New research from the Advanced Services Group at Aston Business School suggests that a focus on product as a platform and a clear understanding of the operational network can positively influence servitization efforts. Dr Kawaljeet Kapoor explains…
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Aug 12, 2019 • Features • Advanced Services Group • aston business school • future of field service • Platforms • Servitization • eco-systems
New research from the Advanced Services Group at Aston Business School suggests that a focus on product as a platform and a clear understanding of the operational network can positively influence servitization efforts. Dr Kawaljeet Kapoor explains…
Servitization is widely recognised in the manufacturing sector today for its potential to bring about sustainable business growth and realise benefit from society’s appetite for services. Servitization is generally understood as the process by which a manufacturing company transforms its business model and capabilities to compete through a combination of products and services, rather than just products alone. For manufacturers, achieving their servitization goals means going beyond their product-driven internal capabilities.
It requires them to move away from the traditional linear supply chain models, in favour of collaborative working with external partners, which can evolve into a network with multiple, interacting actors.In this setting, which we would call an ecosystem, platforms enable increased interactions and transactions between the multiple actors and partners, which were not necessarily a part of the initial supply chains.
There is a plethora of companies that successfully utilise platform strategies. Intel and Windows, for example, bring together third party companies and developers to create innovation platforms.
Others, such as Airbnb and Amazon, allow producers, consumers and organisations to find each other and enable a multitude of transactions with each other. Clearly, businesses across a range of industries are investing in platforms. However, examples from the manufacturing sector are far and few between.
An exploratory research project by The Advanced Services Group at Aston Business School, is looking to change that. The project focuses on understanding the servitization process in a manufacturing setting and investigates the influence platforms have on a manufacturer’s journey to servitization.
What do we mean by platform and ecosystem?
Simply put, a platform can be a product, service, or technology owned by a company that external innovators use as a foundation to develop new products, services or technologies. These newly developed offerings always complement a platform owner’s original offerings, which is why we call such offerings, the complements. By the same logic, we call the companies or people who develop such complements, the complementors.
For instance, on a Fire TV platform, Amazon is the platform owner, and the app developers are the complementors, who use the Fire TV stick as a foundation to develop a multitude of apps for the end-users. A platform, its complements and all network actors put together, is what we call a platform ecosystem. In a platform-based ecosystem, you can typically expect to see a platform owner, the complementors, and the end users as its key actors.
"Modularity makes enabling varied functionalities very simple. In a manufacturing setting, product offerings can be modularized and broken down into services associated with product spares, preventive maintenance, fleet management, and so on..."
These platforms can have varying architectural types. They can be of internal – closed nature, such as Makita’s cordless power tool platform, where all tools can only be powered by a battery developed in-house. They can be across a supply chain – partially open, examples of which can be found across all assembly industries. Both of these types aim at increasing offering variety without complicating internal structures.
They can also be external – open for all external innovators in an industry-level ecosystem setting. An example of this is IBM’s collaboration with Intel and Microsoft in the 1980s, which led to the development of the IBM PC, an open platform used by complementors to develop compatible software, such as Word and others.Irrespective of the types, these architectures are increasingly modular in nature, which means that platforms increase flexibility and reusability.
Complicated production processes are broken into smaller parts or modules that deliver an intended technological function in the overall system, and by doing so, enhance the core functionality of a platform. For example, Google Chrome is a search engine, and its extensions are ‘modules’ developed to offer extended functionalities like a calendar, dictionary or storage drive. In other words, when modules connect to a platform, they add new functionalities to include extended utilities and features.
Therefore, modularity makes enabling varied functionalities very simple. In a manufacturing setting, product offerings can be modularized and broken down into services associated with product spares, preventive maintenance, fleet management, and so on. In essence, manufacturing firms can configure multiple offerings using different combinations of the same modules.
Why the ecosystem view is important
The concept of platforms has been a topic of discussion for more than two decades. Both research and practice have shared fundamental insights on platform dynamics and how they work. But the focus on platforms alone is not enough – the ecosystem in which the platform operates is just as important. Understanding the ecosystem, identifying the different actors and understanding your own role will ultimately determine the platform’s success.
Taking a full view of the ecosystem will account for all actors involved and help manufacturers understand which actors can add the most value to the platform and deliver the service-led offerings intended in the first place - beyond.
Platforms in servitizing companies
The word platform is often associated with all things digital, such as a software component or an application. In fact, platforms are more than just a piece of software, particularly in a servitization-based setting. It would not be too far fetched to suggest that if a manufacturer is acting as a platform leader, then their platform will essentially be their ‘product’.
As they have ownership of the product, it is their decision if and how much of the product and/or its specifications can be shared with complementors to produce novel offerings. Let’s take Trucknology, MAN’s fleet management solution, as an example here. Looking for solutions to better manage fuel costs and truck uptime - their customers’ main pain points - commercial truck manufacturer MAN partnered with telematics company Microlise.
"Technology is only one of the many components that go into building an ecosystem, and there are social and architectural aspects that are key and deserve due recognition..."
Together, Microlise and MAN produced a rating system across a range of driver characteristics, such as harsh braking and harsh cornering. The result was the Microlise Tracking Unit (MTU3), which was installed in MAN trucks to feed back driver and vehicle performance data. Customers can now view driver reports, which help to better manage drivers and inform driver training. Drivers can also access the reports to assess their own performance and improve their skills based on accurate data.In this example, MAN represents the platform owner and Microlise represents the complementor, i.e. the external innovator.
The Microlise Tracking Unit is the complement, and because it can only be of value once installed onto the MAN truck, the truck as MAN’s original product offering has become the platform. Successful examples like MAN are evidence that in manufacturing, collaborating with an extended network of actors can derive benefits of maximum value from investments, as well as lasting relationships with the customer even after product sales.
Research on Platforms and Ecosystems
Yet, not many manufacturers have adopted this approach in their servitization strategies. Whilst the terms platform ecosystems, platform thinking, and platform approach are increasingly used in business and manufacturing, they are often used to describe technology alone. Our research suggests, however, that technology is only one of the many components that go into building an ecosystem, and there are social and architectural aspects that are key and deserve due recognition.
The aim of this research project is to explain how platform ecosystems influence manufacturers developing servitization-based offerings. The project is based on interviews with manufacturing companies on their way towards servitization. A key outcome of this research will be a guide to help servitizing firms position themselves across the different roles (platform leader, complementors, etc.), map dominant players and potential partners, in order to use their network dynamics strategically to pursue collaborative innovation.
Dr Kawaljeet Kapoor is a Research Fellow at The Advanced Services Group at Aston Business School.
Jul 18, 2019 • Features • Advanced Services Group • aston business school • Professor Tim Baines • Servitization • Servitization Conference
While attending the Spring Servitization Conference, Mark Glover caught up with Professor Tim Baines (pictured), Director of the Advanced Services Group at Aston Business School. Conversation ranged from the discipline’s origins to the impact of...
While attending the Spring Servitization Conference, Mark Glover caught up with Professor Tim Baines (pictured), Director of the Advanced Services Group at Aston Business School. Conversation ranged from the discipline’s origins to the impact of Industry 4.0 and why societal shifts in sustainability and service consumption are key factors behind servitization’s next movement...
When I joined Field Service News one word appeared more frequently in my browser and in-box than any others: servitization. Its resonance was affirmed by my Editor Kris Oldland; who, during one of our early induction meetings, explained the pivotal role it plays in modern manufacturing. Three months’ on, I flew to Stockholm, and then took a two-hour car journey to Linkoping where I was to attend a conference dedicated solely to the discipline.
So, it was during a coffee break I sat down with Tim Baines, Professor of Operation Strategy at the Aston Business School and a significant player in servitization’s evolution. I was pleased to have an audience with someone who could shed some light on an area that to a layman (me) can be slightly overwhelming. We both grabbed a coffee and one of the many excellent Swedish pastries on offer before finding a quiet corner to talk.
I started off (perhaps boldly) by explaining my slight surprise that a whole three-day conference on servitization existed; that universities have whole departments dedicated to its research – many of whom were here in Sweden presenting – and that academic papers on the subject are being circulated widely. “Business researchers observe industry,” Tim said, sipping his drink. “They’re looking for phenomena, which they are trying to conceptualize and describe and test their hypothesis and understanding. They ultimately arrive at a clinical description of what that phenomena is.”
The phenomena of servitization emerged from the marketing community in the 1980s, Tim tells me, with its first research work appearing in the European Management Journal. Sandra Vandermerwe and Juan Rada’s paper Servitization of Business: Adding Value by Adding Service was published in 1988 and the former is now credited with introducing the term ‘servitization’ to represent the addition of services to enhance a manufacturer’s commercial offerings.
However, the discipline went into incubation. That was until the 2000s when Tim, along with Andy Neely from Cambridge University and Raj Roy from Cranfield niversity respectively, were awarded a research grant from the Engineering and Physical Sciences Research Council (EPSRC) to resurrect its study. “We all put a lot of effort into it,” Tim recalls. “If you look at the citations; the academic citations on servitization; look at the highest cited papers on servitization, it was really down to our collective work.”
Thanks in part to the funding, as well as the efforts of Tim and his fellow academics interest in the discipline flourished both academically and in practice. Demand for a specialist, academic event grew and eight years ago the Spring Servitization Conference was born; its eight years testament to its growth and popularity. Its first incarnation was a workshop of sorts laying out the basic principles of what the group wanted to achieve; essentially something that was crossdisciplinary within a tight-knit, specialised community.
Tim explains: “The conference is a platform for people to network, to meet each other, to share those ideas, those insights, and to learn from a few carefully chosen manufacturers how they’re seeing the world. I think what we will see in a few years’ time, we’ll have a stronger group coalescing around the key topics. Ultimately, this is a community which could very well define an
equivalent of Industry 4.0 or Industry 5.0.”
“Don’t be put-off by the word servitization... all manufacturers can gain some value through service...”
Industry 4.0 discussions were a key part of that morning’s presentations. Chairing a debate himself, Tim asked panelists if servitization was part of Industry 4.0 or vice-versa? Away from the conference hall I pushed him on his own thoughts. “Most manufacturing companies,” he said, “would associate Industry 4.0 with what’s going on inside the factory. Servitization invariably is what’s going on beyond the factory gate. In reality servitization predates industry 4.0. It will exist concurrently, and in a few years’ time will be still going on and industry 4.0 will have come and will have gone.”
Aligning with the conference’s theme, Delivering Services Growth in the Digital Era, Tim suggests firms feel more comfortable adopting servitization as digital offered a layer of security. “Digital is de-risking, enabling those more advanced services to be offered with lower risk,” he says. “It’s making it easier for manufacturers to do it.”
The other driver, Tim continued, is a broader societal shift around service consumption superseding product consumption. “If you think about servitization; it’s not a question in my mind whether companies will make more money from services or less money from services – that’s an outdated question, an outdated conversation. It’s really a case in the way that society is going. We are consuming more services where the appetite is for more sophisticated services.” Sustainability, another large societal issue is also being bearing down on the servitization sphere.
Tim is hopeful that servitization - and industry 4.0 - can ultimately negate the environmental impact of material-heavy supply chains. He referenced a presentation that morning from Cranfield University’s Tobias Benjamin Widmer, who talked about the de-materialisation of the chain; reducing the consumption of raw materials while still achieving a desired outcome.
From that, our conversation naturally turned to regulation and the influence of Government on sustainability initiatives. Firm polices around electric cars, for example, would Tim Says, have an impact on the supply chains. “If the incentives are there for electric cars, why would you have a diesel manufacturing plant? If you don’t have a diesel manufacturing plant, then your whole supply chain evaporates.”
“Here’s an interesting one,” he smiles. “The number of rotational components in a diesel engine car: about 1,500. In an electric car: about 22. Now what’s that going to do your material supply chain?”
We finish our drinks, aware of the slow movement of delegates at they file back into the conference room, themselves refreshed by caffeine and pastries. I shake hands with Tim and thank him for his time, and we both agree to keep in touch.
The next day, I send Tim an email asking if he could possibly spare a copy of his book he wrote with Howard Lightfoot, Made to Serve. The book is seen as an excellent primer into servitization, and I said as much Tim in my email; how it could enhance my learning on a topic that I was beginning to find rather intriguing.
The book arrived in my mailbox a few days’ later; a good-looking tome with a striking cover. A contemporary, simple image of three factories, the middle one with a striking red path leaving its front gate; fanning in perspective to the base of the cover. I read the book’s preface: “Don’t be put-off by the strange word of servitization,” part of it said, “all manufacturers can gain some value through service.”
I recalled the interview in Sweden, when Tim told me about the early days of servitization; when people queried the term, wondering how you spell it, asking if they would make money out of these advanced services. “Now, we don’t have these questions anymore,” Tim had said.
What is a relatively young area of research, servitization now seems to be an integral cog of a manufacturer’s approach to revenue. As Tim suggested, technology will evolve and eventually become exctinct (Industry 4.0, for example), but servitization, as a theory and practice, will continue to grow alongside and compliment manufacturing. In short, making money from selling spare parts is no longer the revenue stream it once was.
When I joined Field Service News one word appeared more frequently in my browser and in-box than any others: servitization. Its resonance was affirmed by my Editor Kris Oldland; who, during one of our early induction meetings, explained the pivotal role it plays in modern manufacturing. Three months’ on, I flew to Stockholm, and then took a two-hour car journey to Linkoping where I was to attend a conference dedicated solely to the discipline.
So, it was during a coffee break I sat down with Tim Baines, Professor of Operation Strategy at the Aston Business School and a significant player in servitization’s evolution. I was pleased to have an audience with someone who could shed some light on an area that to a layman (me) can be slightly overwhelming. We both grabbed a coffee and one of the many excellent Swedish pastries on offer before finding a quiet corner to talk.
I started off (perhaps boldly) by explaining my slight surprise that a whole three-day conference on servitization existed; that universities have whole departments dedicated to its research – many of whom were here in Sweden presenting – and that academic papers on the subject are being circulated widely. “Business researchers observe industry,” Tim said, sipping his drink. “They’re looking for phenomena, which they are trying to conceptualize and describe and test their hypothesis and understanding. They ultimately arrive at a clinical description of what that phenomena is.”
The phenomena of servitization emerged from the marketing community in the 1980s, Tim tells me, with its first research work appearing in the European Management Journal. Sandra Vandermerwe and Juan Rada’s paper Servitization of Business: Adding Value by Adding Service was published in 1988 and the former is now credited with introducing the term ‘servitization’ to represent the addition of services to enhance a manufacturer’s commercial offerings.
However, the discipline went into incubation. That was until the 2000s when Tim, along with Andy Neely from Cambridge University and Raj Roy from Cranfield niversity respectively, were awarded a research grant from the Engineering and Physical Sciences Research Council (EPSRC) to resurrect its study. “We all put a lot of effort into it,” Tim recalls. “If you look at the citations; the academic citations on servitization; look at the highest cited papers on servitization, it was really down to our collective work.”
Thanks in part to the funding, as well as the efforts of Tim and his fellow academics interest in the discipline flourished both academically and in practice. Demand for a specialist, academic event grew and eight years ago the Spring Servitization Conference was born; its eight years testament to its growth and popularity. Its first incarnation was a workshop of sorts laying out the basic principles of what the group wanted to achieve; essentially something that was crossdisciplinary within a tight-knit, specialised community.
Tim explains: “The conference is a platform for people to network, to meet each other, to share those ideas, those insights, and to learn from a few carefully chosen manufacturers how they’re seeing the world. I think what we will see in a few years’ time, we’ll have a stronger group coalescing around the key topics. Ultimately, this is a community which could very well define an
equivalent of Industry 4.0 or Industry 5.0.”
“Don’t be put-off by the word servitization... all manufacturers can gain some value through service...”
Industry 4.0 discussions were a key part of that morning’s presentations. Chairing a debate himself, Tim asked panelists if servitization was part of Industry 4.0 or vice-versa? Away from the conference hall I pushed him on his own thoughts. “Most manufacturing companies,” he said, “would associate Industry 4.0 with what’s going on inside the factory. Servitization invariably is what’s going on beyond the factory gate. In reality servitization predates industry 4.0. It will exist concurrently, and in a few years’ time will be still going on and industry 4.0 will have come and will have gone.”
Aligning with the conference’s theme, Delivering Services Growth in the Digital Era, Tim suggests firms feel more comfortable adopting servitization as digital offered a layer of security. “Digital is de-risking, enabling those more advanced services to be offered with lower risk,” he says. “It’s making it easier for manufacturers to do it.”
The other driver, Tim continued, is a broader societal shift around service consumption superseding product consumption. “If you think about servitization; it’s not a question in my mind whether companies will make more money from services or less money from services – that’s an outdated question, an outdated conversation. It’s really a case in the way that society is going. We are consuming more services where the appetite is for more sophisticated services.” Sustainability, another large societal issue is also being bearing down on the servitization sphere.
Tim is hopeful that servitization - and industry 4.0 - can ultimately negate the environmental impact of material-heavy supply chains. He referenced a presentation that morning from Cranfield University’s Tobias Benjamin Widmer, who talked about the de-materialisation of the chain; reducing the consumption of raw materials while still achieving a desired outcome.
From that, our conversation naturally turned to regulation and the influence of Government on sustainability initiatives. Firm polices around electric cars, for example, would Tim Says, have an impact on the supply chains. “If the incentives are there for electric cars, why would you have a diesel manufacturing plant? If you don’t have a diesel manufacturing plant, then your whole supply chain evaporates.”
“Here’s an interesting one,” he smiles. “The number of rotational components in a diesel engine car: about 1,500. In an electric car: about 22. Now what’s that going to do your material supply chain?”
We finish our drinks, aware of the slow movement of delegates at they file back into the conference room, themselves refreshed by caffeine and pastries. I shake hands with Tim and thank him for his time, and we both agree to keep in touch.
The next day, I send Tim an email asking if he could possibly spare a copy of his book he wrote with Howard Lightfoot, Made to Serve. The book is seen as an excellent primer into servitization, and I said as much Tim in my email; how it could enhance my learning on a topic that I was beginning to find rather intriguing.
The book arrived in my mailbox a few days’ later; a good-looking tome with a striking cover. A contemporary, simple image of three factories, the middle one with a striking red path leaving its front gate; fanning in perspective to the base of the cover. I read the book’s preface: “Don’t be put-off by the strange word of servitization,” part of it said, “all manufacturers can gain some value through service.”
I recalled the interview in Sweden, when Tim told me about the early days of servitization; when people queried the term, wondering how you spell it, asking if they would make money out of these advanced services. “Now, we don’t have these questions anymore,” Tim had said.
What is a relatively young area of research, servitization now seems to be an integral cog of a manufacturer’s approach to revenue. As Tim suggested, technology will evolve and eventually become exctinct (Industry 4.0, for example), but servitization, as a theory and practice, will continue to grow alongside and compliment manufacturing. In short, making money from selling spare parts is no longer the revenue stream it once was.
Jul 11, 2019 • aston business school • manufacturing • Professor Tim Baines • Christian Kowalkowski • Servitization • Servitization Conference
Now in its eighth year and welcoming over 80 delegates from all over the globe, the Spring Servitization Conference focused on the impact of digitalisation and sought to affirm the benefits this discipline can bring to service in manufacturing....
Now in its eighth year and welcoming over 80 delegates from all over the globe, the Spring Servitization Conference focused on the impact of digitalisation and sought to affirm the benefits this discipline can bring to service in manufacturing. Attending the event in Linköping, Sweden, Mark Glover spoke to some of the keynote speakers and academics to gauge how important this gathering is...
Located in Southern Sweden, Linköping is the country’s seventh largest city. However, its dwarfed in comparison to London and New York, yet its charming and dotted streets littered with shops and cafes give it a very welcoming feel.
A five-minute walk from my hotel nestles an exhibition centre, the venue for this year’s Spring Servitization Conference, and like the rest of Linkoping it has a certain charm to it. Compared to conference hubs like London’s Excel and Birmingham’s NES, this is an idyllic setting: set among a lush green park littered with benches, where workers sip coffee enjoying the sun before heading to the office, the only sound is a polite bicycle bell or a the low drone of a tram.
I settle at the back of the main conference room on day one of the event, sipping my own coffee and grazing on some excellent Swedish pastries while awaiting the opening address from Professors Tim Baines and Christian Kowalkowski.
“I’ve taken a back seat this year,” says Professor Baines addressing delegates. This is the eighth year of the annual conference and the Director of the Advanced Services Group at Aston Business School has always played a key role in the content, but this year has ably passed the reins to Professor Kowalkowski from Linkoping University
“It’s an event that straddles disciplines and the [servitization] community,” Professor Baines says, extolling the conference’s benefits, “and is excellent to theory and research and relevant to application and practice.”
It’s a valid point: the event has always sought to bridge the gap between industry and application while creating a servitization community that can share ideas, best practice and findings. It remains the only event of its kind and its eighth year is testament to its development, where over 80 participants would come through the conference doors.
“It’s very important because we call come from different disciplines,” Professor Kowalkowski says, taking time out to grab a coffee with me during the first day. "Typically, we have a lot of academic conferences where you go to a conference belonging to a particular discipline, for example marketing or operations management, strategy or innovation or something else. This [servitization conference] is a multidisciplinary conference, so you can connect with other researchers from other disciplines. Because this is ultimately multi-disciplinary research, we are doing on servitization.”
Themed around ‘Delivering services growth in the digital era’, this year’s three-day event was structured, as always, round one single track of academic presentations, split into morning, mid-morning and afternoon sessions and each concluding with a panel debate discussing that session’s major points.
To meld industry and academia, Professor Kowalkowski was able to arrange a suite of excellent key-note speakers to begin each morning and afternoon session, including Ellen Molin, Head of Business Area Support and Services at SAAB and Magnus Savenas, VP Customer Care and Quality at Electrolux.
"It’s an event that straddles disciplines..."
To begin proceedings however, the conference welcomed speakers from Toyota Material Handling Europe (THME): Joakim Plate, Director Service Market and his colleague Patrick Carlsson, Senior Manager Business Development, Service Market.
TMHE the pair told us, carry out four million customer visits every year, with an impressive 96 per cent first-time fix-rate however, with connectivity (which Carlsson called a “game changer in service”) and other technology developments. They expect to improve these figures in the future.
Of course, the challenge lies in managing the rate of technology development, which the pair acknowledged, particularly in big data solutions and prediction models. A challenge into digitalization they’ve ratified by partnering with Microsoft.
Following the event, I caught up with both speakers to press them further on this link-up. “It’s two big brands working together for big future challenges,” Carlsson told me. “we have aligned to utilise technology going forward.”
“In more concrete terms,” Plate added, “they [Microsoft] have been a partner with is us throughout the process, initially by trying to predict how will a service technician in our industry work in five or six years’ time. With that starting point we were able to develop the new platform, which will be developed and deployed in several steps. So, we’ve only really just started the journey here.”
T-Stream, the TMHE digitalization platform for service runs on Microsoft’s Azure Cloud used by all its technicians to get access information in real time including online documentation, parts ordering, quote creations, planning, remote error code reading and GPS. These are collected in one user interface delivering engineers to assets before they have broken down.
I ask what takeaways the pair have gained attending and presenting at an academic conference focused on servitization. “For us, it’s about sharing our challenges with the academic world and to try and bridge the gap between the industry and the academic world,” Plate explains. “I think both parties have a lot to gain in working more closely together and for us it’s an opportunity to convey the challenges that we see, and to get input from the academic world. One area could be big-data handling, for instance.”
Michael Kato is Chief Digital Officer at commercial vehicle manufacturer Scania and made the short journey by train to deliver day one’s afternoon key note. Kato told delegates, fresh from an excellent sit-down lunch, about driving a digital strategy with a focus on customer service and service development, the heart of which, he explained, is to “walk extensively in your customer’s shoes”.
Having been in the role for two years, I asked Kato what challenges he found, culturally, in integrating a digital strategy into a well ingrained core business of a company that has 52,000 employees. “I viewed it like an adventure,” he says smiling.
“We had to establish the values we’re after and what are the levers for higher customer value. We needed to formulate an awareness of what we wanted to do and then prioritise it. It’s taken nearly a year and a half to work out how can we drive digital in business both in a long and medium-term way, because it’s massively complex.”
And academically, what did Kato gain from attending the conference in Linkoping? “I think it is of big value,” he says. “From my point of view, you have to understand what you want to take out of it. So, it might be a framework giving a higher clarity on things that you need to focus on. It might be of viewing different capabilities or it might be understanding the complexities of driving change that you might not have reflected on.
“Many companies have problems on getting progress on different areas, they know what they need to do but they don’t know why they’re not getting there.”
Of course, academic presentations make-up most of the conference content and universities across Europe explored strands around SMEs, Industry 4.0 and advanced services. Generally, delegates saw how the digital side of servitization can be turned into actual value creation for customers and suppliers alike.
On this, Chris Raddats, a Lecturer in Marketing at the University of Liverpool attending and presenting, told me that the conference shines a light on the potential of digitilisation for manufacturing servicing. “The Spring Servitization Conference provides a unique opportunity to discuss servitization from both practical and academic perspectives,” he told me at the evening’s drinks reception.
“This year’s conference was particularly interesting as it focused on digitalisation, a phenomenon that is disrupting many industries and one that could profoundly change how manufacturers develop and deliver services.”
It was during this drinks gathering that I met Lina Sunden, a young PHD student from the Lulea University of Technology in Sweden. Lina had a poster on display at the event, which she was due to present on the third day. She was looking forward to the prospect and excited to be part of this event. She told me that a specialist servitization event like the SSC was important as it focused on a discipline that may get lost in other conferences, something which inspires her throughout her academic pursuits.
It’s this coming together of like-minded academics that makes the SCC such an important gathering. Not only bridging the gap between academia and practice, the event offers a place for scholars whose research can be overlooked. However, the potential value that servitization brings to manufacturing, particularly when viewed through digitilisation could be hugely significant.
I’m already looking forward to next year’s event.
Located in Southern Sweden, Linköping is the country’s seventh largest city. However, its dwarfed in comparison to London and New York, yet its charming and dotted streets littered with shops and cafes give it a very welcoming feel.
A five-minute walk from my hotel nestles an exhibition centre, the venue for this year’s Spring Servitization Conference, and like the rest of Linkoping it has a certain charm to it. Compared to conference hubs like London’s Excel and Birmingham’s NES, this is an idyllic setting: set among a lush green park littered with benches, where workers sip coffee enjoying the sun before heading to the office, the only sound is a polite bicycle bell or a the low drone of a tram.
I settle at the back of the main conference room on day one of the event, sipping my own coffee and grazing on some excellent Swedish pastries while awaiting the opening address from Professors Tim Baines and Christian Kowalkowski.
“I’ve taken a back seat this year,” says Professor Baines addressing delegates. This is the eighth year of the annual conference and the Director of the Advanced Services Group at Aston Business School has always played a key role in the content, but this year has ably passed the reins to Professor Kowalkowski from Linkoping University
“It’s an event that straddles disciplines and the [servitization] community,” Professor Baines says, extolling the conference’s benefits, “and is excellent to theory and research and relevant to application and practice.”
It’s a valid point: the event has always sought to bridge the gap between industry and application while creating a servitization community that can share ideas, best practice and findings. It remains the only event of its kind and its eighth year is testament to its development, where over 80 participants would come through the conference doors.
“It’s very important because we call come from different disciplines,” Professor Kowalkowski says, taking time out to grab a coffee with me during the first day. "Typically, we have a lot of academic conferences where you go to a conference belonging to a particular discipline, for example marketing or operations management, strategy or innovation or something else. This [servitization conference] is a multidisciplinary conference, so you can connect with other researchers from other disciplines. Because this is ultimately multi-disciplinary research, we are doing on servitization.”
Themed around ‘Delivering services growth in the digital era’, this year’s three-day event was structured, as always, round one single track of academic presentations, split into morning, mid-morning and afternoon sessions and each concluding with a panel debate discussing that session’s major points.
To meld industry and academia, Professor Kowalkowski was able to arrange a suite of excellent key-note speakers to begin each morning and afternoon session, including Ellen Molin, Head of Business Area Support and Services at SAAB and Magnus Savenas, VP Customer Care and Quality at Electrolux.
"It’s an event that straddles disciplines..."
To begin proceedings however, the conference welcomed speakers from Toyota Material Handling Europe (THME): Joakim Plate, Director Service Market and his colleague Patrick Carlsson, Senior Manager Business Development, Service Market.
TMHE the pair told us, carry out four million customer visits every year, with an impressive 96 per cent first-time fix-rate however, with connectivity (which Carlsson called a “game changer in service”) and other technology developments. They expect to improve these figures in the future.
Of course, the challenge lies in managing the rate of technology development, which the pair acknowledged, particularly in big data solutions and prediction models. A challenge into digitalization they’ve ratified by partnering with Microsoft.
Following the event, I caught up with both speakers to press them further on this link-up. “It’s two big brands working together for big future challenges,” Carlsson told me. “we have aligned to utilise technology going forward.”
“In more concrete terms,” Plate added, “they [Microsoft] have been a partner with is us throughout the process, initially by trying to predict how will a service technician in our industry work in five or six years’ time. With that starting point we were able to develop the new platform, which will be developed and deployed in several steps. So, we’ve only really just started the journey here.”
T-Stream, the TMHE digitalization platform for service runs on Microsoft’s Azure Cloud used by all its technicians to get access information in real time including online documentation, parts ordering, quote creations, planning, remote error code reading and GPS. These are collected in one user interface delivering engineers to assets before they have broken down.
I ask what takeaways the pair have gained attending and presenting at an academic conference focused on servitization. “For us, it’s about sharing our challenges with the academic world and to try and bridge the gap between the industry and the academic world,” Plate explains. “I think both parties have a lot to gain in working more closely together and for us it’s an opportunity to convey the challenges that we see, and to get input from the academic world. One area could be big-data handling, for instance.”
Michael Kato is Chief Digital Officer at commercial vehicle manufacturer Scania and made the short journey by train to deliver day one’s afternoon key note. Kato told delegates, fresh from an excellent sit-down lunch, about driving a digital strategy with a focus on customer service and service development, the heart of which, he explained, is to “walk extensively in your customer’s shoes”.
Having been in the role for two years, I asked Kato what challenges he found, culturally, in integrating a digital strategy into a well ingrained core business of a company that has 52,000 employees. “I viewed it like an adventure,” he says smiling.
“We had to establish the values we’re after and what are the levers for higher customer value. We needed to formulate an awareness of what we wanted to do and then prioritise it. It’s taken nearly a year and a half to work out how can we drive digital in business both in a long and medium-term way, because it’s massively complex.”
And academically, what did Kato gain from attending the conference in Linkoping? “I think it is of big value,” he says. “From my point of view, you have to understand what you want to take out of it. So, it might be a framework giving a higher clarity on things that you need to focus on. It might be of viewing different capabilities or it might be understanding the complexities of driving change that you might not have reflected on.
“Many companies have problems on getting progress on different areas, they know what they need to do but they don’t know why they’re not getting there.”
Of course, academic presentations make-up most of the conference content and universities across Europe explored strands around SMEs, Industry 4.0 and advanced services. Generally, delegates saw how the digital side of servitization can be turned into actual value creation for customers and suppliers alike.
On this, Chris Raddats, a Lecturer in Marketing at the University of Liverpool attending and presenting, told me that the conference shines a light on the potential of digitilisation for manufacturing servicing. “The Spring Servitization Conference provides a unique opportunity to discuss servitization from both practical and academic perspectives,” he told me at the evening’s drinks reception.
“This year’s conference was particularly interesting as it focused on digitalisation, a phenomenon that is disrupting many industries and one that could profoundly change how manufacturers develop and deliver services.”
It was during this drinks gathering that I met Lina Sunden, a young PHD student from the Lulea University of Technology in Sweden. Lina had a poster on display at the event, which she was due to present on the third day. She was looking forward to the prospect and excited to be part of this event. She told me that a specialist servitization event like the SSC was important as it focused on a discipline that may get lost in other conferences, something which inspires her throughout her academic pursuits.
It’s this coming together of like-minded academics that makes the SCC such an important gathering. Not only bridging the gap between academia and practice, the event offers a place for scholars whose research can be overlooked. However, the potential value that servitization brings to manufacturing, particularly when viewed through digitilisation could be hugely significant.
I’m already looking forward to next year’s event.
Mar 21, 2016 • Aston • aston business school • IoT • Servitization
If you thought that servitization was still a concept or something only applicable for large manufacturers, it's time to think again, says Professor Tim Baines, Director of the Centre for Servitization Research and Practice, Aston University...
If you thought that servitization was still a concept or something only applicable for large manufacturers, it's time to think again, says Professor Tim Baines, Director of the Centre for Servitization Research and Practice, Aston University Business School, Birmingham.
There’s an excitement about servitization at the moment. "People are asking questions such as: Is it relevant to my business? Will it work for my products? Are my competitors adopting it? What does a Servitization model look like?" Servitization in general and Advanced Services in particular are attracting interest, says Baines, because they offer the prospect of new revenue streams through post-sale services and the greater financial sustainability that comes with it because manufacturers are no longer totally reliant on transactional sales of products for income.
However, as more services are being built around products, says Baines, so process are becoming more complex. "There are three levels of manufacturer-led product services: spare parts, proactive and reactive product condition maintenance, and Advanced Services such has outcome-based contracts. As companies realise the benefits and value servitization can deliver, both they and their customers are becoming more excited about the possibilities of the Advanced Services element." He points out the parallels with the lean manufacturing journey many manufacturers have already been to remove waste and cost from production processes. “Just as Kanban inventory control and just-in-time logistics processes were advanced elements in lean manufacturing, so Advanced Services are a sophisticated element in servitization."
There’s still a lot of uncertainty about whether the servitization model fits all manufacturers and whether it is relevant to all business sectors.
All of this is challenging for manufacturers to take on board, he concedes. "While there’s a lot of interest, there’s still a lot of uncertainty about whether the servitization model fits all manufacturers and whether it is relevant to all business sectors. Part of that is because people often think servitization is difficult because of the process changes that need to happen. However, rather than look at servitization per se as being difficult, it’s more useful to focus on how receptive your organisation is to change. It’s as much about the culture and attitudes within the business."
Neither is company size is relevant to whether change will be embraced or resisted, says Baines. “Big companies have more resources to initiate change but also more inertia when it comes to changing existing processes. SMEs can be much more nimble having fewer constraints with, say, legacy processes." There is no doubt that SMEs are interested in servitization - in 2015, out of 100 companies that Aston consulted with on servitization, 77 were SMEs, reports Baines.
The intimate relationship with your customer and long-term partnership that the servitization model demands, beings other challenges. "Who has the intimate relationship with the customer: you, the manufacturer of the product, or your distributor? How do you ensure your distributor has the same commitment to your customer needed to make the Advanced Services model work?”
Professor Baines will be hosting Aston Business School's 2016 Spring Servitization Conference on 16-17 May 2016. For more information click here.
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Oct 20, 2015 • Features • Allocate Software • aston business school • Future of FIeld Service • Pitney Bowes • big data • Inca Digital • Rolls Royce • The Service Community
The UK not-for-profit group The Service Community, run by service professionals with the simple aim of sharing knowledge within the community, continues to go from strength to strength. Their latest conference held at Aston Business School,...
The UK not-for-profit group The Service Community, run by service professionals with the simple aim of sharing knowledge within the community, continues to go from strength to strength. Their latest conference held at Aston Business School, discussed Big Data. Community member Chris Farnarth of Allocate Software reports on the day's presentations.
The Service Community’s Aston University Special Event focused on “Big Data” attracted over thirty guests to participate in a lively forum of discussion with a range of academic and practitioner based perspectives. The host for this Big Data themed event was Aston University, enerously made available to us by Community favourite Professor Tim Baines and Jill Forrest.
The Community continues to thrive with over 140 registered members and each event drives more involvement and new participation. Four key note presentations were delivered offering insight into the ubiquitous subject matter of Big Data.
Aston Business School’s Dr Andreas Schroeder opened with a truly engaging and interactive keynote presentation that reviewed the role that data plays in developing basic, intermediate and advanced services, in particular the technical, organisational and strategic considerations a company should consider.
In the second keynote presentation, Andrew Harrison explained that big data is a cost to Rolls Royce and is only turned to value through knowledge by contributing to three areas of their business:[ordered_list style="decimal"]
- Creating value potential in the design of a product
- Maximising value in the use of product
- Refreshing value a product’s life and recovering value its end of life
It’s not the quantity of data that is important, but knowing what to do with it...
Andy Reid energised us further with another perspective of Big Data and how Pitney Bowes has used it with great effect.
Andy set the scene explaining the “4 V’s” of Big Data; Volume, Velocity, Variety and Veracity and went on to demonstrate how Pitney Bowes is developing infrastructure to make its own operations more efficient through its use of data, as well as offering location services that can help the company monetize their big data.
Our final key note was presented by Mark Noble of Inca Digital who told his story of how using the data already generated by their high tech digital printers, they were able to dramatically improve the productivity of their Service organisation.
The key lesson being it’s not the quantity of data that is important, but knowing what to do with it!
For example he showed how by combining 3 key indicators of machine performance, his team were able to prioritise service actions on the worst performing machines.
Thus saving money and improving customer satisfaction.
Once again, The Service Community delivered on its objectives. The content of the meetings is the life-blood of The Community, followed closely by the generosity of participants to offer facilities and key skills such as PR, marketing promotion or other services that will keep The Service Community alive.
To this point, the next event is proposed for March 2016 – date and location to be confirmed.
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Sep 23, 2015 • Features • Aston • aston business school • FTA • MIcrolise • Servitization • The View from Academia • Servitization and Advanced Services
Faced with high fuel costs, congestion, driver shortages and changing delivery patterns, the UK road transport industry has to change radically to improve profit margins and survive. Servitization is the solution, recommends this report by Eleanor...
Faced with high fuel costs, congestion, driver shortages and changing delivery patterns, the UK road transport industry has to change radically to improve profit margins and survive. Servitization is the solution, recommends this report by Eleanor Musson and Dr Ali Bigdeli of the Aston Centre for Servitization Research and Practice
The road transport industry is crucial to the UK economy; 68% of freight goods are moved by road according the UK's Department for Transport Transport Statistics 2014. But the industry faces the challenges of fuel costs, driver shortages, congestion and regulation. Moreover changing consumer behaviour in the UK is turning the industry on its head; 74% of adults bought goods or services online in 2014, compared with 53% in 2008, according to the Office for National Statistics, Internet Access in Households 2014, and the demand for flexible, fast delivery is growing rapidly according to the Guardian newspaper. These are just some of the factors behind the low profit margins in the industry: 3% for operators , reports the Freight Transport Association in its 2014 Logistics Report, and 6% for manufacturers.
This industry has to change radically. There is little to be gained from piecemeal changes to products or pricing; the customer’s priorities and requirements must be placed at the heart of operational strategies. This is achieved through what we call advanced services, which are implemented in an organisation through servitization. Advanced Services are provided by manufacturers and technology innovators with an intimate understanding of the customer’s business priorities, and their difficulties in achieving these. They are a package of a product, and the services that go around the use of the product, consumed as a single offering, which help the customer achieve its requirements.
In order to understand how advanced services and servitization are being adopted in the road transport industry, we interviewed a panel of senior executives from within vehicle manufacturers, component manufacturers, operators, fleet management companies and technology providers, and we outline some of our findings here.
There are three categories of advanced service currently been offered in this industry: [ordered_list style="decimal"]
- The first is vehicle condition and safety related services. Real-time reporting about the condition and performance of the vehicle helps the service provider (e.g. manufacturer, fleet management company) to see how the vehicle is being used by the customer, which mitigates the contractual risk and gives opportunities for service and product improvement. Data are used to help fleet managers monitor costs and identify problem vehicles, either by sharing the information with the customer, or by the manufacturer providing this function as a service. For fuel efficiency and safety, manufacturers test tyre pressure and tread depth, with real-time reporting to alert drivers to problems, and service operatives on hand to make repairs or replacements.
- The second type of services is driver-related services. Through the use of telematics, the manufacturers and operators are able to assess how the truck is being driven, to examine any incidents such as harsh breaking, speeding and idling, and to inspect driving and rest periods. This data is analysed to identify training requirements and in some cases pay performance bonuses.
- The third type is route planning and delivery services. Real-time reporting allows operators to manage routes, taking into account live road conditions. Data on deliveries made compared to schedule and route information enable managers to identify opportunities for improvement.
Advanced services have a three-fold impact in the industry:[ordered_list style="decimal"]
- Efficiency
The greatest efficiencies are achieved by maximising the uptime of vehicles, planning routes efficiently, and processing orders. To illustrate:
• The use of technologies and data by skilled route planning staff reduces mileage driven by up to 10%
• Uptime is maximised by reducing roadside failures thanks to greater visibility of the vehicle, its condition and how it’s being used
• Operators can expect at least a 5-15% reduction in vehicle maintenance and service costs as a result of condition monitoring according to telematics specialist Microlise - Safety and better image
Driver-related services have had a significant impact on driving standards, and in turn the image of operators and the industry. In this regard:
• Microlise reports customers see annual reductions in speeding incidents of up to 90%, and a reduction of up to 60% in the number of accidents.
• The same report states operators are seeing a 5-15% reduction in carbon emissions as a result of optimised routes and better driving. - Cost Savings By enabling improvements in driving performance and better, more informed route planning, technology is helping to deliver cost savings in terms of fuel usage. According to the Freight Transport Association's Manager's Guide to Distribution Costs, fuel represents on average of 30% of the cost of a vehicle . The average unit costs £49,000 per year in fuel. Microlise reports an average 10% (£4-5000) saving on each unit’s fuel consumption being achieved by customers using driver management and training tools.
Recommendations
While the leading organisations demonstrate what can be achieved, our research demonstrated that advanced services are not being adopted universally or uniformly in this industry. In order to accelerate this, we recommend that manufacturers ensure advanced services are properly led and embedded. Servitization is a wide ranging, complex process that requires transformation and coordination of an entire organisation. In most companies, it doesn’t fit neatly within the realm of one department. Just like any other organisational change, servitization needs a champion to lead it and generate buy-in across departments.
Servitization provides an opportunity to ‘be closer to the customer’ which can also be facilitated by innovative pricing models which assure the prospective service user of the level of commitment, and create alignment of objectives between service provider and user. Selling and supporting services is a very different proposition to selling products, requiring different skills and reward structures. Manufacturers will need to invest in training their staff, and consider the incentive and reward structures that will generate the desired outcomes.
The full whitepaper report Delivering Growth can be downloaded here:
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Sep 16, 2015 • Features • AirFrance KLM • Aston • aston business school • Hanken School of Economics • Servitization
The Spring Servitization Conference at the Aston Centre for Servitization Research and Practice in the UK holds a unique position within the servitization community in bringing together representatives of both academia and industry. In Part One of...
The Spring Servitization Conference at the Aston Centre for Servitization Research and Practice in the UK holds a unique position within the servitization community in bringing together representatives of both academia and industry. In Part One of Kris Oldland's report, we heard from Aston’s own Professor Tim Baines and the practical experiences of companies who had already made the move over to a servitization model.
Here in Part 2 we report on the keynote speech given by Christian Kowalkowski of the Hanken School of Economics and from Harman Lanser of airline AirFrance KLM on the concept of reverse servitization. Kowalkowski has been working in the field for over a decade and spoke about how has servitization has evolved over the past ten years and what are the challenges in its further adoption.
“I think a lot of the fundamentals are the same in terms of business logic” Kowalkowski explained “but the problem with some of the business model concepts in general is that two key components are missing. One is culture and how to foster a service culture; that’s often much harder than just acquiring the necessary resources.”
“The other one would be leadership and how to really drive this because it is a change management process. How to motivate the employees at all levels within the organisation to form a strong coalition and to be able to show short term gain on this journey – because it’s a long journey” he added.
One of the interesting concepts Kowalkowski raised in his own presentation was that of ‘reverse servitization’ where some companies are offering advanced services and complex solutions, which they have been offering for many years, or even in some cases decades.
There are many companies that are operating on a business model very close to that of servitization without necessarily having ever planned to do so...
Indeed Kowalkowski believes there are many companies that are operating on a business model very close to that of servitization without necessarily having ever planned to do so, who arrived there simply through adopting a highly customer centric business outlook.
Air France KLM
Indeed, one very high profile company in attendance at the conference had done just that: Air France KLM are the oldest and second largest airline in the world. Harman Lanser who heads up the product development and logistics division within the airline's maintenance and engineering division was another of the keynote speakers at the event. During his presentation he outlined how he realised that the organisation was actually operating on a very similar system to servitization.
“Last year I was at a presentation where Tim Baines showed me the concept of servitization and I realised we were doing something similar to that, not knowing how close it was. I have been going through the process of moving from component availability to total aircraft care to an integrated service support for the airline KLM. Now I am exploring if this is something we can offer to customers”
“Doing it for the airline you work for is one thing doing it for an airline where you only do the service for, where your not responsible for the end product of the airline is different. What does it take to be able to give a completely integrated services product to a third party customer?"he asked. “The trust you need, the reliability you need and the dependency you create between the companies.”
And herein lies perhaps one of the biggest keys to unlocking a successful servitization model. It is fundamental that there is trust built up over many years of good relationships with customers to get their understanding and buy-in of how and why you are proposing to move to an outcome-based business model.
Trust: one of the biggest keys to unlocking a successful servitization model...
Technology is an enabler
In addition to strong customer relationships, and the culture and leadership that Kowalkowski referred to, the other key enabler discussed at length during the conference was the technology.
Indeed, Kowalkowski believes that technology is the final key enabler that is allowing such companies to now make the final transition into being a fully servitized businesses. “You can find academic papers that go back 90 years that talk about selling transportation instead of cars, selling mileage instead of tyres but back then you didn’t have the technology,” he explained. “Today with all the digitalisation you can do so many new things. Technology really is the key enabler”
With so many layers to discuss and in depth explorations of what is a truly exciting area, one that will of course have huge implications for the delivery of field service the more the movement gains pace, the Aston Spring Servitzation Conference proved to be an engaging two days for this vibrant global community.
"One of the things we’ve tried to do and have managed to do successfully is to try and keep the whole community together as we go through some forty presentations and to do that in one room over two days has been a very demanding thing to do but it’s been the right thing to do because we, as a community, debated these concepts”
“I’m delighted that we’ve demonstrated that we are moving forward in this space so overall it’s been a great two days, it’s been an exhausting two days but it’s been really worthwhile and next year…. we’re going to do it all again.”
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Sep 16, 2015 • video • aston business school • Future of FIeld Service • MAN UK • Des EVans • Haulage • Servitization
The shift from traditional manufacturer to fully fledged servitized business was a bold and revolutionary move when MAN Trucks UK made the transition but it ultimately led them to a huge growth spree when the rest of the market was in decline.
The shift from traditional manufacturer to fully fledged servitized business was a bold and revolutionary move when MAN Trucks UK made the transition but it ultimately led them to a huge growth spree when the rest of the market was in decline.
The man driving that change was Des Evans, former Managing Director of MAN UK and now an Honarary Professor at Aston Business School.
Evans was also one of the guest speakers at a recent Service Community event and Field Service News Editor, Kris Oldland caught up with him there to find out more about why and how MAN UK made the shift to becoming one of the great examples of servitization.
The next Service Community event is being held on the 30th September and attendance is free for Field Service News subscribers. To register your place please send your contact details to TheServiceCommunity@gmail.com
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Sep 02, 2015 • video • aston business school • Future of FIeld Service • Video • Events • Field Service Events • Servitization • tim baines
The growing industrial trend of servitization amongst manufacturers is gaining traction and as it does so ever more importance is placed upon delivering efficient and effective field service.
The growing industrial trend of servitization amongst manufacturers is gaining traction and as it does so ever more importance is placed upon delivering efficient and effective field service.
The Aston Spring Servitization Conference brought together industry and academia to discuss the latest developments within the field and Field Service News was there to find out more...
Field Service News is published by 1927 Media Ltd, an independent publisher whose sole focus is on the field service sector. As such our entire resources are focused on helping drive the field service sector forwards and aiming to best serve our industry through honest, incisive and innovative media coverage of the global field service sector.
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