Organizational Challenges For a Supplier of Physical Goods Turning Service Provider

By:
Heidi Korhonen,
Taina Piispa,
Iiro Salkari
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Suppliers of physical goods in b-to-b sector are more and more adding services to their product offer and this way taking charge of a bigger part of the value chain than before. These services are often related to the suppliers' old products and thought of as add-ons. Companies often view this as a small incremental change that doesn't much affect the way their organizations need to work. However, value is created in a different way in services than in physical goods. The importance of competencies in managing joint processes, customer interface and customer information is emphasized. This type of a service innovation is a systemic innovation that changes the way both the supplier and the customer needs to work. An organization streamlined to selling physical goods may not support producing services well enough. Also the systemic nature of the service innovation makes it necessary for the customer to take part in service development.

This paper is based on literature study and a case study. The case is about a company that has traditionally supplied factory automation systems and maintenance work. Lately it has taken responsibility of total maintenance of its customers' factories.


Keywords: Service Innovation, Service Development, Systemic Innovation, Maintenance
Stream: Clients, Customisation, Markets
Presentation Type: 30 minute Paper Presentation in English
Paper: Organizational Challenges For a Supplier of Physical Goods Turning Service Provider

Heidi Korhonen

Research Scientist, Industrial Management and Innovation Systems, VTT Technical Research Centre of Finland
Espoo, FINLAND

Heidi Korhonen is a research scientist in the field of industrial management and innovation systems at VTT Technical Research Centre of Finland. She has earlier also worked as a researcher of industrial management at TAI Research Centre at Helsinki University of Technology. She has received her M.Sc. (Tech)from Helsinki University of Technology (HUT) and is now postgraduate student at HUT. Her current research interests include innovation management, service business, business models and business networks.

Taina Piispa

Project Manager, BIT Research Centre, Helsinki University of Technology
FINLAND

Taina Piispa has extensive experience on many operational functions of industrial and service organizations. She has also experience on project management and industry-academia collaboration. Her current research interests lie in value creation, management of value networks, service business models and causation between different part of business and networks.

Iiro Salkari

Industrial Management and Innovation Systems, VTT Technical Research Centre of Finland
FINLAND

Mr. Iiro Salkari, M.Sc. (Tech.), acts as a senior research scientist at VTT Industrial Systems and leads Innovations and Decision Making team. His main interest areas are enterprise networks, product and service development, and service business.

Ref: M06P0484