The Big Debate: Servitization (part one)

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Servitization has been talked about for many years but all of a sudden it seems to be a key topic on the agenda of many manufacturing companies and also amongst may service based organisations as well. For those companies that tread the path being dubbed the fourth paradigm it will mean a complete rethinking of how they view field service. 

At the recent AfterMarket conference in Amsterdam Field Service News Editor, Kris Oldland hosted a panel debate with three speakers key to servitization; Professor Tim Baines, Aston University a leading proponent of the movement, Brendan Viggers, Product and Sales Support for IFS Aerospace & Defence division who has worked closely with a number of companies such as Emirates on moving towards a servitization model and Koen D’Haeyer, Global Manager Service Development & Technical Services Lely who had been through the journey himself with Dutch Farm Technology company.

Kris Oldland: The case studies we hear around servitization to date all seem to involve large organisations with quite complex or evolved business models already. Is it the case that servitization only applies to companies that have the size to make it work?

Tim Baines: I’ve worked with quite a few smaller companies which has been quite interesting first of all to break away from the myth that servitization is just about large companies. By this time next year we will have got around 70 companies within our region of the UK the west midlands engaged in servitization.

One company which helps us breakaway from this idea that it is all about delivering complex products is a company that actually delivering pallets, regular wooden pallets and these pallets are used in the automotive industry to move windscreens and cars and things like this. There business model before we got involved was they would make a pallet, sell the pallets.

But what they are doing now is slowly but surely getting into the space where they are making the pallets, they are designing the pallets for the application, they are working with the customer to make sure the pallets are well suited, they are actually putting the pallet in the system, they’re tracking the pallets, they are taking care of stock control and slowly and surely they are moving to a position where they are becoming the business process outsourcing partner for the customers own material handling system.

Whilst this may not be a perfectly clinical example of servitization by some definitions, but nevertheless it is a good example of a small company that has adopted the principles of servitization and then put them into practice.

Koen Dyaeyer: I couldn’t agree me that smaller companies companies servitization can work. I have a history in smaller to medium sized companies, and we went drastically through servitization aspects even by a make and buy proposition through to quality assurance etc so it’s applicable for sure in all industries.

What I would say is that technology there is an extra opportunity as in complexity it is very much possible to create the value of your expertise which is also holds true of course.

Audience Question: Whenever we decide to do any transformation a big chunk of it is behavioural change, besides the software and the hardware how to you trigger the behavioural change within a company?

Brendan Viggers: For us its understanding the processes, being able to model those processes and work as a team to fully understand what the different functions and responsibilities you have within that team. But its also being able to drive down to having a piece of data that will ultimately help you deliver that new change.

Koen Dyaeyer: My experience is set directions clearly for each individual so people understand what is needed from them to achieve the goal. Also motivate people, there is a study that says people only get a message when it is

repeated twenty three times. That’s often a slogan that I use, just repeat it and to be honest sometimes it may need to be repeated forty six times but energise it, make it engaging.

Tim Baines: The companies that I studied when we wrote made to serve, were all companies that were pulled into the delivery of advanced service by their customers. In some instances companies they were pulled into this space kicking and screaming, they were product based companies and they were given no option.

What’s interesting to me now is this second wave of organisations where in some instances you are not being pulled into this space by your customers, rather your looking at the benefits that organisations such as Rolls Royce and Caterpillar have got from servitization and you want a piece of that action. But you have a different set of challenges. Some of the challenges remain the same but some are very different.

For example you have to educate your customers, about the opportunity, this is the theory here, an innovation theory showing us the difference between market pull and technology push. You’ve now got to educate your customers. You’ve got to get the buy in of the whole organisation to the servitization approach. Some of the processes and tools that are out there are great once you’ve started down the path but really to start to get the traction in the first instance, to really get people at board level to buy-in to the idea is one of the biggest issues.

How to inspire the senior management, how to get the messaging about what it is that servitization is about both internally and externally, how to frame servitization so they know what you are talking about. Going to customers and stimulating a customer demand which then pulls everything together.

Look out for more from this debate coming soon… 

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