Obstacles with Servicification of Manufacturing

When thinking of Servicification of the Manufacturing Industry, you soon realize it's a very complex topic. Not only you must have deep insights in topics like history, psychology, economy, technology, trade politics, and others - you also face a shortage of studies in the area. Gremyr, Löfberg & Witell writes that "there is a shortage of literature that includes elaborate empirical accounts of service innovations in manufacturing firms", and Oliva & Kallenberg concludes that "The literature, however, is surprisingly sparse in describing to what extent services should be integrated, how this integration (services into their core product offering) should be carried out, or in detailing the challenges inherent in the transition to services.". So it's big, it's complex, and we don't know too much. I would call that a major obstacle - you really need to roll up your sleeves!

Gremyr, Löfberg & Witell conducted their study "Service Innovation in Manufacturing Firms" on the companies SKF, Volvo Buses, and Volvo Trucks. They all are highly successful in their transitions, and they are all 100% dedicated to the task. One thing they all have in common is that their transition is strongly enforced by the top management, and this leads me to the second obstacle: top management. There is no way you (as an engineer in a major company) can start or manage to implement any major servicification in your company, unless you start by getting the trust and assignment to the task from the top management. This not only means the managing director, possibly you also need the whole board of directors and the majority of the owners at your side. If not, just forget it.

In today's highly globalized markets, especially evident for Swedish companies, the trade policies are another obstacle. Lodefalk remarks in a column that "The historic divides in policymaking between trade in manufactures and services, and between offensive and defensive interests are largely antiquated". So the policymakers are also an obstacle on the way to success, and they are not easy to get the hold of!

In my own experience as a Quality Manager, many manufacturing companies are entangled in long and complex supply chains. For example supplyers to the oil & gas industry, apart from facing fierce competition from other manufacturers, also have to face a complex and multi-level supply chain of purchasers; contracting negotiators; engineering-procurement-construction (EPC) companies; platform owners; operators; right owners, and many others - not to mention the whole industry of companies specializing in services like operating, manning, maintenance, repair, and more. The only way to implement anything like vertical integration or integrating services on a major scale is through acquisitions. And again, this is a task for owners and top management.

Nevertheless, servicification of manufacturing is an ongoing process, locally, nationally and globally. How intelligent it may appear, there is no "intelligent design" behind it all. It's more like a silent evolution happening in front of us, and we can only discover its driving forces, machinery and effects. Should we stop it? Should we hail it? Well... no. As little as we could stop industrialization, we can or should stop servicification. But we certainly need to learn more, to get our industry "on track", and to spread the word to all top management and leaders in policy making around the world. To start with. Someone said that there are people out there that are against any change - but that's a completely different story!

References

Oliva, R., Kallenberg, R. ("Managing the transition from products to services". International journal of service industry management 14.2 (2003): 160-172.

Gremyr, I., Löfberg, N., Witell, L. (2010), "Service Innovations in Manufacturing Firms". Managing Service Quality, 20(2): 161-175

Lodefalk, M. (2015), "Tear down the trade-policy silos! Or how the servicification of manufacturing makes divides in trade policymaking irrelevant". http://www.voxeu.org/article/servicification-manufacturing-and-trade-policy