Servitization, modularity, and innovation in supply chain management

Book chapter, 2024

Servitization is a value proposition that integrates service with product offerings, from which manufacturers are able to create solutions that add value and nurture long-lasting ties with customers. Services becoming a central part of many manufacturing company offerings have made servitization a business model innovation. Servitization can be quite complex in terms of configuring products with a wide range of services. The question for many manufacturers is how to manage the complexity and balance between innovation and standardization. In this chapter, modularization is introduced as an approach for managing the complexity embedded in servitization, with particular focus on product platform strategies, decomposition, product architecture, service modularity, components, and interfaces. The benefits and challenges posed by servitization and why modularity can be applied to ease the complexity of integrating product and services into new offerings pose many concerns. Concerns include developing product and service platforms, configuration of business models for digital servitization, and supply chain management for servitization. The emerging cross-disciplinary research on servitization, modularity, and innovation opens new research opportunities, such as in transitioning to the servitization supply chain, servitization strategies for sustainability in supply chains, and research methodologies in servitization. Implementation of digital servitization will lead the companies to restructure their supply networks to foster more integration and transparency in information sharing. Moving forward we identify eight opportunities to advance servitization knowledge.