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Data and Customer pains at the core of ADMA’s “Servitization for Manufacturing SMEs” Learning Network event

On November, 18th 2020 more than 20 professionals from Spain, Denmark, Poland, Slovenia, Netherlands and Belgium gathered around the theme of Servitization. The ADMA team prepared an agenda consisting of 2 keynotes and 3 company use cases.

Panel of experts:

Uses cases:

From Product to Solution, supported by (Digital) Services

What is servitization exactly? It is the transformation of companies from being suppliers of basic products and services towards becoming providers of integrated solutions. In other words, making sure the customer does not have to worry anymore about things he used to struggle with before.

Service closely relates with Technology

Technology made it possible for our society to move from an industrial economy to a service economy  . Nevertheless manufacturing will increasingly become important, but focus is shifting from owning to using, making as such a clear link with Sustainability.

As mobile/web (dashboards, analytics), cloud (micro-services, API’s) and interconnection technologies (OPC-UA, 5G, bluetooth)  are readily available these days, most companies nowadays start this solution-driven jouney by building digitally enabled services around the product. As a consequence, relevant & up-to-date data are by far the most crucial factor for a successful start. Gaining access to exploitable product data will prove to be key. This was an opinion shared by all presenters. Another common conviction was that – as Rome wasn’t built in one day – servitization needs to be built on a brick by brick basis.

A nice reference also was made by one of the speakers to Kotler’s way of describing the road to Augmented Product Concepts (see picture below).

Why should I do it ?

Urola discovered some important servitization motivations, both from the supplier and the customer side.

Supplier Customer
– Business growth by integrating new revenue streams into today’s customers
– To keep investing in times of economic recession through the creation of extra income
– Keep competitors away through long-term, strong relationships with customers
– Converting fixed costs to variable costs, thereby reducing the operating costs
– Improve the performance of the customer’s equipment/product
– Ability to focus efforts more on the core competences
– Reduce barriers/risks of new technology acquisition and implementation

Cafès Cornellà started by identifying the value captured in every part of the value chain. It turned out that growing, (post-) harvesting, preparation and export trading of coffee beans accounted for only 5% of the value captured. The same holds for Roasting and distributing the coffee to retail. Conclusion was that by far the most value captured was in the final Retail part of the coffee value chain (90% !). A clear signal for coffee supplier Cafès Cornellà to start engaging strongly with retail coffee shops through the supply of IoT-enabled and sensor-equipped machines (mainly hydrostatic and temperature sensors). Getting and analyzing the data led to the creation of a solution architecture and platform enabling the barista to make the ‘excellent cup of coffee’.

Mr. Pere Cornellà : “My product is not a coffee bean, but a perfect cup of coffee”

The Stas trailer case inspired us through the introduction of sensors on their products to support clients on best operation. Discussion revealed that also Volvo Earthmover equipment has done the same. They even took it that far that they started offering consultancy in operation of earthmoving activities.

Challenges ahead

Servitization is not an easy journey. Many times, new (digital) technologies as well as a new competitive landscape needs to be explored. Within your company new legal, skills, collaboration and finance related organisational steps will have to be taken.

Moreover, when drafting a possible servitization strategy for your own company, many times a new position in the value chain as well as new value capturing will have to be aimed for. In other words, there ALWAYS will be a direct impact on your business model.  

Gurutz Galfarsoso (Urola): “The servitization team at Urola put a lot of oil between the elements of the Business Model Canvas”

As a consequence, some extra challenges which will need to be addressed include:

  1. How to maximize the knowledge, based on data capturing and analytics
  2. How to monetize the services? (the customer has to see & accept the value of the offer)
  3. Skills to design services (on top of products & processes)

It also became very clear that new competences and tools for the design, launch and adaptation of services will be needed.

Just do it

Every case-owner agreed that the best thing to do is to start by putting together one servitization ‘brick ’ after the other. Making a lot of prototypes proved to be an essential step for most of the speakers.

Further, a clear advise given was to always start to try to get to know the exact pain points of the customer as clearly as possible. It was agreed upon that the importance of knowing what and how to ask always plays a key role. Most of the participants further agreed that involving (only) the most innovative customers at the start really did bring good results.

Gilles Desmet (Stas trailers): “Our journey towards a price per km (pay per use) model will always start with the most innovative customers. A good customer segmentation therefore is key to a successful implementation of a servitisation strategy”

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