Five stages of servitization in machine manufacturing

4. May 2020


Many manufacturers have already realised that the future of their machines and systems lies in service. In this blog post we will explain what servitization is and what it means for you and the machine manufacturing industry. In order to be able to classify more precisely where your company stands on the servitization maturity scale, we have created the following overview as a tool for you.

Servitization Maturity Scale in machine manufacturing

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Servitization Maturity Scale

On the maturity scale of servitization, you will find on the very left in the first stage those companies who have not yet followed the trend towards service. On the far right are companies that already offer new business models in the sense of Asset-as-a-Service. With the help of the following steps you can classify where you stand with your company:

There are many different forms of servitization. It is crucial to establish a clear roadmap for the transformation towards service and not to take too many steps at once.

  1. Sell & Forget
    The first stage of servitization on the far left describes the degree of maturity when machine manufacturers  have sold machines for decades and cannot tell exactly where they are located. Completely reactive they only serve a fraction of their installed base with basic services such as warranty and spare parts, according to Baines so-called “base services”. According to the Mechanical Engineering Industry Association (VDMA) VDMA, German machine manufacturers only provide services for between 10 and 25 % of their own installed base. This means that many companies are still at the very beginning.

  2. Fail & Fix
    The second stage of Servitization describes machine and equipment manufacturers who will react only when their customers or dealers contact them. This means that they for example offer maintenance and repair services, but not proactively. Often associated with this level of maturity, we see under-digitized processes such as paper-based service reports or no existing ticketing system for efficient processing of service requests. Even spare parts and maintenance services are usually not yet offered here via a digital service portal or similar solutions.

  3. Service Excellence
    Companies at this level of maturity have focused on getting their service business under control. Fast response times, high service availability, longer planning periods for service cases and the beginning of proactive offers in service, e.g. through maintenance contracts. This is where digital tools often come into play, making life easier for both office and field service staff. Since good service technicians are hard to find, this is also mainly about increasing the efficiency of your own team.
  4. Digital Services
    Many companies would like to skip the third expansion stage and go directly to predictive maintenance or similar offers. In order to be able to offer digital services sustainably and proactively in the future, the necessary infrastructure must be provided in stage 3 as a basis for technologies such as the Internet of Things or Augmented Reality to be used sensibly and for clear business results.

  5. Asset-as-a-Service
    The final stage of servitization is reached when the product is no longer sold but offered as a service. These are often so-called performance-based business models described as “X-as-a-Service”, where X stands for “everything” nowadays. As an example, here a machine is rented to the operator as a service with a certain availability in order to, among other things, shift the risk of the total cost of ownership to the manufacturer (CAPEX to OPEX). Without having gone through the previous stages of servitization, manufacturers usually find it very difficult to offer this type of business model profitably.

A practical tip from our team:
Always calculate the business case for your next step. Who earns more money with it or saves time or costs? Only when you have a business case you should invest in the next step or in digitization in service.

We can help you set up a roadmap with an underlying business case for your service business. Contact us for a consultation with one of our experts.

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