BBP 2/5. Roland van Dierdonck, Vlerick Leuven Gent Management School

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At April 15th, in the Amsterdam Breitner Building, the seminar Business Beyond Products took place. These are the slides of the presentation by Roland van Dierdonck, Vlerick Leuven Gent School of Management. (part 2 of 5)

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BBP 2/5. Roland van Dierdonck, Vlerick Leuven Gent Management School

  1. 1. Servitisation Prof. Dr. Ir. Roland Van Dierdonck [email_address]
  2. 2. Servitisation <ul><li>WHAT ? </li></ul><ul><li>WHY ? </li></ul><ul><li>HOW ? </li></ul>
  3. 3. MOST PRODUCTS ARE A BUNDLE OF GOODS and SERVICES 100 % Good e.g. Base chemicals 100 % Service e.g. consulting
  4. 4. Servitisation: What? - Redefinition of the “product offering”: from focus on the “hard core” to a focus on “solving the problem of the customer” -From the manufacturing core to the augmented products -Servitisation is more than adding traditional service elements such as .
  5. 5. Colora: Selling Solutions - Originally small firm produced paint sold in paint shops and DIY, but could not compete with large multinational companies -Realized that customers are not just looking for paint; they are looking for help in solving a problem. -Set up a chain of franchisee operated paint shops -Sold paints, but employees trained to help: - advice on the best paint for your needs - if needed come to your home to give advise on the spot.
  6. 6. The augmented product Hardware core <ul><li>Traditional components of customer service: </li></ul><ul><li>delivery lead time and reliability </li></ul><ul><li>installation </li></ul><ul><li>after-sales service </li></ul><ul><li>repair </li></ul><ul><li>payment arrangements </li></ul>Service in the broad sense: solution of the customer’s problem
  7. 7. Servitisation: What Fourth Stage: beyond manufacturing .
  8. 8. The augmented product Hardware core <ul><li>Traditional components of customer service: </li></ul><ul><li>delivery lead time and reliability </li></ul><ul><li>installation </li></ul><ul><li>after-sales service </li></ul><ul><li>repair </li></ul><ul><li>payment arrangements </li></ul>Service in the broad sense: solution of the customer’s problem
  9. 9. SERVITISATION
  10. 10. Servitisation: Why <ul><li>Customers are more (service) demanding </li></ul><ul><li>Servitisation helps to differentiate and build up entry barriers . </li></ul>
  11. 11. A mass customized barbie doll … My Twinn: Personalized Gifts Including Twin Collectible Dolls
  12. 12. THANK YOU FOR YOUR ATTENTION <ul><ul><li>ANY QUESTION ??? </li></ul></ul>OR NOIR
  13. 13. Or Noir <ul><ul><li>Imagine that you can create your very OWN chocolate ! </li></ul></ul><ul><ul><li>Or Noir™ is a method allowing Artisans to create the taste profile of their dark or milk couvertures, by assembling/blending 2 or more pure Origin couvertures chocolate and/or cocoa liquor. </li></ul></ul><ul><ul><li>Chocolate ‘tailor made’ – Exclusivity for 5 years </li></ul></ul>
  14. 14. Threadless: The Customer is the Company <ul><ul><li>Small very successful company in Chicago designing and selling T shirts </li></ul></ul><ul><ul><li>Community of 500.000 customers who may make their own design </li></ul></ul><ul><ul><li>Members of the network submit their ideas and then voted on which ones they liked best. </li></ul></ul><ul><ul><li>Site became a community center where they blogged, chatted about designs, and bought T shirts. </li></ul></ul><ul><ul><li>Company realized high margins,; little/no overstock </li></ul></ul><ul><ul><li>Threadless rethought the relationship with the customer. Customer end up playing a critical roleacross all its operations </li></ul></ul><ul><ul><li>Or Noir™ is a method allowing Artisans to create the taste profile of their dark or milk couvertures, by assembling/blending 2 or more pure Origin couvertures chocolate and/or cocoa liquor. </li></ul></ul><ul><ul><li>Chocolate ‘tailor made’ – Exclusivity for 5 years </li></ul></ul>
  15. 15. Servitisation: How <ul><li>Strategy development. </li></ul><ul><li>Setting up a customer information system </li></ul><ul><li>Organizing the service delivery system </li></ul><ul><li>Human resources mgt: -Putting the right skills in place </li></ul><ul><li>-Empowerment </li></ul><ul><li>The virtual factory </li></ul>
  16. 16. Servitisation: How <ul><li>Strategy development . </li></ul><ul><ul><li>“ In many companies services have not been </li></ul></ul><ul><ul><li>sufficiently integrated into corporate </li></ul></ul><ul><ul><li>competitive analysis and strategy design. It </li></ul></ul><ul><ul><li>is seen as a part of the marketing effort and </li></ul></ul><ul><ul><li>often an unpaid and expensive activity.” </li></ul></ul>
  17. 17. Servitisation: How <ul><li>Strategy development. </li></ul><ul><ul><li>Manufacturing competences are worthless if they do not add value to the customer. </li></ul></ul><ul><ul><li>The strategic planning process to be meaningful should be about customers and employees, about external wants and needs, and internal capabilties and skills, and company’s capacity to link the needs of its customers with the capabilities of the employees. </li></ul></ul><ul><ul><li>There is a need for tighter coupling of customer needs and organisational capabilities. </li></ul></ul>
  18. 18. Servitisation: How <ul><li>Strategy development. </li></ul><ul><ul><li>Servitisation affects the fundamental strategic questions such as: </li></ul></ul><ul><ul><ul><li>What business are we in? </li></ul></ul></ul><ul><ul><ul><li>What business should we be in? </li></ul></ul></ul><ul><ul><ul><li>What business do we want to be in? </li></ul></ul></ul>
  19. 19. Servitisation: How <ul><li>Setting up a customer information system </li></ul><ul><ul><li>- Need to know more about customers and be able to act on that information. </li></ul></ul><ul><ul><li>- Need to make the service concept explicit </li></ul></ul>
  20. 20. The service concept Making the intangible tangible A service concept is a blueprint that communicates to employees what service they should give and to customers what service they should expect to receive. Van Looy, Gemmel and Van Dierdonck, Services Management: An Integrated Approach, FT Prentice Hall, second edition, 2003 A service concept is the mental picture that is held by customers, employees and shareholders about the service provided by the organisation Johnston and Clarck, Service Operations Management, FT Prentice Hall, Pearson Education, Second Edition, 2005.
  21. 21. Servitisation: How <ul><li>Organizing the service delivery system </li></ul><ul><ul><li>Enlarged front office: four walls of a factory no longer limit the domain of manufacturing </li></ul></ul><ul><ul><li>Customers participate in the production process </li></ul></ul><ul><ul><li>Manufacturing operators become service providers and customers become part time employees </li></ul></ul><ul><ul><li>Servitisation moves manufacturing firms from an impersonal market to a relational market </li></ul></ul><ul><ul><li>Vertical lines and structures should be replaced by horizontal lines involving customers and suppliers. </li></ul></ul>
  22. 22. Servitisation: How <ul><li>Empowerment </li></ul><ul><ul><li>Should be enhanced so that personnel can make decisions and act in the interest of the customer at the spot </li></ul></ul>
  23. 23. Servitisation: A Cure for All?
  24. 24. an example for an industrial-resin manufacturer Price of Product On-time delivery Consistence of product perfomance over time Selection of products Level of technical support Frequency of contact with sales representative Service-oriented customers Product-oriented customers Price-sensitive customers Strong positive Deviation from average Source: Study mentioned in Forsuth et al., The McKinsey Quarterly, 2000 Handholders Risk avoiders Basic need customers Design a portfolio of service products
  25. 25. 2. Design a portfolio of service products Position service products according to response times and prices level of service Standard High Volume of contracts Handholders Risk avoiders Basic- need customers High Low Price Low High Source: Bundschuh et al., The McKinsey Quarterly, 2003, number 4, pp.3-13
  26. 26. Select a coherent model of servitisation to support service products Figure Different models of servitization. (BestServ Feasibiity study 2003)
  27. 27. Select a coherent model of servitisation to support service products Source: Bart Van Looy SOLUTION

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