What is servitisation?

by NIck Frank on September 10, 2010

A term of admittedly disputable aesthetic value is making the rounds in industry, based on academic research carried out at a number of industries. It corollary, productisation, does not sound much better, but there you go, What do they mean, though?

The servitisation of products describes the strategy of creating value by adding services to products or even replacing a product with a service. Selling maintenance contracts for capital goods is an example of a service being added to a product. Contracting tyres by the kilometre to haulage companies instead of selling them outright is an example of a service replacing a product.

The productisation of services describes either the evolution of a service to include a product or a service that becomes standardised to a degree where it is marketed as a product. For example in logistics, transport contracts can be so well defined that they turn into a service that is effectively sold as a product.

The term was first coined by Vandermerwe & Rada in 1988: Servitization of business: adding value by adding services. The PDF is downloadable here.

For an overview of Servitisation literature & definitions see Baines, Lightfoot, Benedettini and Kay (2009): Journal of manufacturing technology management, Vol 20 No 5 2009.

The diagram is from Baines et al (2007): State-of-the-art in product service-systems. The article downloadable here.

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