The manufacturer's value chain as a service - the case of remanufacturing

Abstract

Manufacturing enterprises globally have already largely adopted the product-service strategy into their operations. However, due to gradual commoditization of services, manufacturing enterprises will have to further extend this strategy. One possibility is for manufacturers to servitize, not only their final products, but also a part of their value chain, with the aim of increasing their long-term competitive advantage. In this article, the application of servitization to remanufacturing, as a set of operational and business competences and processes, is conceptualized. By offering remanufacturing as a service, manufacturers will create an additional revenue stream. The synergies created from integrating remanufacturing into an enterprise with a product-service system are scrutinized. The impact of offering remanufacturing as a service (servitizing) is then assessed from the perspective of the competitive advantage of both, the provider and the consumer of the service. Three main sets of implications are identified. The first is that the integration of remanufacturing into a product-service system could increase customer satisfaction through a larger service scope and higher service quality, while decreasing operational costs. Furthermore, it is shown that the higher the level of servitization, the stronger is the positive impact of remanufacturing. The second set of results shows that servitizing remanufacturing can substantially increase the competitive advantage of both the provider and the consumer. While the first two sets of results have industrially oriented implications, the third set constitutes a theoretical contribution through the proposal and conceptual validation of extension of the application of servitization theory. Finally, while the reasoning is of a conceptual nature, it is based on established theories and includes remanufacturing-related industrial cases as a basis for assessment.