Content uploaded by Giorgio Giacaglia
Author content
All content in this area was uploaded by Giorgio Giacaglia on Dec 10, 2019
Content may be subject to copyright.
doi.org/10.32426/engresv9n3-002
Engineering Research
Technical Reports
Volume 9 – Issue 3 – Article 2
ISSN 2179-7625 (online)
THE SERVITIZATION IN INDUSTRY 4.0, FACING
CHALLENGES AND TENDENCIES.
Leandro Monteiro da Silva
1
,Arcione Ferreira Viagi
2
,Giorgio
Eugenio Oscare Giacaglia
3
MAY / 2018
Taubaté, São Paulo, Brazil
1 Aluno curso Mestrado Engenharia Mecânica, ênfase em Produção Mecânica, Universidade de Taubaté.
2 Professor Orientador, Universidade de Taubaté.
3 Professor, Universidade de Taubaté.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 21
Engineering Research: Technical Reports
Technical Editor: Giorgio Eugenio Oscare Giacaglia, Universidade de Taubaté, Brazil
Associate Technical Editors
Eduardo Hidenori Enari, Universidade de Taubaté, Brazil
Wendell de Queiróz Lamas, Universidade de São Paulo at Lorena, Brazil
Editorial Board
Arcione Ferreira Viagi, Universidade de Taubaté, Brazil
Asfaw Beyene, San Diego State University, USA
Bilal M. Ayyub, University of Maryland, USA
Ciro Morlino, Università degli Studi di Pisa, Italy
Epaminondas Rosa Junior, Illinois State University, USA
Evandro Luís Nohara, Universidade de Taubaté, Brazil
Fernando Manuel Ferreira Lobo Pereira, Universidade do Porto, Portugal
Francisco José Grandinetti, Universidade de Taubaté, Brazil
Hubertus F. von Bremen, California State Polytechnic University Pomona, USA
Jorge Muniz Júnior, Universidade Estadual Paulista at Guaratinguetá, Brazil
José Luz Silveira, Universidade Estadual Paulista at Guaratinguetá, Brazil
José Rubens de Camargo, Universidade de Taubaté, Brazil
José Rui Camargo, Universidade de Taubaté, Brazil
María Isabel Sosa, Universidad Nacional de La Plata, Argentina
Miroslava Hamzagic , Universidade de Taubaté, Brazil
Ogbonnaya Inya Okoro, University of Nigeria at Nsukka, Nigeria
Paolo Laranci, Università degli Studi di Perugia, Italy
Rolando A. Zanzi Vigouroux, Kungliga Tekniska högskolan, Sweden
Sanaul Huq Chowdhury, Griffith University, Australia
Tomasz Kapitaniak, Politechnika Lódzka, Poland
Valesca Alves Correa, Universidade de Taubaté, Brazil
The “Engineering Research” is a publication with purpose of technical and academic knowledge dissemination.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 22
PRESENTATION
Paper presented at the University of Taubaté, São Paulo Brazil, in partial fulfillment of the
requirements for the Master degree in Mechanical Engineering with emphasis on Mechanical
Production.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 23
THE SERVITIZATION IN INDUSTRY 4.0, FACING CHALLENGES AND TENDENCIES.
Abstract. Since 1995, productivity growth in the Brazilian manufacturing sector has been slowing
down, is partly due to productivity gains and associated falling relative prices of manufacturing in
relation to services. Many manufacturing firms are adapting to offer integrated solutions based on
the needs of their customers. Within this context, servitization and digital technologies become key
factors for firms immersed in the so-called ‘Industry 4.0’. The aim of this work is to analyse the
relationship between the servitization and digitalization, as well as its tendencies, challenges and
barriers that impede the implementation of digital services in the industrial and commercial
sectors, from a theoretical perspective. Digitalization and servitization are treated as related factors
of value-creation in the firm, and thus a source of competitive advantage.
Keywords: Servitization, digitalization, industry 4.0.
1. INTRODUCTION
1.1 CONTEXTUALIZATION
Nowadays, we are living in a world surrounded by risks and uncertainties. In a world where
changes happen at a frightening frequency. In this world companies need to continually adapt and
develop new attitudes and practices to manage all these new risks that are projected in any project.
The servitization is a new reality that companies need to position their business, changing
the way they currently operate, finding the right approach to be competitive in the market, in spite
of change.
1.2 RESEARCH PROBLEM
In times of economic crisis, the value chain of the manufacturing industry is becoming less
attractive in the demand for products that are becoming stagnant, under these circumstances,
companies are increasingly becoming aware of the gains associated with offering services along
with their products (PISTONI E SONGINI, 2018).
In developed economies, intense pressure on manufacturing industries is forcing many
manufacturers to innovate to differentiate their products by offering additional services.
The traditional boundaries between manufacturing companies and service providers are
narrowing and spreading all over the world. To survive, many manufacturing companies have to
deploy beyond manufacturing and offer services and solutions delivered to the customer with their
products, or at least in association with them. This strategy is called "servitization", encompassing
new commercial models based on the product service system (PSS) (PISTONI AND SONGINI,
2018).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 24
1.3 HYPOTHESES.
In this work, the premise will be tested that: Services demand a greater constancy of revenue
and high profit margin, since for the consumer the purchase of product-service (servitization)
represents a smaller investment than the acquisition of goods itself (PISTONI E SONGINI, 2018).
According to Lightfoot et.al (2015), the premise of value creation from the perspective of a business
model for the company seems to be beneficial for the investment in the servitization strategy, and
the same is true from the customer perspective. And Pistoni and Songini (2018) also raises this
discussion, because the service is considered by some consumers as a prop or extra cost for the
product, but it is still better than buying the product and then the service separately.
Thus, to satisfy the consumer's perspective Pistoni and Songini (2008) describes that the
strategy should be to devise a "package" with the value of the product and service as one, thus
removing the possibility of separating the items, or by having the items sold separately have a high
unit cost so that the sum exceeds the value of the "package".
Furthermore , the emergence of the latest digital technologies in industry's 4.0, has allowed
companies to offer intelligent and connected products and services (PARIDA et al., 2014; LENKA
et al., 2017 apud BASAEZ, MARCO et al., 2017).
This recent trend of the industry, focused on the exploration of the use of digital
technologies in the manufacture of products, which has contributed to the feasibility of services that
add value and that contribute to meet the expectations of the increasingly demanding customer.
1.4 OBJECTIVES
The aim of this work is to analyse the relationship between the servitization and
digitalization, as well as its tendencies, challenges and barriers that impede the implementation of
digital services in the industrial and commercial sectors, from a theoretical perspective.
Digitalization and servitization are treated as related factors of value-creation in the firm, and thus a
source of competitive advantage.
1.5 RELEVANCE
This paper reviews literature related to the case study of Servitization as a new business
model, exploring the digital technology that Industry 4.0 offers for the digitization of mutually
integrated products and services.
We will also cross-analyze in the literature and case studies the barriers and factors that
drive the digitization of the servitization, presenting by means of theoretical concepts the
opportunities of this transformation in the business model that the servitization represents, as well
as to conceptualize the impact of the industry.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 25
1.6 DELIMITATIONS
This research was delimited as a conceptual approach in the theme of the insertion of the
digitization in the context of the servitization and its theoretical concepts to build a new framework
with the digitalization and industry 4.0 as a tendency in the servitization, And thus as a result will be
demonstrated the eight barriers that make difficult the process of digital servicing, providing
insights into the drivers and barriers regarding manufacturers' propensity to use digitized service
offerings.
1.7 WORK STRUCTURE
In chapter 1 is presents some generalized characteristics regarding servitization. In Chapter 2
we show the information base, obtained mainly from articles studied on the subject. Chapter 3
shows the methodology and the fundamentals that were used to formulate the results and
conclusions. Chapter 4 explores studies on facilitators and barriers to servicing, acquired in article
studies and data research. In Chapter 5 the conclusive results of the research are discussed.
2. THEORETICAL REFERENCE
2.1 THE SERVITIZATION AS BUSINESS MODEL.
Product Service Service (PSS) or IPS² (Industrial Product-Service Systems) also known as
servitization, is a business model that emerged in the 1990s as a solution to add more value to the
product, allied to the customer's approach and loyalty. The PSS or Servitização combines tangible
products with intangible services, aiming at economic sustainability and reducing environmental
impact, while increasing competitiveness (BRAD and MURAR, 2015).
Neely (2007), Baines et.al (2007) and Coreynen (2016) explain that servitization is the
innovation of organizational and process capabilities to improve value-added through a systematic
change of the supply in just products for sale of product-services. A system like product-service, is
an integrated product offering services that offers value in use. An Organization that integrates in its
business model the servitization, builds and delivers a complete integrated solution of products and
services that offers its customers comfort and tranquility in the acquisition of a particular asset.
A product-service system is an integrated product with services that offers value in use, in
this way, an organization that has adopted servitization as its business model, designs, builds and
delivers an integrated offer of products and services that offers value throughout the product life
cycle.
Slack (2010) says that this concept of servitization or product-service is leading the strategy
of companies that want to improve competitiveness and is an area of growing interest.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 26
Thus according to Cusumano et all (2015) apud Vendrell-Herrero et all (2017) Companies
are gradually adopting the servitization as business models.
And approximately two-thirds of companies in developed countries have already adopted
the servitization strategy (NEELY, 2008 apud VENDRELL-HERRERO et all 2017).
Through serviceability, companies can differentiate their offer and improve customer
engagement (VANDERMERWE & RADA, 1988 apud VENDRELL-HERRERO et al 2017).
However, recent studies have shown that the capture of value, through servitization strategy is
complex in companies that produce manufactured and digitized products (BENEDETTI, NEELY, &
SWINK, 2015; KOHTAMAKI, PARTANEN, PARIDA, & WINCENT, 2013; SUAREZ,
CUSUMANO, KAHL, 2013 apud VENDRELL-HERRERO et al 2017).
However, although this business model is considered complex, servitization has proven to be
an essential strategy to take advantage of the opportunities and to differentiate you products, along
with the improvement of the interface with the client and to obtain a competitive advantage in face
their competitors.
2.2. THE FOURTH INDUSTRIAL REVOLUTION
The world is on the edge of an unprecedented new technological revolution, which will
completely change the way we live, work and relate to each other, considering infinite possibilities
due to billions of computer connections and mobile devices that connect people everywhere on the
planet in real time (SCHWAB, 2016). And according to Hyacinth (2017) the production method in
the present century has witnessed enormous changes.
Schwab (2016) describes that the first change in our way of living occurred 10,000 years
ago when man began domestication of animals and combined efforts with them for production,
transportation, and communication, then the advent of the first industrial revolution from of 1760
activated by the construction of railroads and the invention of the steam engine, the mechanical
production was inaugurated, already at the end of century XIX arose the second industrial
revolution with the mass production, promoted by the advent of electricity and the assembly line.
The third industrial revolution began in the 1960s, also known as the digital revolution, because it
was catalyzed by the development of semiconductors, where the development of automated systems
with the help of computers began, so the sector is growing in all its faces, acquiring each
technologies to improve the production process.
Schwab (2016) says that many professionals and academics still consider all this
transformation as part of the third industrial revolution, but this transformation is distinct due to
three factors cited by him:
1 - Speed of change never seen in human history;
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 27
2 - The extent and depth of the changes.
3 - Economic, social and cultural impact that is changing the way we live.
In according to Ustundag et.al (2018) and Schwab (2016), the fourth industrial revolution or
industry 4.0 is done by combining numerous physical and digital technologies such as artificial
intelligence, cloud systems, adaptive robotics, augmented reality, Internet of things. The main aim
of industrial transformation is to increase the efficiency and productivity of resources to increase the
competitive power of enterprises. The era of transformation we are now experiencing differs from
others, because not only provides change in companies but also reveals the concepts of intelligent
and connected processes and service-oriented business models.
And more Shamim et.al (2017) and Ustundag et.al (2018) describe that Industry 4.0 and
other methodologies and management philosophies are not mutually exclusive, they can be
integrated with each other for Product Production Management success and services.
The fourth industrial revolution isn't only oriented towards industry, according to Schwab
(2016), its scope is much broader. As with advances in areas of gene sequencing, nanotechnology,
renewable energy, quantum computing, Artificial Intelligence (AI), Internet of Things (IoT),
Standalone Vehicles, 3D Printers, New Intelligent Materials and Alloys, Energy Storage, Smart
Sustainability . But especially with the fusion of these technologies and their interaction between
physical, digital and biological domains that make it fundamentally different from previous
revolutions (SCHWAB 2016).
This is the proposal of Industry 4.0, through the advanced application of information and
communication systems in production. Thus building intelligent factories that allow mass
customization (SANDERS et.al, 2016, SCHWAB 2016).
Harari (2016) states that currently the knowledge is the main source of humanity wealth and
power, in opposition in the past when humanity had as main source of wealth the material
resources.
These technologies, developed and joined by Industria 4.0 according to Schwab (2016), will
create new business models, remodel the economy, culture in every human context, remodel the
production system and the logistics system and our transport system, aiming to eliminate losses and
waste.
2.3. MEGA DIGITAL TRENDS.
According to Schwab (2016), all innovations were only possible thanks to this digital
revolution. Just as intelligent robots would not exist without the development of IA, which are
dependent on computing power.
Schwab (2016) cites 4 Megas digital trends:
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 28
1 – IoT internet of things: connects products, services, places, etc. with people, which
are made possible by connected technologies and various platforms;
2 - Radio Frequency Traceability (RFID) that allows tracking products through the
supply chain;
3 - Blockchain, which is a secure computer network protocol that checks a
transaction before it can be registered and approved. The block is shared, programmable,
cryptographically secure and therefore reliable. No user controls and can be inspected by
everyone.
4 - Business platforms focused on services (digital servitization), offer new services
ranging from laundry to shopping, parking tasks, carpooling, combining supply and demand
with low cost, generate opportunities as people who never considered themselves suppliers,
ie a seat in your car, a spare room in your home, a commercial link between a dealer and
manufacturer.
Schwab (2016) comments on other platforms such as "Uber, the biggest taxi
company, does not own vehicles." Facebook, the largest owner of popular media, does not
create any content, Alibaba, the most valuable reseller, has no inventory and And Airbnb, the
largest accommodation, does not have properties.
2.4. IMPACT OF INDUSTRY 4.0 ON BUSINESS MODEL.
The technologies developed in the fourth industrial revolution are having a major impact on
how companies are conducted and organized.
Many companies have invested in introduction of new technologies that create new trends
with the focus of meeting the expectations of their customers, such as the offer of services
connected to products.
Schwab (2016) cites the widespread adoption of 3D printing to make a Distributed and
Decentralized Manufacturing. Capturing unique customer information and asset performance data
that will amplify other technology trends.
The disruption will also lead to the formation of agile and innovative competitors who, by
accessing digital platforms, will be able to develop marketing, sales and distribution faster,
improving quality and price.
Schwab (2016) cites four major impacts of the fourth industrial revolution in business:
2.4.1. Customers expectation,
According to Schwab (2016), the consumers are increasingly demanding in terms of quality,
speed of delivery, and customer service. The Apple, for example, is concerned not only with product
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 29
quality and performance, but also with packaging, branding, shopping, and customer service.
2.4.2. Enhancement of products by data.
New technologies are changing the way organizations manage their resources, products and
services are enhanced with digital capabilities for increase their intrinsic value.
Schwab (2016) describes about data capture by sensors installed on equipment are managed
and monitored by software that contains analytical algorithms to detect failures, calculate
performance and report maintenance needs, and too optimize performance at the maximum limit of
the equipment in aircraft, for example, control centers know beforehand if an engine is failing. They
can therefore instruct the pilot on what to do and mobilize the maintenance team upfront in the
flight's destination.
Schwab (2016) also comments that the ability to predict the performance of a product,
allows the creation of new business models as servitization. The performance can be measured and
monitored over time and provide operational information serving as the basis for business strategy.
2.4.3. New partnerships.
Schwab (2016) describes in your book, how new partnerships are being formed as
companies learn the importance of new forms of collaboration. Such collaborations, however,
require significant investments from both parties to develop firm strategies, to seek appropriate
partners, to establish communication channels, to align processes, and to respond flexibly to
changing conditions.
2.4.4. New structural models.
According to Schwab (2016) and Sanders (2016) emerging companies will need to change
their structural models such as: focusing on customer satisfaction, investing in assistive
technologies, and making more efficient use of energy and material flows, preserving resources,
reducing costs and positive impact on the environment.
In almost all industries, digital technologies have created new and disruptive ways of
combining products and services.
2.5. SERVITIZATION IN INDUSTRY 4.0.
Although the development of servitization is commonly traced back to the early 1990s; It
originated in the United States and quickly achieved success in Western Europe (PISTONI AND
SONGINI, 2018).
Lightfoot et.al (2015) says today the companies are in position to "offer packages"
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 30
consisting of combinations of goods, services, support, self-service and knowledge with customer-
focused.
According to Hojnik (2016), servitization is one of the economic megatrends of modern
society, a process that creates value by adding services to products, ranging from renting and
holding capital goods to producing objects and rapid prototyping, such as the use of printers 3D,
In view this megatrend of the business model called servitization, companies are starting to
implement their products and machines with intelligent digital systems, so they can operate
independently and communicate with other machines in production.
This development is referred as "Industry 4.0" which has your main focus in Germany, and
includes the digitization of traditional industries (SPATH et al., 2013, BAUER et al., 2014, apud
LERCH and GOTSCH, 2015).
As consequence of this trend, a growing number of companies are beginning to use digital
systems for their service offerings (MUNSTER and MEIREN, 2011 apud LERCH and GOTSCH,
2015).
2.6. SERVITIZATION DIGITAL.
A wide range of researchers has examined the role of digital technologies, especially those
related to information and communication technologies, in manufacturing companies, examining
how the new digital technologies drive and act as facilitator of servitization (VENDRELL-
HERRERO & WILSON, 2016 PISTONI AND SONGINI, 2018).
"Digital servicing" consists mainly of incorporating digital services into a physical product
(HOLMSTROM & PATANEN, 2014 apud PISTONI AND SONGINI, 2018 and COREYNEN
2016) and aims to develop especially the capture and processing of data and information, allowing
manufacturing companies to develop new business models by exploiting the potential of their
products. (VENDRELL-HERRERO & WILSON, 2016 apud PISTONI AND SONGINI, 2018).
The digitalization facilitates the development of economic operations and it's a facilitator of
service quality through better allocation of resources and more accurate information sharing within
and outside the boundaries of the enterprise (KINDSTROM & KOWALKOWSKI, 2014, PISTONI
& SONGINI, 2018 and COREYNEN 2016).
Some examples of digital servitization in industry 4.0 can be seen in the business model of
the Volvo company which, while essentially a car manufacturer, is also involved in the broad
spectrum of activities associated with the provision of services, from insurance to technical
assistance, and has even developed a system that can, through a smartphone, alert a mobile fuel
supplier to come and complete the tank when the car is parked (VANDERMERWE and RADA,
2015 apud HOJNIK, 2016).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 31
The Amazon doesn't sell books, but offers a variety of related services, such as cloud
infrastructure and network; And IBM leveraged your growth in software and consulting, from a
computer hardware manufacturer to a computer services company (GERSTNER (Harper Business),
2002 apud HOJNIK, 2016); All these companies have converted product sales into integrated
product and service solutions (HOJNIK, 2016).
In summary Hojnik (2016) claim that the service and information revolution are two sides of
the same coin and is becoming a primary component for servitization.
2.7. THE ROLE OF THE INTERNET OF THINGS (IoT) IN THE SERVITIZATION.
The Internet of Things (IoT) is seen as one of the most important facilitators of servitization,
because through it, the goods servicing companies remotely monitor the condition of the equipment
and seeks indicators of imminent failure through vibration, temperature and pressure sensors . This
reduces technical support visits, reducing costs and producing fewer interruptions and greater
customer satisfaction. Remote diagnostics, besides the possibility of repairing industrial machines,
can also be used for human health, such as remote control of pacemakers (HOJNIK, 2016).
The emergence of fast and powerful ICT, such as the Internet, plays a leading role in
improving existing business models (HOJNIK, 2016 and HOSONO et.al, 2016).
ICT service providers, have provided the integration of systems and services to their
customers. Integrators of these systems have played a key role in delivering the product-service as
they implement software and cloud integration in the Internet of Things (IoT) technology and
deliver on-premise ICT systems infrastructures along with hardware products and then provide
support (HOSONO et.al, 2016 and ARDOLINO et.al, 2015).
Consequently according to Hojnik (2016), smart products present an advanced form of
servitization, which merges tangible and intangible (Internet-based) products, ranging from
maintenance and repair services, human health condition monitoring, energy efficiency services,
taxi call service, parking assistance or even autonomous driving.
Dinges (2016) describes the combination of hardware and software technology to make
predictive analyzes to predict the future state or failures of the product, equipment or machinery.
Lerch and Gotsch (2015) argue that greater service orientation with greater complexity leads
to a greater need for digital solutions. On the other hand, the use of ICT systems opens new
potential branches to provide innovative services.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 32
3. METHODOLOGY
Due to the wide possibilities offered by digitalisation, these questions arise: 1 - To what
extent digital systems in industry 4.0 influence the transformation of the business model of
companies to become a provider of solutions that offers the customer a package of its product-
service (servitization) . 2 - And which directions and barriers are hidden behind this process?
To answer these questions, will be done a review of the literature with focusing on recent
articles and books dealing with the digitization and transformation of companies. After analyzing
the most relevant articles, we have to derive the facilitators and barriers described in the different
studies. And so, discuss the findings by reflecting on existing theoretical concepts, implementing
implications for strategic management, and giving an overview of the current and future scenarios.
4. DEVELOPMENT
The development of this article was developed using descriptive research in articles and
books of different authors.
And according to Pinillos (2017, p.82) we can say: “…servitization as a scientific discipline
using qualitative techniques and to less extend quantitative techniques.”
4.1. THE STAGES FOR THE DEVELOPMENT OF DIGITAL SERVITIZATION.
According to Apa (2014) there are few evidence describing the evolution of servitization in
the manufacturing field.
For Carvalho et.al (2013) the transition between simple products companies, to products +
services (servitization) is influenced by issues related to the proximity of its customers, service
providers and government, focusing on the company's market strategy, facilitating the control and
management of yours businesses, but also aiming at sustainability with the association of the offer
a unique solution system that reduces the total amount of goods produced with the introduction of
new concepts to use of the product (rent and leasing) that influence consumption patterns.
Basically, the standard can be summarized as follows: company, offered goods or services,
then switched to a different type of offerings, linked their products to closely related services, and
eventually became "package" companies consisting of "Focused customers". combinations of
goods, services, support, self-service and knowledge "(BAINES, LIGHTFOOT, BENEDETTINI, &
KAY, 2009 apud APA, 2014).
However, in a more in-depth study with an analysis of three case studies and literature data,
Lerch and Gotsch (2015) developed four generic stages that lead to digital servicing, analyzing the
dependencies of the individual characteristics and activities of the manufacturers according to
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 33
Figure 1:
Figure 1. Stages of transformation of the manufacturers under the influence of servitization and
digitization: Source: Lerch and Gotsch (2015), p.78
Lerch and Gotsch (2015) comments on the transformation stages of the manufacturers under
the influence of the servitization and digitization presented in the graph:
I. Manufacturer: The first stage is characterized by manufacturers providing
mandatory product-related services such as installation or maintenance and repair and use of
standard ICT solutions for their services such as digital text files, e-mail, video calls, etc. This
stage sees ICT Solutions being used for day-to-day work, with almost no significant impact
on the way service offerings are performed in competition(LERCH and GOTSCH, 2015,
p.77).
II. IT-based services: Stage II companies use ICT solutions to enhance their existing
service offerings; This is also known as the concept of tele-services. As a result, companies
can deliver services faster, with fewer resource inputs and / or higher quality (LERCH and
GOTSCH, 2015, p.77).
III. Pure digital services: Stage III manufacturers offer services that are enabled by
ICT systems. Examples of such services include software-based simulations, virtual or
augmented reality applications, or digital technical analysis. These services extend
manufacturers' service offerings and significantly improve product or service performance
(LERCH and GOTSCH, 2015, p.77).
IV. Scalable Product Service Systems: Manufacturers at this stage not only provide
complex product service systems to their customers, but also use ICT solutions as a new
component in the product services package. The goal of this digital infrastructure is to create
intelligent, independent operating systems capable of delivering the highest availability,
optimal operating conditions and greatly reduced resource inflows at the same time (LERCH
and GOTSCH, 2015, p.77).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 34
4.2. THE INTERNET OF THINGS IoT AS MAIN DRIVER.
The Internet of Things (IoT) interconnects physical objects to the Internet. With this
technology at the service of servicing, companies are able to differentiate their offer and improve
engagement with the customer.
IoT is going through a fast-growing phase. McKinsey (2016) apud Gauthier (2017)
estimates that the total size of the IoT market is expected to grow by $ 3.7 billion by 2020 and $ 6.2
trillion by 2025. Gartner (2015) apud Gauthier (2017) predicts 20 , 8 billion connections will be in
use worldwide by 2020. Most businesses will be impacted.
Business competitiveness is increasingly dependent on your ability to add services to your
products.
The process of servitization continues to be a major challenge for a number of reasons, such
as the creation of a new management of entrepreneurship (GAUTHIER et al., 2017 apud
GAUTHIER, 2017), creating disruptions in the supply chain (VENDRELL-HERRERO et al., 2017
apud GAUTHIER, 2017) or increasing complexity of value-generating mechanisms
(BENEDETTINI, et al., 2015, KOHTAMAKI, et al., 2013, SUAREZ et al., 2013 apud
GAUTHIER, 2017).
4.3. THE BARRIERS FOR THE IMPLEMENTATION OF SERVITIZATION DIGITAL.
Digital servitization, although it is an innovation of the servitization that is already being
implemented by the companies, still struggles against difficulties for their subsistence.
Lerch and Gotsch (2015), identified and classified eight key drivers of digitalisation in
service:
1. Complexity of services offered
The complexity of the services offered by the companies influences the level of
digitalization, that is, the more advanced and ambitious the services, the more it needs
the support of intelligent ICT solutions to offer its customers (LERCH and GOTSCH,
2014; GEBAUER et al. 2011 by LERCH and GOTSCH, 2015).
2. Technical infrastructure
Technical infrastructure as real-time communication networks are essential for the
digitization of services, and these networks must have high rates of data transfer and
must be able to process large amounts of information. Without a stable and reliable
network, digital services can not be offered economically. (BAUER et al., 2014;
WESTKAMPER et al., 2013 apud LERCH and GOTSCH, 2015).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 35
3. Integration of value chain partners
Integration of value chain partners: in manufacturing enterprises, it is essential to work
in cooperation with technology partners or suppliers in order to continuously improve
products and at the same time, it is important to increasingly deepen the relationship
with customers, because the demand for personalized products and services is
increasing. The growing need to integrate vendors into production processes and
customers must be managed more efficiently through the use of digital services
(BUSCHAK 2013; GEBAUER et al., 2011, LERCH and GOTSCH, 2015).
4. Sharing of exports
Sharing of exports is another driver of servitization. Especially, companies with high
export sales benefit from new digital opportunities because digital and remote control
services open up the chance to offer activities that are independent of consumer
location, whether with maintenance or remote repair services. High-quality products
that are also equipped with spatially independent services are encouraging foreign
customers (HOLTBRUGGE et al., 2007 apud LERCH and GOTSCH, 2015).
5. Scanning of the core product
Digitization of the core product: the services offered by the companies should be
considered in terms of their connection to the main product. Therefore, it is not
surprising that the degree of digitalization of the main product influences the degree of
scanning of the tracking services. In order to integrate the services in this network and
increase the added value, the services must be digitized in the same way as the physical
components (HOFFMANN 2014; BAUER et al., 2014 apud LERCH and GOTSCH,
2015).
6. Main Product Complexity
Complexity of the main product should be considered ie the more complex the product,
the more useful the services, especially for the customer. Therefore, there seems to be a
connection between the complexity of the product and the supply of services that
accompany the products. Customers who purchase a technically complex product with
digital components need consultancy and training services, preferably must be provided
digitally (DACHS et al., 2013, RAINFURTH 2003, WASSMUS 2014, LERCH and
GOTSCH, 2015).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 36
7. Size of the lot
The size of the batch also influences the digitization of the service, due to the fact that
companies that offer one-piece production only or products with a greater degree of
individualization end up requiring a greater volume of personalized services as well as
special complex machines that are developed especially for a single customer, require a
wide variety of digital follow-up services (BORGMEIER 2002, RAINFURTH 2003,
SEEGY 2009 apud LERCH and GOTSCH, 2015).
8. Size of company
The size of the company affects the digitalization of the service: in fact, large companies
have more resources and skills for the application of digital components. Many micro
enterprises do not have their own IT services division and are not able to provide
individual digital solutions (REICHWALD et al., 2009; RAINFURTH 2003 LERCH
and GOTSCH, 2015).
However, one of the major barriers to the digitization of service delivery addressed by Lerch
and Gotsch (2015) is the lack of skilled employees in manufacturing companies. Employees
providing the services need a continuously growing technical qualification profile with engineering,
mechatronics and IT knowledge. Digitalization increases significantly complexity, abstraction, and
problem resolution levels. Training and other professional development courses should be offered to
overcome this barrier by empowering employees to provide quality digital products and services.
5. CONCLUSION
This paper explored the business model of servitization under the aspect of technological
evolution and industry 4.0 with its implications and challenges of competitiveness and customer-
consumer perspective, analyzed also the recent discoveries about the facilitators and the barriers to
the digitization in relation to the offers of services together with the propensity of the manufacturers
in the business model of offers of digitized services and considering also the servitization in
commercial scope, highlighting the close connection between service and innovation of the business
model. The fourth industrial revolution can, on the one hand, act as a driving force for servitization,
helping to pave the way for more innovative solutions, while at the same time exposing the negative
implications of service provision for society and the economy. However, this exponential advance
of technology in global industry 4.0 can overcome barriers to new business models, increase
competitiveness, improve quality and open up new opportunities for Brazilian industry, enabling its
growth.
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 37
REFERENCES
ARDOLINO, Marco; SACCANI, Nicola; PEROLA, Marco: The Impact of Digital Technologies
and Ecosystems on the Servitization of Companies: a Preliminary Analysis; Servitization:
the theory and impact Proceedings of the Spring Servitization Conference 18 – 19 May
2015.
APA, Martina. Uncertainties in the servitization era: managing risk in contract for availability;
Master Degree Thesis; Faculty of Industrial and Management Engineering. POLITECNICO
DI MILANO, 2014.
BAINES, T. and LIFHTFOOT, H.W. ''Servitization of the manufacturing firm: Exploring the
operations practices and technologies that deliver advanced services'', International Journal
of Operations & Production Management, vol. 34, no. 1, pp. 2-35, (2014).
BRAD, Stelian; MURAR, Mircea; Emploing smart unit and servitization towards reconfigurability
of manufacturing processes; 7
th
Industrial Product-Service Systems Conference – PSS,
industry transformation for sustainability and business; ScienceDirect, 2015.
BASAEZ, Marco O.; VENDRELL-HERRERO, Ferran; BUSTINZA, OSCAR F.: Book of
Abstracts: 6
th
International Conference on Business Servitization - Enhancing sustainability
performance through Digital servitization: Implications from the automotive industry;
OmniaScience (Omnia Publisher SL), 1st edition, 2017.
BAINES Tim; LIGHTFOOT, Howard; EVANS, S. "State of the art in product service systems",
Proceedings IMechE., Vol. 221 Part B: J. Engineering Manufacturing, pp.1543‐1552.
(2007).
CARVALHO, Marly Monteiro de; PALADINI, Edson Pacheco; RIBEIRO, José Luis Duarte;
FOGLIATTO, Flávio Sanson; PEREIRA, Veridiana Rotondaro. Gestão de Serviços: Casos
brasileiros. Editora Atlas S.A. (2013).
COREYNEN, Wim; MATTHYSSENS, Paul; BOCKHAVEN, Wouter Van; Boosting servitization
through digitization: Pathways and dynamic resource configurations for manufacturers;
Industrial Marketing Management; ScienceDirect (2016).
DINGES, Veit; URMETZER, Florian; MARTINEZ, Veronica; ZAKI, Mohamed and Neely, Andy:
THE FUTURE OF SERVITIZATION: Technologies that will make a difference.
Cambridge Service Alliance, University of Cambridge, Cambridge, UK, 2016.
GAUTHIER, Caroline. Taking the IoT turn: Best practices from 5 success cases. 6th International
Business Servitization Conference, Barcelona School of Building Construction (EPSEB)
Universitat Politècnica de Catalunya; OmniaScience, 2017;
HARARI, Yuval Noah: Homo Deus: Uma breve história do amanhã; Editora: Vintage Digital;
Edição: 01 (2016).
HOJNIK, Janja. THE SERVITIZATION OF MANUFACTURING: EU LAW IMPLICATIONS
AND CHALLENGES. ResearchGate
(https://www.researchgate.net/publication/311206173); Article in Common Market Law
Review · December 2016 .
HOSONO, Shigeru; NUMATA, Eriko; SHIMOMURA, Yoshiki. Servitization Methodology in ICT
Service System Design. ScienceDirect. Procedia CIRP 47 ( 2016 ).
Eng Res, v. 9, n. 3, p. 20-38, May / 2018. doi.org/10.32426/engresv9n3-002 38
HYACINTH, Brigette Tasha; The Future of Leadership: Rise of Automation, Robotics and Artificial
Intelligence. Editora: MBA Caribbean Organisation; Edição: 1 (2017).
LERCH, Christian; GOTSCH, Matthias: How Digitalization can Accelerate the Transformation
Process from Manufacturer to Service Provider; Servitization: the theory and impact
Proceedings of the Spring Servitization Conference 18 – 19 May 2015.
LIGHTFOOT, Howard; BAINES, Tim; SMART Palie: The servitization of manufacturing: A
systematic literature review of interdependent trends. Researchgate
(https://www.researchgate.net/publication/235301898). (2009).
NEELY, Andy: THE SERVITIZATION OF MANUFACTURING: AN ANLSYSIS OF GLOBAL
TRENDS; 14th European Operations Management Association Conference, Ankara, Turkey
(2007).
PISTONI, Anna; SONGINI, Lucrezia. Servitization strategy and Managerial Control. Emerald
Pubrishing Limited. (2018).
PINILLOS, Maria-Jose; DIAZ-GARRIDO, Eloisa; MARTIN-PENA, Maria-Luz. The evolution of
the servitization concept: a co-word analysis. 6th International Business Servitization
Conference, Barcelona School of Building Construction (EPSEB) Universitat Politècnica de
Catalunya; OmniaScience, 2017;
SANDERS, Adam; ELANGESWARAN, Chola; WULFSBERG, Jens: Industry 4.0 Implies Lean
Manufacturing: Research Activities in Industry 4.0 Function as Enablers for Lean
Manufacturing; Published by: Journal of Industrial Engineering and Management, 2016.
SCHWAB , Klaus. The Fourth Industrial Revolution. World Economic Forum. Published by:
Cologny / Geneva Switzerland 2016.
SHAMIM, Saqib; CANG, Shuang ; YU, Hongnian; and LI, Yun Li: Examining the Feasibilities of
Industry 4.0 for the Hospitality Sector with the Lens of Management Practice; Academic
Editor: Huaqiang Yuan, 2017.
SLACK, Nigel; CHAMBERS, Stuart; JOHNSTON, Robert. Operations Management. Published by
Prentice Hall Financial Times. Sixth Edition. 2010
USTUNDAG, Alp; SALKIN, Ceren; ONER, Mahir and CEVIKCAN, Emre: A Conceptual
Framework for Industry 4.0 no livro: Springer Series in Advanced Manufacturing, Springer
International Publishing Switzerland 2018.
VENDRELL-HERRERO, Ferran; BUSTINZA, Oscar F.; PARRY, Glenn; GEORGANTZIS, Nikos;
Servitization, digitization and supply chain interdependency; Industrial Marketing
Management; ScienceDirect (2017).
