Identify and categorize the challenges of strategic product-oriented to service-centric movement in manufacturing companies

Document Type : Research

Authors

1 Student of Business Management, Faculty of Management and Economics ,Islamic Azad University, Science and Research Branch, Tehran, Iran.

2 Associate Professor, Department of Business Administration, Faculty of Management, Tehran North Branch, Islamic Azad University, Tehran, Iran

3 Azad eslamic, Qazvin branch

Abstract

Today, manufacturing companies are trying to redefine their strategic position with customers by using integrated service-product-combination solutions to enjoy the benefits of providing product lifetime services. The purpose of this study is to introduce the phenomenon of service-oriented and provide a way to identify and categorize the challenges of adopting a service-oriented strategy in the heavy equipment industry. Semi-structured interviews with 13 industry experts were used to collect data and content analysis method was used to analyze the data and extract the results. Given the ignorance of the service-oriented process in domestic companies and the need to create a rich source of knowledge, a structured study of the theoretical foundations of the research was conducted and using the theme analysis method, a basic structure of challenges consisting of 373 key points, 41 Sub-themes and 9 main themes were created, which were used in the interview and analysis of the results. The results of the interviews represent a pattern with 262 key points, 44 sub-themes and 10 main themes of service-oriented development challenges in the manufacturing industry. The main challenges include: service culture, customer management, types of products-services available, value, contracts, service delivery system, supply network, risk management and changes in the economic environment.
Keywords: Service Providers, Product-Service Systems, Core Services, Challenges

Keywords

References

  1. Adrodegari, F., Saccani, N., & Kowalkowski,C. (2016). A framework for PSS business models: formalization and application, Product-service system across Life Cycle, Procedia CIRP 47, 519 – 524.
  2. Alghisi, A., Saccani, N. (2015). Internal and external alignment in the servitization journey-Overcoming the challenges. Production Planning and Control, 26 (14–15), 1219–1232.
  3. Avlonitis, V., Frandsen, T., Hsuan, J., & Karlsson, C. (2014). Driving Competitiveness through Servitization, a Guide for Practioners. Published by The CBS Competitiveness Platform, 4-21
  4. Baines, T. S., Lightfoot, H.W., Benedettini, O., & Kay, J. M. (2009a). The servitization ofmanufacturing: A review of literature and reflection on future challenges. Journal ofManufacturing Technology Management, 20(5), 547–567.
  5. Baines, T. S., Lightfoot, H. W., & Kay, J. M. (2009b). Servitized manufacture: Practicalchallenges of delivering integrated products and services. Proceedings of the Institutionof Mechanical Engineers, Part B: Journal of Engineering Manufacture, 223(9), 1207–1215.
  6. Barnett, N. J., Parry, G., Saad, M., Newnes, L. B., & Goh, Y. M. (2013). Servitization: Is a paradigm shift in the business model and service enterprise required? Strategic Change, 22(3–4), 145–156.
  7. Barquet, A. P. B., de Oliveira, M. G., Amigo, C. R., Cunha, V. P., &  Rozenfeld, H. (2013). Employing the business model concept to support the adoption of product–servicesystems (PSS). Industrial Marketing Management, 42(5), 693–704.
  8. Benedettini, O., Neely, A., & Swink, M. (2015). Why do servitized firms fail? A risk-based explanation. International Journal of Operations & Production Management, 35(6), 946–979.
  9. Benedettini, O., Swink, M., & Neely, A. (2017). Examining the influence of service additions on manufacturing firms' bankruptcy likelihood. Industrial Marketing Management, 60, 112–125.
  10. Brax, S. (2005). A manufacturer becoming service provider-challenges and a paradox.Managing Service Quality: An International Journal, 15(2), 142–155.
  11. Cooper, R. G., & Edgett, S. J. (2003). Overcoming the crunch in resources for new product development. Research-Technology Management, 46(3), 48–58.
  12. Demeter, K., & Szász, L. (2013). Towards solution based thinking: Characteristics of servitization at Hungarian manufacturing companies. Journal for East European Management Studies, 309–335.
  13. Durugbo, C., & Erkoyuncu, J. A. (2016). Mitigating uncertainty for industrial service operations: A multi case study. International Journal of Operations & Production Management, 36(5), 532–571.
  14. Duschek, W. (2017). Conceptualizing the Transition to Servitization in the Capital Goods Industry. A thesis submitted to The University of Gloucestershire.
  15. Fang, E., Palmatier, R. W., & Steenkamp, J. B. E. (2008). Effect of service transition strategies on firm value. Journal of Marketing, 72(5), 1–14.
  16. Finne, M., Brax, S., & Holmström, J. (2013). Reversed servitization paths: A case analysis of two manufacturers. Service Business, 7(4), 513–537.
  17. Gebauer, H., Fleisch, E., & Friedli, T. (2005) .Overcoming the Service Paradox in Manufacturing Companies. European Management Journal, 23 (1), 14-26.
  18. Gebauer, H., & Fleisch, E. (2007). An investigation of the relationship between behavioral processes, motivation, investments in the service business and service revenue. Industrial Marketing Management, 36(3), 337–348.
  19. Gaiardelli, P., Resta, B., Martinez, V. , Pinto, R., & Albores, P. (2014). A classification model for product-service offerings. Journal of Cleaner Production 66 (3), 507-519.
  20. Harland, C., Brenchley, R., & Walker, H. (2003). Risk in supply networks. Journal of Purchasing and Supply Management, 9(2), 51–62.
  21. Homburg, C., Fassnacht, M., & Guenther, C. (2003). The role of soft factors in implementing a service-oriented strategy in industrial marketing companies, Journal of Business-to-Business Marketing, 10(2), 23–51
  22. Johnstone, S., Dainty, A., & Wilkinson, A. (2009). Integrating products and services through life: An aerospace experience. International Journal of Operations & Production Management, 29(5), 520–538.
  23. Kastalli, I. V., & Van Looy, B. (2013). Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31(4), 169–180.
  24. Kindström, D., & Kowalkowski, C. (2014). Service innovation in product-centric firms: A multidimensional business model perspective. Journal of Business & Industrial Marketing, 29(2), 96–111.
  25. Kinnunen, R. E., Turunen, T. (2012). Identifying servitization capabilities of manufacturers:A conceptual model. Journal of Applied Management and Entrepreneurship, 17(3), 55.
  26. Kowalkowski, C., Windahl, C., Kindström, D., & Gebauer, H. (2015). What service transition?Rethinking established assumptions about manufacturers' service-led growth strategies. Industrial Marketing Management, 45, 59–69.
  27. Li, J. H., Lin, L., Chen, D. P., & Ma, L. Y. (2015). An empirical study of servitization paradox in China. The Journal of High Technology Management Research, 26(1), 66–76.
  28. Lin, R. H., Chen, C. Y., Chiou, C. H., & Chuang, C. L. (2014). Exploratory research on the servitization planning model in manufacturing firms. International Journal of Electronic Business Management, 12(1), 41.
  29. Malleret, V. (2006). Value creation through service offers. European Management Journal, 24(1), 106–116.
  30. Martinez, V., Bastl, M., Kingston, J., & Evans, S. (2010). Challenges in transforming manufacturing organisations into product-service providers. Journal of manufacturing technology management, 21(4), 449–469.
  31. Matthyssens, P., & Vandenbempt, K. (2008). Moving from basic offerings to value-added solutions: Strategies, barriers and alignment. Industrial Marketing Management, 37 (3), 316-328.
  32. Meier, H., Roy, R., & Seliger, G. (2010). Industrial product-service systems- IPS 2. CIRP Annals - Manufacturing Technology, 59(2), 607–627.
  33. Mert, G., Herdera, C.F., Mencka, N., & Auricha, J.C. (2016). Innovative services for customized, availability-oriented business models for the capital goods industry, Procedia CIRP 47, 501 – 506.
  34. Mo, J. P. T. (2012). Performance assessment of product service system from system architecture perspective. Adv. 1–19.
  35. Neely, A. (2009). Exploring the financial consequences of the servitization of manufacturing. Operations Management Research, 1 (2), 103-118.
  36. Ng, I. C., & Nudurupati, S. S. (2010). Outcome-based service contracts in the defence industry-Mitigating the challenges. Journal of Service Management, 21(5), 656–674.
  37. Nordin, F., Kindström, D., Kowalkowski, C., & Rehme, J. (2011). The risks of providing services: Differential risk effects of the service-development strategies of customisation,bundling, and range. Journal of Service Management, 22(3), 390–408.
  38. Nordin, F., & Servadio, L. (2012). Critical issues during servitization: an n-depth case study.Paper presented at AMA Servsig, International Service Research Conference Hanken School of Economics, Helsinki, Finland.
  39. Nudurupati, S. S., Lascelles, D., Wright, G., & Yip, N. (2016). Eight challenges of servitisation for the configuration, measurement and management of organisations. Journal of Service Theory and Practice, 26(6), 745–763.
  40. Nygards, A., & Hammar, P. (2018). From product provision to advanced service solutions: challenges and enablers in servitization depending on type of Product-Service System. Chalmers Univercity of Technology Gothenburg, Sweden.
  41. Ohvanainen, J., & Hakala, E. (2014). Anindustrial Company entering service business, International Journal of Service Science, Management and Engineering, 1(2), 21-31.
  42. Oliva, R., & Kallenberg, R. (2003). Managing the transition from products to services,     International Journal of Service Industry Management, 14(2), 160–172.
  43. Opresnik, D., & Taisch, M. (2015). The value of big data in servitization. Internationa Journal of Production Economics, 165, 174–184.
  44. Parida, V., Rönnberg Sjödin, D., Wincent, J., & Kohtamäki, M. (2016). A survey study of the transitioning towards High-Value industrial product-services,Procedia CIRP 16, 176 – 180.
  45. Partanen, J., Marko, K., Parida, V., &Wincent, J. (2017). Developing and validating a multi-dimensional scale for operationalizing industrial service offering, Journal of Business & Industrial Marketing, 32 (2), 295-309.
  46. Pawar, K. S., Beltagui, A., & Riedel, J. C. (2009). The PSO triangle: Designing product, service and organisation to create value. International Journal of Operations & Production Management, 29(5), 468–493.
  47. Posselt, T. (2017). Organizational Competence for Servitization. Springer Gabler.
  48. Raddats, C., Easingwood, C. (2010). Services growth options for B2B product-centric businesses. Industrial Marketing Management, 39(8), 1334–1345.
  49. Reim,W., parida, V., & Örtqvi, D. (2014). Producte service systems (PSS) business models and tactics – a systematic literature review. Journal of Cleaner Production 97(6), 61-75.
  50. Reinartz, W., & Ulaga, W. (2008). How to sell services more profitably. Harvard Business Review, 86 (5), 90-96.
  51. Ren, G., & Gregory, M. (2007). Servitization in manufacturing companies, literature review. Paper presented at EurOMA Conference, London Business School.
  52. Salonen, A. (2011). Service transition strategies of industrial manufacturers. Industrial Marketing Management, 40(5), 683–690.
  53. Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business Horizons, 48(3), 199–207.
  54. Sharma, S., & Mahajan, V. (1980). Early warning indicators of business failure. Journal of Marketing, 44(4), 80–89.
  55.  Sheth, J., & Sisodia, R. (2005). Why good companies fail. European Business Forum, 22, 24–30.
  56. Storbacka, K. (2011). A solution business model: Capabilities and management practices for integrated solutions. Industrial Marketing Management, 40 (5), 699–711.
  57. Tian, Y., Jia, Y., Sun, H., Li, D., Yang, Y., & Malik, S. (2012). The moderating effect of service capability on the relationship between service delivery and business performance of manufacturing companies. African Journal of Business Management, 6 (6), 2169-2180.
  58. Trkman, P., Mertens, W., Viaene, S., & Gemmel, P. (2015). From business process management to customer process management. Business Process Management Journal, 21(2), 250–266.
  59. Tukker, A. (2015). Product services for a resource-efficient and circular economy-A review. Journal of Cleaner Production, 97, 76–91.
  60. Valtakoski, A. (2017). Explaining servitization failure and deservitization: a Knowledge-based perspective. Industrial Marketing Management, 60, 138-150
  61. Vandermerwe, S., & Rada, J., (1988). Servitization of business: Adding value by adding services.European Management Journal, 6(4), 314–324.
  62. Vinicius, M., Pessôaa, P., & Beckera, J.M. (2017).Overcoming the product-service model adoption obstacles. Procedia CIRP 64 (2017) 163 – 168.   
  63. Visnjic, I. (2010). Servitization: When is service oriented business model innovation effective? Service Science Management and Engineering 6, 30-32.
  64. Walters, P. G. (2008). Adding value in global b2b supply chains: Strategic directionsand the role of the internet as a driver of competitive advantage.  IndustrialMarketing Management, 37(1), 59–68.
  65. Weeks,R., & Benade,S. (2015). The development of a generic servitization systems framework, Technology in Society, 43, 97-104.
  66. Wise, R., & Baumgartner, P. (1999). Go downstream: The new profit imperative in manufacturing. Harvard Business Review, 77(5), 133–141.
  67. Zarpelon Neto, G., Pereira, G. M., & Borchardt, M. (2015). What problems manufacturingcompanies can face when providing services around the world? Journal of Business & Industrial Marketing, 30(5), 461–471.
  68. Zhang, W., & Banerji, S. (2017). Challenges of servitization: A systematic literatureReview. Industrial Marketing Management 65, 217–227.
Journal of Strategic Management Studies
Volume 11, Issue 41
April 2020
Pages 139-159

Files

History

  • Receive Date: 16 November 2019
  • Revise Date: 02 February 2020
  • Accept Date: 15 March 2020

Share

How to cite

Statistics