Servitization is not a project but a journey

More and more (manufacturing) companies are realizing that if we remain stuck in just developing and selling products, we will sooner or later lose out to parties who can also offer the customer a range of top-notch services. But how do you make the transition to (full) service provider in both organizational and technological terms? And what should my service business model look like, also considering my supply chain? What challenges do I face on my journey to a service-centric organization?

Servitization Community
In recent years, TU Eindhoven (TU/e) and Link Magazine have organized workshops on this theme in order to create awareness about the challenges of servitization and to create a network that gathers and shares knowledge. And to ultimately find solutions to the challenges. In September, at a workshop in Eindhoven, the step was taken from probing where the challenges are to concrete action.

That afternoon, the ESF Servitization Community kick-off took place. Some twenty representatives of companies plus a handful of participants via a livestream dwelt on what servitization is and implies, and two use cases were explained by companies that had already travelled part of the ‘journey’: Lely and Selmers. With the creation of the Servitization Community, the theme is also embraced by ESCF, which was set up 25 years ago to better align university programmes with the knowledge and needs of business.

From a product-centric to a service-centric approach
During the kick-off, Néomie Raassens, assistant professor of outsourcing & servitization at TU/e, clearly explained what servitization entails and what it requires. In short, it is the transformation from a product-centric to a service-centric approach by adding services that add value for customers to the core business – offering products. Which is easier said than done.

It is a long and tough journey, explained Oscar Moers of Lely, leading developer/builder of innovative solutions and services for dairy farming. ‘An important lesson learned is that you have to believe in it, focus on it and incorporate it into your strategy. Servitization is not a project, it is a journey with major implications for the set-up of your organisation and the way you work. One of the many challenges facing Lely is to get all Lely Centers – who are responsible for technical and service support in the over forty countries where the company operates – to adopt this service-centred approach. That is very difficult, because roughly 90 per cent of those centres are run by franchisees, dealers and importers. But Lely wants to continue on this path regardless. Currently, the full-operational lease project is up and running in six Lely Centers. Its goal is to map out the hurdles and missing links to eventually becoming that full-service provider.’

Customer perspective
Selmers, a developer and supplier of equipment for the oil & gas and water industries, has also been on a journey for some years to transition from an equipment provider to a solutions provider, said operations manager Rob Schouten. Selmers has managed to make progress by constantly tackling new challenges. A very important one is that the traditional, hierarchical organization has been replaced by a steering committee, as a result of which that the functioning of departments as silos has been abandoned and the sales organization and the engineering and project teams start each working day together with one key question: If we approach this issue in this way, are we doing it from the customer’s perspective? ‘The user requirements are leading in what we do,’ said Schouten.

The workshop ended with a post-it session, in which the participants were asked to put their (fictitious) money on what they considered as the most urgent problem area for which solutions should be developed. This demonstrated that organizational problems stand out. The Servitization Community will do its best to develop adequate solutions for this.

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Image: Bart van Overbeeke