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1,service management,CHAPTER 3,2,Servitization: or why services management is relevant for manufacturing environments,3,the previous chapters we have identified the specific characteristics of services. This may have given the false impression that manufacturing goods and delivering services are so different that this book will only be relevant to companies classified as being in the tertiary or services sector of the economy. This is an outdated view.,4,Traditionally, manufacturing companies supplied goods, while service was seen as having only minor importance. This attitude has changed.,5,This attitude has changed. Services have become important for manufacturing companies. More and more of these companies are offering an integrated package of products and services.,6,Sandra Vandermerwe, one of the leading scholars on this topic, has called this movement the servitization of businesses,7,This change affects the management of traditional manufacturing companies. The offering to the customer has to be redefined to include this bundle concept. As a result, manufacturing businesses and service companies are no longer so very different, and each has something to teach the other.,8,we shall take a closer look at this change, describing the way in which servitization is evolving. We shall also examine some of the causes of this trend and some of the implications it has for a companys organization and its production processes.,9,FROM GOODS TO SERVICES,Traditionally, the focus in manufacturing companies has been on making a good quality article. The objective has been to make a car that would take the customer from point A to point B, a lift that would go up and down, or a coffee machine that would make coffee.,10,There is nothing wrong with this; we all want our cars to function smoothly or our coffee machines to make good coffee.,11,Every manufacturer has to ensure that the goods the substantive element of the product work well. However, manufacturers have come to realize that the offering of a product is enhanced when it is complemented by services.,12,A classical form of customer service offered by manufacturing companies is after sales service the installation, maintenance and repair of goods sold.,13,It is apparent, however, that customer services in this context are seen as services that accompany goods for example, acceptable delivery time, after-sales repairs, correct installation, etc. Services are seen as an add-on or sometimes even as a necessary evil, since in the minds of most consumers or salespeople, an intervention after the sale is often associated with a defect in the product.,14,This notion of service can obviously be extended. Servitization goes beyond the traditional approach of providing additional services. In the case of servitization, the offer is defined as a bundle consisting of both goods and services. Servitization thus requires a different mindset.,15,Redefining products will often mean taking a fresh look at customers needs. Instead of trying to sell the item with the service as an add-on, we should address the problem that a particular product solves. This will often lead to the conclusion that the hardware is only part of the solution.,16,Solutions are provided not merely by a good and some added-on services, but by means of a package which includes both goods and services. Both contribute to the fulfilment of customer needs.,17,From goods to a bundle of goods and services,SERVITISATION,Manufacturers become service producers !,18,An examination of the different ways of defining the relationship between goods and services reveals three different approaches:,considering yourself as a mere goods manufacturer and supplier; offering additional services; and embracing the notion of servitization.,19,WHY SERVITIZATION?,20,Why is it that manufacturing companies are becoming increasingly interested in giving their customers good service?,21,Broadly speaking, there are two main reasons,22,First of all, most customers just want more service and are no longer satisfied with the good alone. Second, offering a higher level of service than that of your competitors is a way of making your offering more attractive for your customers. It can differentiate you from your competitors.,23,Satisfying customer needs,Todays customers simply demand more services. They do not simply want to buy a computer or a car; they also want a guarantee that it works. They want ease of use, ease of repair, and a 24-hour information desk.,24,This is not to say that the tangible element of the offering has become less important Customers still want the same article, but they also want the services, so that they can get the most out of their purchase.,25,Redefining an offering as a bundle of services and goods may, therefore, meet customers expectations.,26,Seeking differentiation,Traditionally, competition between manufacturing firms has tended to focus on the goods themselves. A company gained customers or increased its sales because its goods were better than those of its competitors.,27,Now competition has shifted to another level, namely that of the products service component.,28,Many manufacturers only have limited competitive advantage in terms of their goods. Goods are rather easy to copy; patents often give only limited protection against copying. Goods are becoming more and more alike in terms of their quality and performance.,29,Manufacturers are finding it difficult to differentiate themselves from their competitors on the strength of the goods alone, and thus have to find their source of differentiation elsewhere.,30,MAKING THE TRANSITION,Setting up customer information systems Organizing the service delivery system Putting the right skills in place The virtual factory?,31,Describe the three st
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