Servitization - A horrendous word but an important concept
The term servitization refers to the concept of companies moving away from providing their products as a simple one off transaction but thinking about it more as a service. Instead of selling people washing machines you sell them a service for cleaning their clothes, instead of selling people a car you sell them a service for transporting yourself from A to B. Rolls Royce pioneered this concept and coined the phrase "Power by the Hour". Instead of selling their engines to the aircraft companies, they sell them a service where they rent the engines along with maintenance and upgrade contracts and charge by the amount these engines are actually used. This document looks at how UK based manufacturing companies are moving to this model to increase their competitiveness in this global market.
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