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As manufacturing firms seek new ways to develop their service factors to realise...

Feb 19, 2024

As manufacturing firms seek new ways to develop their service factors to realise more values and increase their competitives, servitivation of manufacturing continues to be a topic of growing importance and interest to both the research and practice communities. For both communities, an overriding challenge is to understand and manage the transformation processes that manufacturing companies must undergo to compete through services rather than through products alone (Kowalkowski et al., 2017; Baines et al., 2017). Considering the observation above and by scoping the literature on servitization, critically discuss the concept of servitization, the transformation process that manufacturing firms undergo to successfully servitize their operations. In your discussion, inter alia highlight the transformation processes, including the significant organisational change involving operating processes, capabilities, and platforms as well as the main industry 4.0 technologies highlighted in the literature as enablers of servitization.

Answer

Servitization is the transformation process through which manufacturing firms evolve their business models to offer services in addition to products, thereby creating additional value for customers and gaining a competitive edge.

Solution

Definition of Servitization: Servitization is the process by which manufacturing firms transition from a focus on selling products to offering a combination of products and services. This often leads to more sustainable revenue streams and closer customer relationships

Transformation Processes: The transformation process includes significant changes in organizational structure, culture, and capabilities. This involves developing new service offerings, reconfiguring operating processes, and investing in new technologies and skills

Organizational Change: Organizational change encompasses the development of new capabilities, such as service design and delivery, customer relationship management, and the implementation of service-oriented platforms that support these new functions

Industry 4.0 Technologies: Technologies such as the Internet of Things (IoT), big data analytics, and cloud computing are identified as enablers of servitization. They allow for more efficient service delivery, predictive maintenance, and enhanced customer experiences

Key Concept

Servitization in manufacturing

Explanation

Servitization represents a strategic shift in manufacturing firms from selling products to providing comprehensive solutions that include services, driven by the need to create additional value and differentiate from competitors. Industry 4.0 technologies play a crucial role in enabling this transformation by providing the necessary tools and platforms for efficient service delivery and customer engagement.

◊One potential question from the perspective of Macro Economics could be: - How does the concept of servitization impact the overall productivity and competitiveness of manufacturing firms in an economy?⍭ Generate me a similar question◊