Investigating the linkages between service types and supplier relationships in servitized environments

https://doi.org/10.1016/j.ijpe.2013.10.001Get rights and content

Highlights

  • The paper addresses buyer–supplier relationships in servitized contexts.

  • A classification of services offered in product-centric servitization is developed.

  • The linkages between service types and relationship characteristics are analysed.

  • Findings can help companies to align supplier relationships with service offerings.

Abstract

Manufacturers undergoing servitization resort to an increased number of suppliers to deliver services. Although managing upstream relationships is particularly critical in servitized contexts, theory development on this topic is still at an early stage. This study analyses the linkages between the types of services that servitized manufacturers outsource and the relationships they establish with their suppliers.

First, we present a framework that is based on a multidimensional description of buyer–supplier relationships and on a categorisation of services. Second, we present the empirical findings coming from multiple case studies and discuss the characteristics of buyer-supplier relationships for Product support, Customer support and Process related services (the three categories investigated) in the light of the presented framework.

The paper contributes to the servitization literature by showing that there is no one best way to shape buyer–supplier relationships in servitized environments. Instead, the type of service being outsourced is one of the key factors that influence the way upstream relationship should be crafted.

Introduction

Manufacturing companies are shifting from being pure manufacturers to offering solutions and services, often delivered through their products or in association with them (Neely, 2008). In the literature, this move toward integrated offerings of products and services falls under different terms, such as “servitization” (Vandermerwe and Rada, 1998), “transition from products to services” (Oliva and Kallenberg, 2003), “going downstream in the value chain” (Wise and Baumgartner, 1999), “product service systems (PSS)” (Tukker, 2004), “moving towards high-value solutions, integrated solutions and system integration” (Davies, 2004, Windahl and Lakemond, 2010) and “manufacturing/service integration” (Schmenner, 2009). Manufacturers have strong technical and product-oriented capabilities, but are often weak in service-oriented ones (Neu and Brown, 2005). Hence, they may outsource the delivery of services (e.g. a remote helpdesk, field maintenance, spare parts supply). Upstream relationships with suppliers delivering such services are therefore critical for successfully providing solutions (Windahl and Lakemond, 2006, Johnson and Mena, 2008). Nonetheless, buyer–supplier relationships in servitized contexts have received little research attention until recently (Bastl et al., 2012). In particular, research to date has not investigated how buyer–supplier relationships are linked with the types of services outsourced. This paper focuses on this research gap. The study is based on case-based research. The paper is organised as follows: Section 2 provides a literature review and presents the research framework. Section 3 illustrates the research methodology. Section 4 describes the empirical findings, which are then discussed in Section 5 in the light of the extant literature. Implications for research and practice as well as the limitations of this research are discussed in Section 6.

Section snippets

Product-centric servitization

Servitization of manufacturing firms implies “the innovation of an organisation's capabilities and processes to better create mutual value through a shift from selling products to selling PSS” (Baines et al., 2009a, p. 555) that are “integrated product and service offerings that deliver value-in-use” (Baines et al., 2007, p. 1545). Besides the variety of terms found in the literature to describe this phenomenon, researchers agree on what pushes companies towards this transformation, i.e. the

Empirical research methodology

Since the literature lacks studies that investigate buyer–supplier relationships in servitized contexts by taking into explicit consideration the types of services outsourced, this research concentrates on exploration and theory building. The research was empirically grounded with the aim to discover emerging patterns and practices (Meredith, 1998) and overcome a number of shortcomings of purely conceptual arguments (Siggelkow, 2007). More specifically, we employed an “iterative-grounded”

Case A

Company A is the Italian branch of a multinational company operating in the imaging and printing industry, with 225 M€ in revenue and 153 employees (2011). Company A manufactures and supports inkjet, laserjet and multifunction printers, plotters, video projectors and fiscal printers. After-sales services in Italy are provided by a network of 45 suppliers. Three relationships have been analysed, concerning three different service portfolios. Supplier Ia is a very small (less than 0.3 M€ in

Discussion

Although cooperation and information sharing between a manufacturer and its supplier network are critical to deliver servitized offerings, previous empirical studies suggest that they are implemented only to a limited extent (Martinez et al., 2010, Lockett et al., 2011, Bastl et al., 2012). In this study we adopted the type of service delivered as a lens to analyse the relationships between manufacturers and the suppliers to whom service delivery is outsourced. This approach is motivated by the

Conclusion

Servitization requires the coordination of a complex network of product and service providers (Johnson and Mena, 2008): the management of buyer-supplier relationships is therefore critical (Baines, 2009a; Martinez et al., 2010). This paper contributes to theory development in the field of servitization, addressing a topic still under-investigated: buyer–supplier relationships. We explored the linkages between buyer-supplier relationships in servitized environments and the types of services

Acknowledgements

This paper has been inspired by the activity of the ASAP Service Management Forum (www.asapsmf.org), a community where scholars and practitioners from Italian universities and several leading manufacturing companies, consulting firms and service providers collaborate in developing research projects and share findings in the product services management field.

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