Observations from Dr. Klaus Dohrmann, Vice President Strategy and Development, E&M Sector, DHL CSI

Manufacturers around the world are experiencing profound change. Growing competitive pressures are igniting extraordinary innovation driven by digitalization, particularly in the creation of entirely new business models.

As an example, instead of focusing on engine sales, Rolls Royce is now ‘selling thrust’, welcoming customers into a decade-long contractual relationship that guarantees engine operational uptime – in other words, outcomes for its customers. Meanwhile, GE is transitioning from a company that sells sophisticated machines to a company that sells solutions, and has identified a $25 billion market opportunity for capability-based service propositions.

These new business models place services at the heart of all activity. The manufacturer’s perspective is shifting away from products and features and towards helping customers achieve their own business goals. This process, known as ‘servitization’, is transforming traditional manufacturing strategies to concentrate on product-enabled service models that sell asset capabilities and operability.

Driving future success from digitization and new business models: servitization in manufacturing

There are many servitization rewards. The manufacturing organization can create closer, more strategic links with each customer while also providing valuable insight into product usage and securing more sophisticated, higher-value contracts than before.

It’s clear that logistics and the supply chain play a critical role in ensuring product uptime and efficiency in new servitization business models – the topic of my brief video. If you’d like to deepen your understanding and knowledge of this important trend in logistics, I can recommend our recently published white paper: Servitization and Supply Chains, A DHL Perspective on Future Engineering & Manufacturing Supply Chains

Published: May 2018

Image: DHL