case study, where the designed animations illustrate the possibilities of a digital twin of a service. The animations showing the service process characteristics were first used as a communication tool and eventually those animations were actively used in customer cases for different purposes. This motivated the idea for examining the implications of such animations representing a digital twin of a service. Findings The paper provides empirical insights regarding the potential for developing and using a digital twin of a service for different cost management and management control purposes. The digital twin of a service may include all main details of a new service offering, simulating the functionality of a service, hence making the performance and the implications of the new service concept clear for all the stakeholders. The digital twin of the service enables defining the processes, setting targets and helps communication about the value generation. Thus, they represent a significant toolkit for the management accounting and control function of the manufacturers. Originality/value This paper is among the first attempts to understand the digital twin of the service. The paper is unique in providing financial and control implications of digital twins also in the context of service business development. The in-depth interventionist approach enabled an exceptional exploration process on the subject. The article paves the way toward further research on managing the digital twins of services in the future.
View
... In a word, the research results on the relationship between servitization strategy and profit are not unambiguous. Some authors find that the servitization strategy increases the firm's profitability and that this relationship is linear (Neely, 2008;Kastalli & Van Looy, 2013), that is, positive and non-linear (Kohtamäki et al., 2013;Khanra et al., 2021), others identify a non-linear, U-shaped relationship (Kastalli & Van Looy, 2013;Kohtamäki et al., 2020). Moreover, it is indicated that the model of maturity is valid in the case of servitization (Martinez et al., 2010;Mastrogiacomo et al., 2017;Adrodegari & Saccani, 2020;Feng et al., 2021). ...
... At the same time, the higher the share of services in the sales of manufacturing companies, the higher the operating costs, which implies that this strategy is resourcedemanding and requires additional effort from the company, which increases with the increase in the level of its implementation (Neely, 2008;Martinez et al., 2010;Bressanelli et al., 2018;Kohtamäki et al., 2020). Existing evidence suggests that in some cases the costs of servitization can be so high that they force the company to abandon this strategic direction (Coreynen et al., 2017). ...
... After the successful completion of the initial phase, servitization's further application can affect the reduction of expenditures (Benedettini et al., 2015). For example, by proactively monitoring the functionality and condition of products (which can be an element of the manufacturer's enriched offer), the number of product failures, repairs, and overhauls is reduced (Neely, 2008;Baines et al., 2009;Tao & Qi, 2019). Investing in technology and digital servitization ensures more efficient collection and processing of the required data (Lenka et al., 2016;Kohtamäki et al., 2020), while increasing the efficiency of resource use, as well as investing in relationships with supply chain members and developing closer relationships, lead to a reduction in operating costs and an increase in company effectiveness (Ulaga & Reinartz, 2011;Benedettini et al., 2015;Bressanelli et al., 2018). ...
Servitization strategy and financial performance of manufacturing companies in the Republic of Serbia: A preliminary study
Article
  • Jan 2025
Intending to identify the relation between Serbian manufacturing companies' performance and the servitization strategy, the paper presents research that was carried out on a sample of 10 medium and large companies. The results suggest that there is a positive correlation between the level of servitization and the financial performance of manufacturing companies, as well as between the company's experience in implementing this strategy and its profits. Although the direction of the correlation corresponds to the hypothesized one, the results are not statistically significant. A small and geographically undiversified sample is seen as a primary reason for this. As a preliminary, this study should actualize servitization as a field of research and initiate the interest of practitioners in this strategy.
View
... The provider should understand their needs for a justified exploration into the world of new business models. Not every company depends on this change [1] or benefits from it [12,13]. However, a reorientation can bring competitive advantages, customer satisfaction, and associated profits [14,2,15]. ...
Development Of A Framework For A Structural Analyzation And Examination Regarding The Need Of Serviceoriented And Datadriven Business Models In Mechanical- And Plant-Engineering
Article
Full-text available
  • May 2025
Digital transformation currently offers companies new ways to conceive and execute business models, including service-oriented and data-driven ones. However, a strategic realignment of the business administration and the introduction of such business models require thorough examination. It can be challenging for providers to identify the demand for these business models, making it difficult to assess the feasibility of the endeavor. Complexity and lack of clarity in decision-making require structured guidance through the process. This is similar to the involvement principle in marketing, where the complexity of the decision-making process varies depending on the product. To make an informed decision regarding the introduction and use of service-oriented and data-driven business models, it would be beneficial to first analyze and concretize the demand and opportunity for these business models, both internally and externally motivated. This paper aims to assist both stakeholders by proposing a methodical approach that provides a structured, comprehensive, and well-founded response regarding the need and demand for service-oriented and data-driven business models for small and medium-sized enterprises (SMEs) in mechanical- and plant engineering on the provider side. This approach supports the design of a corresponding business model and thus strengthens the internal understanding and motivation within the organization. Internal stakeholders, such as product management, consulting, sales, and business development, can better understand the added value, benefits, opportunities, risks, and feasibility. This creates the foundation for strategic decisions regarding designing and introducing innovative business models across various corporate areas.
View
... Conforme Neely (2009) a servitização está classificada em três níveis, tendo como primeiro nível o serviço orientado ao produto, sendo a receita gerada apenas pela venda desses produtos; segundo nível são os produtos com serviços adicionais, tendo como objetivo a eficiência do produto e sua durabilidade ao longo de sua vida útil; o terceiro nível está orientado a soluções e resultados, no qual é oferecido uma solução personalizada de acordo com a necessidade do cliente. ...
ESTRATÉGIAS DE SERVITIZAÇÃO: UM ESTUDO DIRECIONADO AO SEGMENTO AUTOMOTIVO BRASILEIROA STUDY OF THE BRAZILIAN AUTOMOTIVE SEGMENTESTRATEGIAS DE SERVITIZACIÓN: A STUDY OF THE BRAZILIAN AUTOMOTIVE SEGMENTUN ESTUDIO DEL SEGMENTO AUTOMOVILÍSTICO BRASILEÑO
Article
Full-text available
  • Apr 2025
Este estudo tem por objetivo avaliar as recentes transformações no modelo de negócio automotivo brasileiro sob a ótica das estratégias de servitização. Como principal contribuição teórica este estudo discute a servitização como uma das estratégias para geração da inovação. A pesquisa se caracteriza por sua natureza descritiva e, qualitativamente, utiliza-se de metodologia documental, aliada ao método Delphi para complementar o levantamento dos dados. Como principais resultados, destacam-se a oferta de novos serviços vinculados aos produtos, inovação em soluções de mobilidade, modelos de negócios inovadores, serviços diferenciados e adaptados às demandas contemporâneas e parcerias estratégicas. Gerencialmente, a análise comparativa entre as marcas do segmento oferece um panorama do status quo para este segmento e recomendações do uso do estudo para as empresas.
View
Servitization and firm performance: evidence from a specific policy in China
Article
  • May 2025
Purpose This study aims to investigate servitization’s impact on firm performance empirically and further explore the underlying causal mechanisms through which this effect operates and examine how heterogeneous factors and industry characteristics moderate this relationship. Design/methodology/approach This study leverages the Chinese policy of promoting servitization as a quasi-natural experiment and employs panel data from Chinese listed firms. Utilizing propensity score matching-difference-in-differences methodology, this study examines the effect of servitization on performance enhancement, conducting a series of robustness and endogeneity tests to ensure the validity of the findings. Furthermore, this study also explores mediating, heterogeneous and moderating effects. Findings Servitization positively influences firm performance through the mediating channels of enhanced innovation and productivity. This impact exhibits heterogeneity contingent upon servitization type, competitive environment and ownership structure, further moderated by industry characteristics. Originality/value This study uses a quasi-natural experiment to examine the impact of servitization on firm performance, providing context for understanding the resource-based view, dynamic capabilities and service-dominant logic. Furthermore, it systematically identifies channels and factors influencing servitization’s effect on performance enhancement and offers robust and comprehensive empirical evidence. This research also provides evidence supporting the crucial role of industrial policy in promoting industrial transformation and development.
View
An exhaustive examination of the contemporary technology, impediments, and forthcoming hurdles regarding environmentally sound cold spray additive manufacturing: a review
Article
  • Apr 2025
  • CAN METALL QUART
Cold spray additive manufacturing (CSAM), a solid-state supersonic deposition technique combining cold spray and additive manufacturing, is gaining attention for its potential in large-scale manufacturing, construction, and repair of engineering components. CSAM enables the fabrication of three-dimensional parts and promises significant benefits to the production sector. This review explores recent advancements and key challenges in implementing CSAM for applications in maintenance, refurbishment, and sustainable fabrication. The study highlights CSAM's practical advantages, including reduced environmental impact and improved product design and customisation. Despite current challenges, findings suggest that strategic planning and optimised production techniques can overcome existing barriers. Additionally, the review identifies future research directions aimed at establishing CSAM as a robust and widely accepted additive manufacturing technology. With further development, CSAM holds the potential to transform modern manufacturing through enhanced efficiency, sustainability, and functionality in producing complex technical components.
View
View
View
Mapping circular economy principles and servitisation approach in business model canvas: an integrated literature review
Article
Full-text available
  • Jul 2023
It is a common perception that circular economy (CE) principles positively influence the servitisation strategy. The firms improve their productivity and resource/energy efficiency by engineering functional efficacy in a sustainable product. However, the managerial practices that support this distinctive business model (BM) are relatively sparse despite their liaisons. Therefore, this paper is focused on addressing this gap by investigating the managerial practices that firms can implement to explore the downstream opportunities of CE and servitisation BM. This paper uses a systematic literature review (SLR) approach to frame a theoretical model. The findings were improved by cross-validation using a text mining technique, demonstrating how organisations may co-create and extract value through CE and servitisation to develop a flexible management system. This study used the business model canvas antecedents to map a set of managerial practices to understand the mythography of the servitisation approach with CE principles. The findings show that identifying key stakeholders assists a firm in selecting an appropriate strategy based on sustainable value propositions that include cost structure and revenue streams to close the resource loop. Managerial commitment is critical in achieving the maximum economic, environmental, and societal potential. A few research agendas with distinct research orientations are proposed to mitigate the significant research gaps in CE and servitisation literature. This study provides managers and practitioners with some intriguing insights as it emphasises the need to select a suitable strategy to utilise a firm's resources successfully.
View
Product service systems, ecological and economic basics
Method
Full-text available
  • Jan 1999
This paper is on Product Service systems (or product service combinations), commercial deals containing both a material product and an intangible service. The writers propose a method to analyse the economic and ecological qualities of these systems. They believe an understanding of product service systems is a next step on the way to econology: the junction of ecology road and economy lane. This text gives basic observations and definitions, offers an outline of a new assessment method and ten case descriptions. This paper has been written to stimulate discussion on this promising subject. It has been commissioned by the Dutch ministries of Environment (VROM) and Economic Affairs (EZ).
View
State-of-the-art in product-service systems. Proc IMechE Part B: J Eng Manuf
Article
Full-text available
  • Oct 2007
A Product-Service System (PSS) is an integrated combination of products and services. This Western concept embraces a service-led competitive strategy, environmental sustainability, and the basis to differentiate from competitors who simply offer lower priced products. This paper aims to report the state-of-the-art of PSS research by presenting a clinical review of literature currently available on this topic. The literature is classified and the major outcomes of each study are addressed and analysed. On this basis, this paper defines the PSS concept, reports on its origin and features, gives examples of applications along with potential benefits and barriers to adoption, summarizes available tools and methodologies, and identifies future research challenges. © IMechE 2007.
View
Customer satisfaction: review of literature and application to the product-service systems
Article
Full-text available
This feasibility study commissioned by the National Institute for Advanced Industrial Science and Technology in Japan (AIST) and supported by the Sustainable Consumption Unit (UNEP) provided an overview of approaches used in different disciplines for evaluating consumer behaviour. The study analysed the applicability of existing research concepts, theories, and tools for evaluating consumer satisfaction with product-service systems (PSS). It included a discussion over their strengths/weaknesses. This paper presents a short overview of the study. BACKGROUND
View
Designing Product/Service Systems: A Methodological Exploration1
Article
Full-text available
  • Jul 2002
  • Des Issues
The abstract for this document is available on CSA Illumina.To view the Abstract, click the Abstract button above the document title.
View
Go downstream: The new profit imperative in manufacturing
Article
  • Jan 2000
  • HARVARD BUS REV
The companies that benefits from the `go downstream' theory are presented. Managing downstream businesses requires looking at new variables such as profit per installed unit, share of customer's total downstream-activity spending and total customer return over the product life cycle. Manufacturer's cannot afford to ignore the opportunities that lie downstream, if they do, the next decade will decade will be even bleaker than the last.
View
View
View
View
View
Competitive Strategy - Techniques For Analysing Industries And Competitors
Article
  • Jan 1980
Now nearing its 60th printing in English and translated into nineteen languages, Michael E. Porter's Competitive Strategy has transformed the theory, practice, and teaching of business strategy throughout the world. Electrifying in its simplicity -- like all great breakthroughs -- Porter's analysis of industries captures the complexity of industry competition in five underlying forces. Porter introduces one of the most powerful competitive tools yet developed: his three generic strategies -- lowest cost, differentiation, and focus -- which bring structure to the task of strategic positioning. He shows how competitive advantage can be defined in terms of relative cost and relative prices, thus linking it directly to profitability, and presents a whole new perspective on how profit is created and divided. In the almost two decades since publication, Porter's framework for predicting competitor behavior has transformed the way in which companies look at their rivals and has given rise to the new discipline of competitor assessment. More than a million managers in both large and small companies, investment analysts, consultants, students, and scholars throughout the world have internalized Porter's ideas and applied them to assess industries, understand competitors,, and choose competitive positions. The ideas in the book address the underlying fundamentals of competition in a way that is independent of the specifics of the ways companies go about competing. Competitive Strategy has filled a void in management thinking. It provides an enduring foundation and grounding point on which all subsequent work can be built. By bringing a disciplined structure to the question of how firms achieve superior profitability, Porter's rich frameworks and deep insights comprise a sophisticated view of competition unsurpassed in the last quarter-century. Book Description Publication Date: June 1, 1998 | ISBN-10: 0684841487 | ISBN-13: 978-0684841489 | Edition: 1 Clique Aqui
View