Servitization: from the product to an integrated service
The term servitization (deriving from the combination of the words service and transformation) refers to a new approach to business, replacing the traditional model based on selling a product with the more modern concept of selling a solution.
With this approach, the supplier no longer limits themselves to making goods available and offering occasional technical support, but adds extra services as an integral part of the offer while establishing a long-term relationship between producer and client.
Servitization is a primary feature of industry 4.0
Servitization is an important feature of industry 4.0, as it incorporates the principles of transformation and evolution towards a smarter business approach. Companies that choose to adopt this innovative business strategy must change their market approach by modifying their operational models.
In companies oriented towards servitization (defined as Access Focused), ownership of the goods remains in their hands instead of being released to the client. Consequently, they have the dual task of facilitating access to the product and supplying essential services for its operation, including maintenance and support.
Product users therefore, do not need to pay large purchasing costs; they pay a fee, calculated in proportion to their actual use of the product. This approach is already commonplace in the IT sector and is used, for example, by companies involved in the rental of printers and photocopiers.
OEE as the basis of the servitization strategy
Servitization’s distinctive feature is the so-called OEE or Overall Equipment Effectiveness. In practice, all the equipment supplied to the client is remotely monitored by the supplier via special smart sensors.
These sensors are used to transmit data relating to the general state of the equipment and details of its performance and operation in real time, so as to facilitate procedures such as the scheduling of maintenance intervention by the manufacturer.
The data gathered provides a precious source of information for the manufacturer, who can use it to make improvements to the equipment or to aid in the design of better performing devices in the future.
Service transformation and data driven economy
The gathering and analysis of data via the use of technologies such as the Internet of Things (IoT), Cloud services and Big Data, includes servitization in what is defined as the ‘data driven economy’.
The supplier company’s decisional processes and strategies are based on information obtained via smart sensors installed inside the equipment. This is how artificial intelligence helps the company to predict potential future problems, by analysing risk factors and the chances that such events will happen.
By using these estimates, the supplier can plan more effectively for any maintenance intervention or product replacement and, if necessary, can explore new ways of improving workflow. A better understanding of how the client uses the product allows the supplier to offer increasingly personalised services.
Why is implementing servitization advantageous?
Embracing the concept of servitization is highly beneficial both for producers and clients: while the former acquire a fundamental role throughout the product’s lifecycle, the latter have the opportunity to work together with a company interested in building stable, long-term relationships.
Such collaborations result in higher performance equipment, which is carefully designed and able to meet the specific needs of each client efficiently. Furthermore, this business model guarantees up-to-date equipment which will never become obsolete.
Servitization also opens the doors to potential new clients, who were previously put off by not being able to afford to purchase the equipment at full price.
Translated by Joanne Beckwith
