Servitization: Analyzing its Dilemma in B2B Manufacturing Industry

Abstract

In recent years, due to the development of globalization, the rise of emerging markets, and the manufacturing industry’s proficiency in existing technologies, the competitive situation among manufacturing companies has become increasingly severe. So, it is imperative to find a breakthrough for the survival and development of companies, and to find new directions for increasing profits and profitability. In view of the rapid development of the service industry, the servitization of the manufacturing industry defined as a service-oriented package for customer, has become a new development requirement and a stable profit growth point for the industry. Exploring the challenges faced by the servitization of manufacturing industry and how to overcome these challenges has become an indispensable part. Through the research of the existing literature, the corresponding theoretical framework was established. Combined with the blueprint designed by the theoretical framework, a typical case company and its customer in the industry was selected for empirical research. The challenges of manufacturing servitization and the corresponding solutions, were discovered based on the analysis of the empirical data from the case company and its customer. The challenges that exist in the servitization of the manufacturing industry are concentrated in the internal strategic management of the companies and external customer relationship. This study suggests that companies should adopt a suitable business model and coordinate the key performance indicators among various functions to solve the internal challenges. In addition, the method of evaluating performance should be shared with customers to improve customer satisfaction. The study ends with suggestions for future research to further develop servitization.