Servitization for Industrial Products

Industry Trends

Industrial Servitization Drivers:

As products become more complex, they also become increasingly impractical for a general-purpose maintenance team at the end customer’s site to support and maintain which drives the need for servitization.  This usually becomes apparent when a repair is needed, and maintenance requires product training. 

Modern equipment typically contains mechatronics, electronics, software and intellectual property (IP).  Unfortunately, after training an on-site technician, the knowledge decays or leaves for another role before the next repair is needed.  As a result, users look to the supplier for support.  Services have become an inseparable component of the product.  

Servitization Increases Revenue with aHigher Net Promoter Score
Servitization Increases Revenue
and Net Promoter Score

Example: Compared to the time when cars had carburetors and no computers, few people repair their autos (the author included). 

In most cases, servitization started with and focused on maintenance and equipment uptime.  Some companies have extended servitization into operational performance to guide and improve the skills of the equipment operator.

Servitization Benefits:

End-users who are involved in the supplier section of complex assets should include servitization in their selection criteria.  This typically includes condition monitoring, predictive maintenance and the availability of a technician to make a repair.  Condition monitoring to provide guidance to the machine operator is a growing trend.

Benefits for end-users include reduced unplanned downtime for critical equipment which avoids revenue losses and safety issues.  Operator guidance improves product quality and yield while also avoiding harsh or stressful equipment use that leads to extra maintenance.

To implement servitization, suppliers will need to adopt Industrial IoT for condition monitoring.  They will also need to revisit their Field Service Management (FSM) software to assure they can deliver on the promise of near zero unplanned downtime.  With aftermarket services, suppliers obtain a new source of revenue.  A more subtle benefit includes higher customer satisfaction, improved Net Promoter Score (NPS), and repeat sales.

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