Servitization in Manufacturing Firms: Exploring Possible Relations Between the Product-Service Systems Offered by Highly Servitized Manufacturing Firms and the Market Environments in which they Operate

Abstract: Title Servitization in Manufacturing Firms: Exploring Possible Relations Between the Product-Service Systems Offered by Highly Servitized Manufacturing Firms and the Market Environments in which they Operate Authors Edvin Magneteg Max Parkosidis Supervisors Ola Alexanderson, Faculty of Engineering (LTH), Lund University Stefan Calling, ASSA ABLOY Entrance Systems Background In recent years, an increasing number of manufacturing firms have started looking towards servitization as a way of developing their business - offering different forms of product-service systems rather than only selling products. There are numerous ways in which manufacturing firms can choose to offer services, and the extent to which different firms have chosen to servitize also varies, with some firms having taken significant steps towards becoming pure service providers. There could be many reasons why firms servitize to different degrees, with some becoming highly servitized - one such factor being potential characteristics of their market environments. As such, it becomes relevant to study and explore possible relations between the market environments of highly servitized manufacturing firms and the product-service systems they offer, in order to create a greater understanding of the rationale that drives servitization. If such relations exist, they could potentially also be used to assess the servitization possibilities of manufacturing firms in general. Purpose The purpose of this study is to explore possible relations between the market environments of highly servitized manufacturing firms and the product-service systems they offer and, if possible, demonstrate how the insights gained can be used to assess the servitization possibilities of manufacturing firms. Methodology In order to initiate the exploration of the study’s topic, a literature review was first conducted, resulting in the establishment of a theoretical framework to be used when studying the desired topic, as well as the identification of ten successfully servitized manufacturing firms. Five of these firms were deemed highly servitized in the context of this study, and their product-service systems and market environments were subsequently studied further through case studies based on secondary research. Using the aggregated insights from these case studies along with information gathered from interviews, observations and secondary research, the servitization possibilities of the Pedestrian Door Solutions segment of ASSA ABLOY Entrance Systems were finally assessed. Conclusions A total of 15 different service types that can be considered by manufacturing firms seeking to servitize their businesses were identified. Regarding highly servitized manufacturing firms, it was concluded that they operate in mature industries characterized by high competition, that they have customers with a strong need for reliable, convenient and efficiency-increasing solutions, that they offer a product that enables a high degree of servitization by being complex, durable, connected and mobile, and that they are affected by macro environmental trends that affect customer needs, the competitive climate and product potential. Finally, it was concluded that there appears to exist unexploited servitization possibilities at AAES PDS, with some requiring development of the firm’s products before they can be offered.