By Neil Tumber, Relationship Manager, Advanced Services Group
Just like data, automation, Industry 4.0 and the Internet of Things (IoT), servitization has become something of a buzzword – and for good reason. Servitization and advanced services offer the potential for organizations to significantly transform their business models to deliver even greater value to customers while also increasing their own profitability. But what do we mean by servitization, and what exactly are advanced services?
In this post, we will explain everything you need to know.
What is servitization?
Servitization is a term used to describe a journey of transformation, specifically: the innovation of an organization’s capabilities and processes to better create mutual value through a shift from selling products to selling product-service systems that deliver a desirable outcome for the customer. So, for example, instead of manufacturing and selling a machine tool and ending the transactional customer relationship there, a business instead might produce and sell the machine tool as part of delivering a contracted support and maintenance service.
Servitization: a practical example
An example of servitization is Koolmill, a business in the UK that works with the Advanced Services Group at Aston Business School. Like several manufacturers, Koolmill was originally set up to produce and sell machines – in Koolmill’s case, rice-milling machines. However, much of its customer base is in low-income regions of countries such as China and India, where the price associated with milling-machine ownership is considered prohibitively expensive. To overcome this challenge, the business transitioned to a servitized approach, offering rice-milling-as-a-service.Continue reading “Servitization 101 – How servitization can strengthen your relationship with your key accounts”