Service strategies within the manufacturing sector: Benefits, costs and partnership.

1. Service strategies within the manufacturing sector: Benefits, costs and partnership. VALERIE MATHIEU PAPER NO. 13 Presented By Jared Norrell

2. Purpose of Article • “This paper proposes an original typology of service maneuvers achieved by manufacturing companies and addresses the implementation issue within the framework of this typology” (Mathieu, 2001).

3. Previous Work • Levitt (1972) • Everyone is in the business of service • Berry and Parasuraman (1991) • Manufacturing companies are also service companies • Bitner (1997) • All businesses are service businesses in some form • Jack Welch • “The service market is bigger than we ever dreamt”

4. Overview • Typology for manufacturing service • Service specificity • Organizational intensity • Benefits from implementation of service strategy • Financial benefits • Strategic benefits • Marketing benefits • Costs inherent in implementation of service strategy • Competitive cost • Political cost • The collaborative option for implementing a service strategy • Collaborative continuum • Potential partners • Points of application • Costs of collaborative option

5. Typology for manufacturing service(Ways manufacturing companies can take to embrace service field) • Service specificity- content of manufacturing service maneuver. • Customer service- addresses general quality of interactions between seller and customer. • Product services- support the supplier’s product in such ways as physical distribution, after-sale service, or technical assistance. • “Service as a product”- type of service which is independent from a company’s goods, may experience a company’s service without consuming its goods. • Organizational intensity- manufacturing service maneuver refers to both the strength and the scope of its impact on the firm. • Cultural- reshapes the mission of the firm and has potential to modify some fundamental characteristics of the firm. • Strategic- aims to add some key competency to a firm’s portfolio. • Tactical- specific actions within the marketing mix of the firm.

7. Benefits from implementation of service strategy • Financial benefits • Commercialization of services around a tangible product can raise revenues. • Product services tend to reduce vulnerability and volatility of cash flow allowing for a higher shareholder value. • Strategic benefits • Service strategy can provide a competitive advantage through differentiation. • Service strategy can help in building industry barriers to entry. • Marketing benefits • Have potential to augment the goods offering and appeal to the client. • Product service strategies can influence overall client satisfaction. • Superior service can increase both first-time and repeat sales, thus increasing market share.

8. Concerning the financial and strategic benefits, the more intense and specific the service maneuver, the higher the benefits • For marketing benefits, the more intense the service maneuver, the higher the benefits.

9. Costs inherent in implementation of service strategy • Competitive cost- manufacturing firm must build its own competitive advantage with three opportunities. • Using drivers of positional advantage- skills and resources which have the highest leverage on competitive advantage non-accessible to the competitors. • Weakening the competitors’ drivers- Ex. An auto dealer changing oil not only on its own cars but also on its competitors’ cars. • Develop new sources of competitive advantage- many manufacturers have developed global strategies and can now use these geographic odds in order to set up specific competitive positions. • Political cost- emergence, adoption and implementation of service maneuvers is expected to pose a threat to some organizational units and present an opportunity to others. Two ways to counter resistance. • Interpret service maneuver as an innovation. • Necessity to implement service management principles.

10. Strategic cost or political cost are proportional to both the service specificity and the organizational intensity.

11. The collaborative option for implementing a service strategy(Implementation of partnerships with potential competitors) • The collaborative continuum- existence of various intensities and diverse realities in the potential collaboration. • Internalizing- keeping entire service maneuver at home. • Outsourcing- entrusting a partner with the whole implementation of the service maneuver. • Partnering- In between internalizing and outsourcing. • Benchmarking- manufacturing firm must consider this as one of the very first steps in the implementation of service maneuver. • Potential Partners- distributor, client, service provider, and now the traditional competitor.

12. The collaborative option for implementing a service strategy, Continued 3. Points of application- potential domains for collaboration. Two main phases of any service maneuver by a manufacturing company. • Service development- generate “customer-driven service designs and standards.” • Service performing- focuses on service delivery. • Back office- support employees, physical facilities, and technology. • Front office- front-line employees, physical evidence and technology. 4. Costs of the collaborative option • Role specification- decisions and functions are assigned to the parties in the relationship. • Nature of planning- viewed as frameworks within which subsequent adaptations can, and are expected to, take place. • Nature of adjustments- must be prepared to show flexibility and to accept jointly negotiated changes. • Monitoring procedures- establishment of the extent to which contractual compliance has taken place. • Incentive systems- type of incentives used and to the basis on which they are distributed. • Means of enforcement- must be considered above and beyond incentives and must be an ongoing relationship.

14. Conclusion • Broadly speaking, the article has aimed at contributing to the field of service maneuvers within the manufacturing sector. • The more intense and specific the service maneuvers, the higher the benefits, the strategic and cultural costs, and the cost of running the collaborative option.