Service Management and Marketing: Managing the Service Profit Logic, 4th Edition

CHAPTER 16TRANSFORMING A MANUFACTURING FIRM INTO A SERVICE BUSINESS

“In growing numbers customers consider manufacturers of physical products service providers, albeit often mediocre service providers. In order to maintain their competitive advantage it is time for manufacturers to start transforming themselves into service businesses.”

INTRODUCTION

In previous chapters we have discussed what it means to be a service organization, and to manage it and its customers with a customer focus in order to support the customers’ activities and processes in a value-supporting way. Here the need for traditional manufacturers, such as firms in metal, forest, electronic, chemical, IT and other industries, to find new sources of competitive advantage is discussed. Transforming into a service business is one logical way of getting closer to the customers and finding new opportunities to support customers’ processes in a more valuable manner than before. After reading the chapter the reader should understand the reason for manufacturers to transform into service businesses, and why this requires a strategic turnaround of the whole firm to be fully successful. The reader should also know what changes are needed to become a service business, how the product should be understood and what steps should be taken, according to the CSS (Conceptualizing, Systematizing, Servicizing) model, to make a transition.

THE CHALLENGE FOR MANUFACTURERS

It is generally agreed that markets have moved into a service ...