Evaluating Servitization in the Manufacturing Equipment Industry

Abstract: In the manufacturing equipment industry, sensors integrated in manufacturing equipment is a prerequisite for higher levels of servitization, such as maintenance and product support services, as the sensors can provide data of equipment usage. In this study, a framework called Evaluation of readiness of servitization has been developed, where manufacturing equipment companies can evaluate whether they benefit from developing new solutions with a higher level of servitization. In the evaluation of servitization, a company in the manufacturing equipment industry should consider the following three factors; Value proposition’s fulfilment of customer needs, Market acceptance of value proposition and Internal capabilities to develop and deliver the solution. This study shows that all three factors must be considered for a justified evaluation. The study is based on a single case study on the manufacturing equipment company Atlas Copco Industrial Technique, and a literature review on servitization in the manufacturing industry. This study shows that uncertainty about customer needs and market acceptance of the new value proposition that servitization entails, constitute obstacles to develop new solutions with a higher level of servitization. Thereby, it is of great importance to a manufacturing equipment company to assess readiness both internally and externally when evaluating if they benefit from developing new solutions with a higher level of servitization.