The Changing Manufacturing Terrain
The Changing Manufacturing Terrain
The Changing Manufacturing Terrain
The concept of product-focused manufacturing processes has been challenged by the rise of
product-as-a-service for manufacturers and their industrial clients. Product offerings that
include value-added service proposals guarantee that producers will make money. Services
are already emerging as reliable income streams, necessitating a complete business model
change for rethinking strategies and developing new competencies. The term "servitisation"
refers to a business strategy where the result or services are offered as a product,
guaranteeing that customer demands are addressed while enhancing the performance of
the primary product outcome. To survive and expand in the developing economy,
manufacturers must start a transformation of operations, moving from a product-focused
functional structure to one that is more customer and outcome-focused.
Introduction
The Changing Manufacturing Terrain
Commoditisation is rising due to declining product differentiation, rising customer
expectations, and changing environmental and safety standards. Upending established
marketplaces forces businesses to reconsider their current service and business models.
Manufacturers are changing their operational capabilities to:
Apply best practices like performance-based contracts
Packaging and delivering value services at every stage of the customer's value chain
LITERATURE REVIEW
In 2009 Baines T.S et al. [1] said that Servitization is the innovation of an organisation’s
capabilities and procedures to move away from selling standalone products and toward
selling integrated goods and services that add value while being used. Examples of
servitisation in the literature include a broad spectrum. These usually emphasise the
possibility of preserving income streams and boosting profitability., For manufacturers,
servitisation is not a magic bullet. But it is an idea with much potential, giving businesses
ways to advance up the value chain and take advantage of higher-value economic
endeavours. There isn't much research out there right now that practitioners could use.
Drawing on the work of other related research communities, their paper offers a valuable
overview of servitisation and a foundation for an additional in-depth investigation into the
more significant subject of service-led competitive strategy.
In 2013 Howard L. et al . [9] Manufacturing servitization was a broad and intricate area of
research interest. To view the many contributions to knowledge production from those
research communities dealing with servitisation, this work aims to give an integrative and
organising lens. To do this, the study tries to answer two key questions: Where are the
knowledge stocks and flows among the research communities? And what general scientific
issues are these communities addressing? The authors have conducted a comprehensive
evaluation of the research literature related to the servitisation of manufacturing using an
evidence-based methodology. This study includes a descriptive and thematic analysis of 148
academic publications published in 68 international peer-reviewed journals by 103 distinct
lead authors.
In 2002 Agnihotri S at el. [10] We looked for publications in the ISI Web of Science and
SCOPUS to perform this investigation. Academic journals published between January 2010
and September 2016 were included in the search criteria. A good conceptual framework for
the subject of e-business is established by Al-Debei and Avison (2010) and Zott, Amit, and
Massa (2011), which also serve as a point of reference for DBM analysis. Based on these
reference papers, the analysis's time frame was constrained to publications between 2010
and September 30, 2016. "Digital business models/model" and "digitalisation and business
models/model/modelling" were the search phrases.
The further up these layers a business can go, the more robust its model will be, and the
more solid its customer relationships will be.
The real-world situation shows that achieving the appropriate ROI in services is frequently
challenging, despite servitisation claims to provide robust competition with rapid
development, revenue, and profit-making potential. This is primarily because creating and
sustaining goods for servitizationservitisation requires high equipment and service use.
Application
Xerox
The American company, Xerox Holdings Corporation, offers print and digital document
services and solutions in more than 160 nations. Xerox is headquartered in Norwalk,
Connecticut (having relocated from Stamford, Connecticut, in October 2007). However, the
firm was founded in Rochester, New York, and most of its workforce is there. For $6.4
billion, the business acquired Affiliated Computer Services at the beginning of 2010. It
constantly appears on the list of Fortune 500 firms since it is a big established corporation.
Servitization of Xerox:
Xerox, a company formerly renowned for photocopiers, now markets itself as a company for
corporate management and operations. Today, services account for more than half of
Xerox's revenue.
The process that Xerox underwent is referred to as "the essence of servitisation, employing
technology to deliver services firmly tied with current goods" on the Xerox blog.
Alstom
Alstom SA is a French multinational with products including the AGV, TGV, Eurostar, Avelia
and New Pendolino high-speed trains, suburban, regional, and metro trains and Citadis
trams rolling stock company involved in the passenger transportation, signalling, and
locomotive industries.
In 1928, Compagnie Française Thomson-Houston and the electric engineering branch of
Société Alsacienne de Constructions Mécaniques merged to establish Alsthom (formerly Als-
Thom). Constructions Electriques de France (1932), the shipbuilder Chantiers de l'Atlantique
(1976), and portions of ACEC were among notable subsequent purchases (Belgium, the late
1980s).
In 1989, GEC Alsthom was created by combining components of the General Electric
Company (UK). With the purchases of Italian rail signalling expert Sasib Railways and
German rolling stock maker Linke-Hofmann-Busch, the business increased its stake in the
rail industry during the 1990s. GEC Alsthom was listed on the Paris Stock Exchange in 1998;
later that year, it changed its name to Alstom.
Servitization of Alstom:
Based on the concept of "lost customer hours," Alstom provides comprehensive
maintenance services that prioritise performance for its clients.
Therefore, reducing the duration of delays brought on by train breakdowns and the number
of impacted passengers is an important goal. Alstom is subject to financial penalties from
the client under the contract terms if they fail to deliver during peak hours.
Alstom's TrainLife Services (TLS) package, which supports customers' needs for dependable,
high-quality service, comprises services including condition-based maintenance, support for
organisational and technical operations, and performance improvement.
MAN has maintained its leading position, achieved excellent customer value rankings, and
increased revenue thanks to its customer-focused strategy.
Caterpillar
A Fortune 100 American company called Caterpillar Inc. creates, develops, manufactures,
promotes, and sells to clients machinery, engines, financial products, and insurance through
a global dealer network. It is the biggest producer of construction machinery in the world.
Servitization of Caterpillar:
Another excellent example of a service which offers various services in addition to
production.
The Cat® Product Link, a remote tracking and monitoring service, is one example of such a
service. This service gives customers information on where equipment is located and
monitors components for preventative maintenance to increase component life and save
downtime.
Using information transmitted by Caterpillar trucks, Caterpillar remotely analyses the
machinery to make decisions that maximise performance.
Rolls Royce
Since 2003, Rolls-Royce Motor Cars Limited, a British luxury car manufacturer, has been the
sole producer of vehicles bearing the Rolls-Royce brand and a wholly owned subsidiary of
BMW AG. In Goodwood, West Sussex, England, the company's administrative and
manufacturing headquarters are situated on the Goodwood Estate.
Servitization of Rolls Royce:
A prime example of servitisation is Rolls-Royce. Engine manufacturers manufacturer Rolls-
Royce has provided clients with a service package in which they pay by the hour depending
on how long an engine is in use.
This is a considerable departure from manufacturers' usual business practices, which include
selling a product and then charging for repairs as frequently as necessary. In this approach,
producers eventually benefit from unstablehazardous items that require more maintenance,
which is wrong and terrible for customers.
Engines are rented to clients as part of the TotalCare® servicing package that Rolls-Royce
provides to airlines, part of the TotalCare®detailsine details details-Royce offers to airlines;
Engines are leased to clients. Rolls-Royce keeps track of machine data to anticipate future
maintenance issues, so maintenance is only done as needed. This eliminates unscheduled
and engine downtime while saving money on unnecessary maintenance work.
Rolls-Royce, which has been covering the majority of engines with their service package
since 2010, has demonstrated financial advantages from the improved alignment between
the customer's demands and the manufacturer made possible by this service.
https://doi.org/10.1108/17410380910960984
Baines T.S, Lightfoot H.W, Benedetti, O. and Kay J.M, “The Servitization of
manufacturing: Review of Literature”.
https://www.researchgate.net/publication/280198351_Servitization_of_manufactur
e