I was chairing a meeting of the IOM's Operations Development Panel (ODP) this afternoon at Cranfield University. The ODP aims to shape thinking in Operations Management across a range of sectors and one of the topics we were exploring was 'Product Servicisation' which is where companies look to stop selling products and start selling competences.
The classic example is Rolls Royce who sell 'power by the hour' on their aero-engines, so clients have access to the value (a working engine) but avoid the liability. For many companies trying to compete on price, this approach offers the option to differentiate themselves in the market, although it requires careful planning on cashflow and having a robust model.
Cranfield are working on a two year research programme to look at the most effective way of helping companies to 'servicise' their operations and also helping service sector companies to develop products that sell and I look forward to supporting them in this research.
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