Mehmet Cakkol,
Cranfield PhD
A synopsis of his PhD research, by Mehmet Cakkol at Cranfield School of Management.
“Manufacturing matters. It creates wealth, sustains jobs and is central to our economic success. It has been the foundation of our strength as a trading nation in both the past and the present” (Department of Business Innovation and Skills, 2008).
Recent reports by UK government agencies have shown that even though productivity has increased drastically for the last decades, profitability of manufacturing is proportionally decreasing. One of the main reasons for this low profitability is the rise of low-cost manufacturing in developing economies. In response to increasing competition from low cost economies, recent years have witnessed a growth of interest in western manufacturers attempting to move downstream to provide innovative solutions composed of associated services and manufactured goods.
This shift has been termed the ‘servitization of manufacturing’. The supposed move towards servitization is argued to comprise a radical departure from traditional ways of working, with an associated need for structural realignment of management principles. Extant literature on servitization predominantly focuses on changes within the manufacturing organisation. In particular, these studies focus on the focal firm’s internal processes, functions and capabilities for the provision of servitized offerings neglecting the network level relationships with customers, partners or suppliers. Especially in high value manufacturing where offerings are composed of complex products and services, organisations tend to couple with multiple stakeholders ranging from commodity suppliers to strategic alliances in order to provide and support offerings.
In addition, it is also argued that today competition is not amongst the companies but rather amongst the supply chains. Within this context, recent literature argues that strategies towards servitization significantly impact supply networks. However, little is known in both academia and practice as to how these networks are configured to provide servitized offerings. Thus, there is an emerging need to study the implications of servitization on the supply networks. This research is one of the first known studies to address this issue by adopting a case based research on the implications of servitized offerings on the supply network of a large-scale manufacturer in the UK.
The results of the case study show that servitized offerings require different network configurations in terms of structures and relationships. These offerings require more complex configurations compared to the traditional product offerings. In particular, this research identifies the key emergent attributes of inter-organisational relationships in a servitizing network. As a result, a conceptual model is developed to demonstrate the relationships amongst the emergent attributes. Of further importance is that the key attributes related to the product offerings were all based on the manufacturer and centred on the product features. On the other hand for the product-service offerings, the focus was not only on manufacturer but also supply network was equally important in the provision of these offerings. At the same time, the attributes were mainly around the service component of the offering. However as we move towards the full solution offerings, the attributes were all based around the customers’ business. Contrary to some extant literature, this research showed that there is not a wholesale migration towards services, but goods, services and solutions can be sold in parallel and most importantly these depend on customers’ demand.
For further information about the on-going research regarding the implications of servitized business models on supply networks, please contact the corresponding author.
