Purchasing Department’s Role in the Servitization Transformation

Abstract

Services have become commonplace among consumers where the trend also occurs in business to business markets. Due to competitiveness, risk sharing and adaptation to remain in business, servitization has become of greater importance to stabilize revenue and seek new opportunities. Though there is extensive research on servitization, most research takes an organizational perspective for the needed activities to be performed and not a departmental perspective. Which lead to the purpose of the research; to investigate what role the purchasing department plays in the servitization transformation and how to organize the department for the transformation. The qualitative research combines semi structured interviews at a case company within the automobile industry, two external companies and literature. The first external company is within the aerospace industry, and in the initial stages of their transformation. The second works in telecommunication and servitized back the 1990’s. The data collected from the case company and external companies is analyzed through a thematic methodology. The study presents managerial and academical implications that conclude by strengthening the link between the purchasing department and servitization. Specifically, the purchasing department can contribute by enabling external resources and leveraging market knowledge. Cross-functionality is vital since it will utilize the department’s knowledge and focus on customer value creation. To explore new opportunities with external parties, it can be advantageous to separate a new venture from the original organization, providing the space to test and evaluate it in a measurable and protected manner. When evolved, the company’s context and strategy will determine the optimal layout for the venture.