The services in the product line are no longer an additional feature. In the value chain, services used to be at last, after-sales and marketing. However, in the new business landscape drenched with new technologies like IoT and AI, services have become more flexible. It can now switch places with products or either could stand together to support the products, depending on the business requirements.

Why has it happened? And what are the potential benefits?

The phenomenon is called servitization in the manufacturing industry. It is the result of manufacturers’ struggle to break through the massive commoditization to differentiate their solutions in the market. Servitization aims at measuring the quality of the product/services based on the “outcome” achieved by the customers, instead of the product or services. Therefore, it is also known as outcome as a service model. The new business model requires manufacturers to measure the outcome using advanced capabilities in data analytics to rate the charges of their solution.

Top Concerns in Servitization

The key concerns of manufacturers here are how would the outcome be determined, how will the outcome be measured, what will be the KPIs, what if the product does not achieve the guaranteed outcome, and most importantly, what is the accountability of the customer.

While these are the right questions to ask, they are not simple to answer. And no one but leadership teams could answer them for effective implementation. In order to understand how these questions could be answered and their relative possibilities, we need to look at factors that fueled and drive the outcome-based service model.

Servitization is the strategy of service integration into the core business in manufacturing organizations in order to enhance the business performance and competitive position of the organization. Servitization of manufacturing tends to emphasize the potential to maintain business growth, profitability, differentiation, and competitive advantage.

How Do Manufacturers Operate in Servitization Model

In order to understand the working mechanism of an outcome as a service model, we need to see the entire process from the standpoint of changing manufacturer-customer relations.

Earlier manufacturing functions in an open-loop system, where the product goes through many hands, from suppliers, distribution centers, and retailers to finally reach the customers. Once the product left the warehouse, manufacturers had little role to play in product usage.

With service-oriented solutions, a new relationship between manufacturers and customers has been developed, where manufacturers and customers are connected, which closes the loop.

Manufacturers can use this insight not only to determine the outcome, but also in product design, development, modifications, and validation processes. The insight could also be used to create USP and market differentiators with respect to usability and customer experience.

The Enhanced Role of Field Service Teams in Servitization Model

Since the servitization model is highly data-driven, field service teams face the challenge to track, monitor, and interpret the data patterns correctly. Unlike the usual product-driven model, where they majorly collect the field data, in the servitization model, they are literally bombarded with the data from a multitude of processes. This happens because there is massive use of tools in the servitization model in every aspect of the business process.

Each service tool is based on advanced digital capabilities, most often, powered with purpose-built features to capture a variety of data from different sources. These tools have greatly impacted the service delivery processes.

On one hand, they bring visibility, transparency, and accuracy in the processes, on the other hand, they speed up the service cycle, resulting in faster turnaround time, and reduce the administrative burden on the field teams so that instead of filling complex forms, they could focus on their core tasks of performing repair tasks and simultaneously deliver outstanding solutions to the customers. Tools that are specific to field service teams are field service management software solutions that are equipped with a range of modules to standardize the workflow and automate key tasks.

A typical field service tool is available as a standalone software with features for key processes such as scheduling and dispatch or inventory management or a fully integrated software that covers every aspect of the business.

Embracing Digital Technology for Field Service Management

Field service management tools enable digitization of processes, thereby allowing field teams to view and manage service operations online. Service managers could track every incident online, see what is happening in the processes in real-time, make significant changes in the schedules without a fuss, and monitor field activities, including travel logs, time logs, and assets associated with the field technician and the tasks.

Similarly, field service technicians can update data easily, from anywhere, anytime, and access critical data such as service manuals, service agreements, and historical data about payments and service history. In the era of servitization, companies must prepare their field service technicians to use digital technologies to deliver the “outcome” promised to the customers.