What is Advanced Servitization: Output as a Service?


Pursuing growth is one of the crucial responsibilities of the stakeholders managing a manufacturing outfit. The introduction of lean manufacturing techniques is one example in which processes such as Kanban were codified into standards that reduced waste and improved output. However, after the introduction of lean manufacturing techniques, global growth within the industry flattened out in the decade preceding the present day, which is what Industrie 4.0 and the servitization of the machine within facilities intends to fix.

Introducing output as a service

The process of maximizing output or throughput for the average user of manufacturing equipment can be measured and codified to provide a road map to consistently maximize production cycles. The optimization of production cycles is what output as a service intends to achieve. Output as a service consists of two approaches. First, it involves original equipment manufacturers (OEMs) providing manufacturers with equipment and optimization tools to consistently deliver maximum throughput. In the second approach, equipment owners provide an optimal functioning machine to end users within a product-service system.

Expanding on the first description or approach of output as a service, OEMs assist manufacturing facilities to optimize their growth initiatives by providing additional services or support to improve machine utilization. The additional services can include the insight obtained from benchmark data that highlight the best way to use any equipment to consistently maximize output. Other examples include providing facility owners with predictive maintenance tool kits and real-time remote-maintenance services to ensure downtime is eliminated and equipment is properly used.

Successfully eliminating unplanned downtime and developing real-time in-house response capabilities leads to a direct improvement in the quantity and quality of goods that a facility produces. Thus, unlike lean manufacturing, the implementation of an output-as-a-service initiative is focused solely on growth and improved output quality – not reducing cost.

The second approach to output as a service is the servitization-of-the-machine strategy. In this scenario, the equipment owner or OEM develops a product-service system that manufacturers can access through contractual agreements. The product-service system ensures servitized machines function optimally throughout the duration when the manufacturer or end-user makes use of the equipment. The product-service system also comes equipped with the tools and materials that empower the manufacturer to optimize output for servitized hours.

Digital transformation and output as a service

Delivering output as a service requires knowledge of every aspect of a production cycle. The manufacturer offering servitized equipment or providing optimization solutions must understand how the end-user interacts with servitized machines. Having this knowledge helps when responding to complaints or planning to improve the product-service system.

Gaining insight into a servitized environment starts with tracking important production and machine utilization metrics. Digital-transformation solutions provide the tools for keeping tabs on product-service systems and servitized machines using digital technology. Technological solutions – from the deployment of IoT devices to manufacturing enterprise systems, from edge devices to the digital twin – provide the tools for implementing output as a service. Learn more from the elements of servitization white paper about the role of digital transformation.

Responsibilities associated with servitization of the machine

Servitization of the machine confers important responsibilities to the parties involved with implementing and taking advantage of servitized equipment. To servitize a machine, manufacturing enterprises must have the supporting structures and technologies to ensure optimal output is guaranteed. Thus, the responsibility of tracking machine utilization and handling repairs or maintenance belongs to the OEM providing the services.

The aforementioned responsibilities of the service provider are also outlined within the contractual agreements signed by both parties. Servitized machines are deployed to deliver output as a service, and mismanaging the servitized environment comes with harsh penalties that are outlined within the contract.

The responsibilities of the end-user of the servitized machine are also considered when optimizing output is the goal. The customer is expected to provide the operators and, in some cases, the raw materials to execute production cycles. In scenarios in which throughput quality or quantity is affected due to the inability of the end-user to meet their obligations, any negative outcomes from the poorly utilized servitized equipment are borne by the customer.

The benefits of servitization of the machine

Machine servitization focuses on optimizing output. This is its major benefit. The customer or end-user gets optimized equipment with all the technical support required to improve productivity and meet quantity and quality-control requirements. For small and medium manufacturers which do not have the resources to purchase or maintain heavy-duty equipment, servitized machines provide an affordable means to access expensive equipment.

For large-scale manufacturers, servitization of the machine outsources the repairs, maintenance, monitoring, and management of equipment to more capable hands. The manufacturer simply pays to use optimized equipment when it is required for specific production purposes. The contractual arrangement enables the manufacturer to focus on the job of improving output without any equipment-related challenges.
The benefits of servitization of the machine and offering output as a service-to-service providers create a regular and alternate source of income for OEMs, thus spurring revenue growth. OEMs also get to learn about how their equipment functions in the real world by collecting utilization data and the insight that comes with it. Thus, servitization benefits the service provider financially …while also improving output.


Output as a service and the servitization of the machine provide the manufacturing industry with the opportunity to improve its financial position and output. Output as a service is also the only Industrie 4.0 business model that focuses solely on growth and not on reducing cost. Thus, manufacturers interested in leveraging the smart factory to improve output must develop the capacity to provide servitized solutions or take advantage of them depending on the capabilities of a given facility.

[Courtesy: Exor]


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