Introduction
The competition through strategic service provision has become a unique feature of innovative manufacturing companies. Integrated product-service is capable of being a means of differentiation which is providing a strong market defence to competition right from low-cost economies, especially in the manufacturing industry, whereby there is a highly installed product base. Many companies are resorting to servitization to improve productivity and gain a competitive advantage over other competitors. The term servitization was introduced by Vandermerwe and Rada in this describing this phenomenon which came to be referred to as “servitization of manufacturing (Zhang & Banerji, 2017).” Essentially, servitization is a transformational journey involving firms, especially manufacturing firms developing the abilities they required in providing services as well as solutions supplementing their traditional product offering (Ayala, Paslauski, Ghezzi, & Frank, 2017). Examples of practitioners that have adopted servitization fall into four categories; embedded services allowing traditional downstream services to be established into the product for instance Honeywell focus on in-flight monitoring of engine systems; comprehensive services like those GE is offering around the product market, for instance GE capital financing activities; integrated solutions whereby firms looking beyond their traditional product base in assessing the general customer needs, for example, the move by Nokia into network-infrastructure solutions; and distribution control as utilized by Coca-Cola in grabbing shelf space within its high-volume low-margin supermarket segment.
Servitization can be problematic when exposed to risks, and no adequate measures are taken to prevent risks. One of the critical uncertainties in the internal risks known as mistakes in the formulation or execution of a firm’s strategic market plan as the result of decision-making traits of top managers. Permitting the financial leverage to increase so high, until it falls behind the competitors when it comes to production technologies, possessing a poor or lacking an inventory control at all, cash flows miscalculation, referring on unfavourable contracts with consumers or stakeholders can be a fatal mistake(Huxtable & Schaefer, 2016) . This entails internal constraints such as historical liabilities or unavailability of resources, which tend not to enable managers to take adequate actions to address environmental threats. Therefore a company can fail to suppose the management lacks the capacity of deploying an effective business strategy, regardless of the way the strategy can be viable.
The company of focus is Unilever. Unilever UK Limited, a famous prominent manufacturer for consumer goods. It manufactures home and personal care, packaged food, health, nutrition, beauty as well as hygiene products. It is an international company serving customers across the world. The company originated from Victorian England and has been serving the United Kingdom a period exceeding a century (“About Unilever,” n.d.). Unilever’s mission is to achieve the everyday nutritional, home hygiene as well as personal care needs with brands which help people to feel better and look good too. Being a manufacturing company, servitization will be relevant for Unilever. Servitization will help Unilever as a manufacturer in reclaiming control over its services associated with their products and provide them to the consumers directly. Unilever will benefit from the capacity to establish a long-term relationship between consumers and the manufacturer. This will mean increased profitability will be achieved.
Literature review
There are many research papers on servitization since the year 1988 which majority of them came from the USA, UK, Europe and Switzerland.it covers a wide range of topics and availability of guidelines and procedures of implementing servitization.
The Evolution of Servitization
There are few proven recordings for servitization evolution in the manufacturing industry. There are explanations on how firms first measured themselves to be in service or good and proceed to offer goods in the combination of more close and services that are related and to a point which farm gives out bundles that consist of customer prioritization of support, goods, knowledge and service. Movement of servitization of manufacturing term is traced back to early 1991 (Kowalkowski, Gebauer, Kamp, & Parry, 2017). Besides that, there are suggestions that pioneering usage came into existence in 1960 due to the outline of selling systems. Most of the manufacturing firms have changed dramatically due to strategies from the evolution of servitization and causes the boundaries among services and products to turn out to be blurred (Kowalkowski et al., 2017). Most of the quoted papers are from USA, UK and Europe nation. Majority of these papers are available in decision-making and business literature specialist. Examples are European management journal, industrial marketing management, international journal for operations and Harvard business review
Advanced services
Categorization is made to categorized different categories of services such as advanced, based and intermediate services. Based services are concentrated on the provision of a product such as spare parts and product delivery. The intermediate services are emphasized on the maintenance of the condition of a product like a repair, operator training, helpdesk, and observing situation (Martín-Peña, Sánchez-López, & Díaz-Garrido, 2019).Advanced service is an outcome that concentrates on the provision of capabilities over the performance of the products and is conveyed over the product-service system. This ability suit grouping of services and products that moved around in usage of the product and delivered and consumed as one offering. These advanced services are assisting the buyers instead of giving support to the products. They offer an assuring to the customers on availability level and how strong is the ability they are acquiring (Xing, Liu, Tarba, & Cooper, 2017). Due to improve services, producer undertakes much responsibility and risk. Manufacturer concentrates on incomings of performance in their products and accountability being fulfilled. Coming up with advanced services create long term business opportunities, revenue streams, closer relationship and contracts that are long term and aims at realizing great value for the users and predicting its costs. It features regular payments of revenue, rental agreements, revenue sharing contract and risks. Ownership of a brand is not transferred to the user with advanced services. This might require not the same economic model for advanced services. In terms of advanced services, sharing a reward and risk, advanced services enable manufacturers to undertake high responsibility level and risk. From such agreements, the cost of maintenance expected is embedded.
Intermediate Service
Benefits of servitization changes are achieved when the firm begins to give out radical changes providing intermediate services is a better place for the majority of businesses to start their servitization drive. It is more possible that intermediate services are being offered already. This is an overhaul, helpdesk, repair, maintenance and periodic. It is essential to get the right price to help in profit improvement. When thinking about the price of a service, there should be an understanding of the user’s perception of a monetary value being put in place by use of service (Harjo, Frandsen, & Hsuan, n.d.). They might check service repair as a creation of ways of extension in the operation life of the equipment. It ensures there is the responsibility for the firm giving out the services to keep the value of the share. Size of share is different depending on the user’s typicality and willingness to pay in an organization.
Product service systems
Researchers have placed their interests on PSS by in quest of addressing the capability of a product service combinations to improve industrial, social, environmental and economic sustainability. They follow an eco-friendly and ecological tradition; thereby, they refer studies on this field as a PSS research community. A PSS is a particular variety of business model that naturally emphasizes through the integration of product on full filling the last demand function or need. This is an extraordinary instance in servitization that values asset utilization, performance or asset rather than possession and differentiations are achieved by the integration of service and product that gives out the value in use to users (Raddats, Kowalkowski, Benedettini, Burton, & Gebauer, 2019). For PSS to be successful, it requires to be designed at a systematic level from the perspective of a customer. It involves participation with clients and change in the structure of the organization. Barriers for the adoption of PSS are placed on both sides of the dyad. Producers might be alarmed with a shift in the firm’s configuration, absorbed risks and pricing (Raddats et al., 2019). Solutions of PSS are perceived as having the impending for decoupling nature force from the rise of the economy through concentrating on asset used than on ownership asset. Research from this location aims to change a considerate of PSS to ease the planning, effective delivery and expansion of industrialized PSS.
Problems Companies Face when Servitizing
Servitization strategy adoption brings corporate and culture problems. They are categorized broadly into organizational change, organizational strategy and service design. Designing services is considerably different from the design of the product because services are difficult when defining. This discourages firms from the expansion of their service dimensions due to their need from competition from the usual domain and rivals such as customers, distributors and suppliers (Crozet & Milet, 2017). Risk also presents a challenge in the design process because the work previously done by customers presents new problems to a firm. Focusing on communication that describes the worth proposition to a user needs to be put into consideration in the design of the provision of service. Embracing a downstream site, Organizations should be valued service and service-oriented (Ayala et al., 2017). These view highlight the essentials of a client partner and expanded capabilities in creating solutions. An attempt to change an outdated manufacturer to organization strategy required for operational servitization creates particular problems. Service culture is exact and not similar to outdated developed culture and shift of mindset is essential to prioritize developments and take on services concerning much older sources of competitive advantage.
Discussion
Unilever UK Limited a renown manufacturer for consumer goods. It manufactures home and personal care, packaged food, health, nutrition, beauty as well as hygiene products. It is an international company serving customers across the world (“About Unilever,” n.d.). The company has not adopted servitization yet, but hopefully, it will in future. The company is currently focused on a product-oriented strategy. However, as Unilever will be adopting servitization, its strategy will shift from product-oriented to service-oriented. More emphasis will be played on the quality of services offered to the customers. Customer service will be a top priority which will help in promoting the relationship between the company and customers. Two-way communication will be adopted to improve customer service.
Suppose Unilever adopts the servitization strategy, it will affect the company by rendering it several benefits which can only be attained suppose Unilever possess appropriate structures and processes. A major impact of servitization on Unilever is the capability of developing a long-term relationship with its customers. Servitization will place Unilever in a position to retain its existing customer and maintain a long-term relationship with the customers. Essentially, this is because a customer depends on the manufacturer for more than just supplying consumer goods (Kowalkowski et al., 2017). Therefore, since servitization improves service delivery and production processes, like other manufacturers, Unilever will experience a long term relationship with the customers meaning that the company’s profitability will increase. The company’s profitability will strengthen the company’s business trend to streamline the overall number of providers Unilever has to decrease probable disruption.
Given that the current industry trends are favouring manufactures in terms of servitization. It is, therefore, clear that Unilever’s adoption of servitization will affect the company positively, thus promoting the successfulness of the company. Essentially, manufacturers focus on what sensitization can deliver (Huxtable & Schaefer, 2016). Servitization has proven to be effective suppose a company adjusts its business structure and making a reassessment of finances, which integrates servitization and enjoy the benefits in the future.
As Unilever will be adopting servitization, there is a need to improve employee expertise to cope up with the servitization concepts. Because of the improved qualification requirements to effectively implement the servitization strategy. Therefore, Unilever has to invest in learning or training programs to maintain the standard high. To achieve a desirable servitization strategy, Unilever has to establish a specific working time model for old employees (Martín-Peña et al., 2019). This is designed to guide old employees on their work duties and processes specifically. Unilever should have created precise training programs for older employees which is design to consider the capabilities for the old employees and train them adequately. Unilever should also a retaining program aimed at retaining top-performing employees and also creating a training program for mixed-age teams to have a productive workforce (Raddats et al., 2019). The company should also establish mentoring programs to mentor and motivate employees to embrace the change from product-centred to service-centred strategy. Establishing these programs is likely to be costly. Training and programs will cost the company a lot of money. Therefore, Unilever has to budget and prepare for it financially.
Conclusion
To sum it all, many companies are resorting to servitization to improve productivity and gain a competitive advantage over other competitors. However, servitization can be problematic when exposed to risks, and no adequate measures are taken to prevent risks. Servitization will help Unilever as a manufacturer in reclaiming control over its services associated with their products and provide them to the consumers directly. The company has not adopted servitization yet, but hopefully, it will in future. The company is currently focused on a product-oriented strategy. Unilever will benefit from the capacity to establish a long-term relationship between consumers and the manufacturer. There are many research papers on servitization since the year 1988, which majority of them came from the USA, UK, Europe and Switzerland. Most of the manufacturing firms have changed dramatically due to strategies from the evolution of servitization and causes the boundaries among services and products to turn out to be blurred. Based services are concentrated on the provision of a product such as spare parts and product delivery. Intermediate services emphasize on the maintenance of the condition of a product. Servitization changes are achieved when the firm begins to give out radical changes providing intermediate services is a better place for the majority of businesses to start their servitization. This is an extraordinary instance in servitization that values asset utilization, performance or asset rather than possession and differentiations are achieved by the integration of service and product that gives out the value in use to users. Risk also presents a challenge in the design process because the work previously done by customers presents new problems to a firm. Focusing on communication that describes the worth proposition to a user needs to be put into consideration in the design of the provision of service. Solutions of PSS are perceived as having the impending for decoupling nature force from the rise of the economy through concentrating on asset used than on ownership asset. Research from this location aims to change a considerate of PSS to ease the planning, effective delivery and expansion of industrialized PSS. Customer service will be a top priority which will help in promoting the relationship between the company and customers. A significant impact of servitization on Unilever is the capability of developing a long-term relationship with its customers. Servitization will place Unilever in a position to retain its existing customer and maintain a long-term relationship with the customers. The company’s profitability will strengthen the company’s business trend to streamline the overall number of providers Unilever has to decrease probable disruption. As Unilever will be adopting servitization, there is a need to improve employee expertise to cope up with the servitization concepts. Unilever has to invest in learning or training programs to maintain the standard high.