University of Groningen

Faculty of Economics and Business

LEAN SERVITIZATION: ADDING VALUE TO

THE PRODUCT-CENTRIC AFTERSALES

PROCESS IN LIGHT OF DIGITIZATION

Martin Rudnick

S2943956

m.rudnick@student.rug.nl

A Master Thesis submitted to the Faculty of Economics and Business at the

University of Groningen in partial fulfillment of the requirements for the Degree of

Master of Science in the Technology and Operations Management program.

Groningen

20th June 2016

Supervisor: Dr. Daryl J. Powell

Co-assessor: Dr. Jan Riezebos

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© 2016

Martin Rudnick

ALL RIGHTS RESERVED

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ABSTRACT

A shift from ‘pure product’ to integrated product-service systems for manufacturing

firms is observable bearing benefits for both, the organization and the customer. In literature

drivers and enablers of this change, such as servitization of manufacturing, lean, smart devices

and the Internet of Things have been discussed extensively and receive growing attention of

practitioners. New technology developments in combination with the advent of a growing amount

of information, lead to a mind-shift across companies and opening up additional revenue streams

for organizations in the aftersales market. Hereby, the lean thinking approach provides a

promising mean to enhance value in the aftermarket by altering an organizations’ aftersales

business model in the digitization era.

The purpose of the paper is to outline the current state of research and contribute to the growing

discussing of lean in the digitization era. Thus, the paper follows a case research approach and

aims to examine characteristics of the aftersales process of a customized products domain. Later

on, it shall help to streamline and guide through an organizations’ product-centric aftersales

process. Findings show, that in product-service systems lean maturity and collaboration across

departments are crucial for success. The creation of innovative solutions in conjunction with

support of higher management level is needed to be competitive. Surprisingly, organizations are

also willing to increase initial sales when reshaping their current product-oriented service. Within

the conducted case researches organizations point out their endeavor to deliver innovative

solutions, but often struggle due to a missing link between ready-to-use technology and making

the technology ready for release. A lean servitization framework has been sketched out to support

organizations in their delivery of aftersales services. Further, a shift from reactive aftersales

service activities towards a predictive approach is observable in delivering digital product-service

system.

Keywords: Lean Service; Internet of Things (IoT); product-service systems (PSS); servitization of manufacturing;

business model

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PREFACE

This thesis presents the final work of the master studies in Technology and Operations

Management at the University of Groningen, Netherlands. It reflects the documentation of my

undertaken research during the time from February 2016 to June 2016. Specifically, it presents

the results of a study towards Lean Servitization within the digital era. In detail, a closer look is

drawn to valuable information extracted from the product life cycle and subsequent

implementation into a company’s aftersales business model.

Multiple persons have contributed in different ways to make this master thesis happen.

Weather their contribution was of academic, practical or supportive nature, all deserve a huge

“Thank You”. I would therefore first like to express my gratitude to my thesis supervisor Daryl

Powell and co-assessor Jan Riezebos for their time taken, remarks and hints on the topic on hand.

The weekly hold SCRUM meetings gave valuable input, clear advice, support and served as a

roadmap throughout the entire master period.

I would also like to thank Ralf Wieland from Kendrion N.V. to make an explorative case

research happen at their organization and being the contact person throughout the time.

Furthermore I would like to thank Maarten van Cann and Saskia Scheffers from NedTrain for

their time to show me their operations and being available for questions and interviews.

Finally I would like to express my deepest gratitude to my family and friends for being

helpful and supportive during the entire. Without them as backbone this thesis would not have

been possible in the way it is presented.

Groningen, June 2016 Martin Rudnick

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LIST OF TABLES

Table 1: Overview of Case Studies ................................................................................................ 14

Table 2: Generic BMC Template Questions (adapted from Osterwalder & Pigneur, 2010) ......... 20

Table 3: Roadmap towards Lean Servitization (own table) ........................................................... 23

Table 8: Business and Manufacturing Context of Case Company B – NedTrain .......................... 30

Table 9: Lean Context of Case Company B – NedTrain ............................................................... 30

Table 10: Aftersales Context of Case Company B – NedTrain ..................................................... 31

Table 11: Digitization Context of Case Company B – NedTrain .................................................. 32

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LIST OF FIGURES

Figure 1: Business Model Canvas (Osterwalder & Pigneur, 2010) ................................................. 8

Figure 2: Preliminary Conceptual Model (own figure) .................................................................. 11

Figure 3: Lean Digitization Canvas (own figure; based on Osterwalder & Pigneur, 2010) .......... 19

Figure 4: Theoretical Framework for Lean Servitization (own figure).......................................... 22

Figure 5: Revised Conceputal Model (own figure) ........................................................................ 25

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LIST OF ABBREVIATIONS

Auto-ID – Auto-Identification

BMC – Business Model Canvas

B2B – Business-to-Business

B2C – Business-to-Customer

CIP – Continuous Improvement

ETO – Engineer-to-Order

IDS – Industrial Drive Systems

IoT – Internet of Things

KPI – Key Performance Indicator

LDC – Lean Digitization Canvas

M2M – Machine-to-Machine

MIT – Massachusetts Institute of Technology

MRO – Maintenance, Repair, Overhaul

MTO – Make-to-Order

NS – Nederlandse Spoorwegen

NTR – NedTrain

OE – Operational Excellence

OEM – Original Equipment Manufacturer

PSS’s – Product-Service System’s

RFID – Radio Frequency Identification

R&D – Research and Development

8D – Eight Disciplines

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CONTENT

ABSTRACT .................................................................................................................................................... iii

PREFACE ...................................................................................................................................................... iv

LIST OF TABLES ............................................................................................................................................. v

LIST OF FIGURES .......................................................................................................................................... vi

LIST OF ABBREVIATIONS ............................................................................................................................. vii

1. Introduction ......................................................................................................................................... 1

2. Theoretical Background........................................................................................................................ 4

2.1 Lean in the Product-Service Context ............................................................................................ 4

2.1.1 Servitization .......................................................................................................................... 4

2.1.2 Product-Service Systems ...................................................................................................... 5

2.1.3 The Lean Philosophy ............................................................................................................ 5

2.1.4 Business Model .................................................................................................................... 6

2.2 Digitization ................................................................................................................................... 8

2.2.1 Smart Technology................................................................................................................. 9

2.2.2 Internet of Things ................................................................................................................. 9

3. Research Design ................................................................................................................................. 11

3.1 Methodology and Conceptual Model ......................................................................................... 11

3.2 Case Protocol .............................................................................................................................. 12

3.3 Data Collection and Data Analysis .............................................................................................. 12

4. Case Analysis ...................................................................................................................................... 13

4.1 Kendrion N.V. – Germany ........................................................................................................... 14

4.2 NedTrain – Netherlands ............................................................................................................. 16

5. Discussion ........................................................................................................................................... 19

5.1 Lean Digitization Canvas ............................................................................................................. 19

5.2 Theoretical Framework .............................................................................................................. 21

6. Conclusion, Limitations and Further Research ................................................................................... 26

APPENDICES ............................................................................................................................................... 27

REFERENCES ............................................................................................................................................... 38

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1. Introduction

In today’s environment agility and innovation of manufacturing firms are of strategic

importance and provide new sources of income (Goldman & Nagel, 1993). Driven by

globalization and digitization, a trend for manufacturing firms from ‘pure product’ operations to

integrated solutions (Brax & Jonsson, 2009) and product-service systems (PSSs) is recognizable

(Baines et al., 2009). Those systems are of great strategic potential and imply value-adding

activities to the product. Thus, organizations have a chance to generate value by reshaping their

aftersales business model. One philosophy to streamline operations within organizations is ‘lean

thinking’, originating from manufacturing and adapted successfully in several domains. In lean

value is created by reducing waste in the process (Womack & Jones, 1996). As Malmbrandt and

Ahlstrom (2013) and Baines (2015) point out, lean services for manufacturing organizations are

still in its beginning and little research has been done yet.

First described by Vandermerwe and Rada (1989) servitization promotes intense customer

relationship and goes beyond a service strategy to the adaption of new technologies and a

disseminated reshape of the business strategy. Regarding this background, the concept of

servitization entails new value-adding opportunities for manufacturers within the aftersales

process (Mathieu, 2001). In particular, this paper focuses on product-centric servitization. This

terminology describes a set of services that is directly related to a product offering. Activities,

such as maintenance, repair, overhaul and/or support are examples of service offerings and are

applied to a centrally located product. Advanced services examples include Rolls-Royce

Aerospace with their power-by-the-hour model, Xerox with its document management service

strategy or HUK-Coburg with its newly motor insurance approach. Consequently, the innovation

of product-oriented service strategies experiences growing interest among researchers and

practitioners (Visnjic, Wiengarten & Neely, 2016; Resta et al., 2015). A prevailing challenge is to

adapt lean principles in servitization and shape the product-oriented aftersales process

accordingly.

Within the servitization context, the Internet of things (IoT) plays an important role as

information from the extended product lifecycle are captured and adds value to the aftersales

process (Kiritsis, 2011; Fleisch,Weinberger & Wortmann, 2014). IoT envisions a future concept

to translate the physical world into a virtual one, in which smart devices replace computers step-

by-step and communicate with each other (e.g. M2M -- machine-to-machine). The provision of

real-time data is a core feature of IoT. Tao et al. (2015) investigated the applicability of IoT in

manufacturing with the aim to find a way to make the transition from product-oriented

manufacturing to a service-oriented manufacturing. Similarly, Mejtoft (2011) sees the IoT

concept as value creation tool and suggested that a reinvention of business models is crucial when

applying IoT technology. While there is literature to business model innovation (Gassmann,

Frankenberger and Csik, 2014) and IoT business model builder (Bilgeri et al., 2015) available,

none of them provides a linkage of lean and digitization in their researches.

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Aforementioned developments point out the strategic decision-making process and

complexity that is involved by replacing one-time product sales with ongoing, value-adding

approaches in the digitization era. As identified by Baines et al. (2009) and Resta et al. (2015)

lean operations are still lagging behind in product-oriented PSSs. A clear linkage of how IoT and

Lean can be incorporated into a digital PSSs is lacking. Within lean servitization, waste reduction

is crucial in order to win in the aftermarket. Specifically, this paper takes a closer look at the

current product range and customer base of a company and brings it in context with their

aftersales business model. In light with this, following research questions are defined:

Research Questions

1a: What product-lifecycle information are of importance for lean servitization?

1b: What information level layers are touched upon?

2: How can the gathered information are brought into context with an organizations’

aftersales business model?

By following a case research approach, this study aims to examine characteristics and

underlying factors that are of importance for winning the aftermarket for a customized product

domain. Research question 1a (RQ1a) aims on identifying the nature of information that are of

importance in lean servitization. Numerous perspectives within an organization are going to be

looked at, ranging from an organizations business and manufacturing context to their aftersales

context. In RQ1b, a separation of the usability of information is being made, by differentiate

between strategic, tactical and operational information related to the lifecycle of the products and

services. Further, it is a first step to separate between useful and useless characteristics to find out

common patterns. Later, RQ2 focuses on the creation of a theoretical framework that incorporates

aforementioned characteristics. The constructed framework aims to generate additional value to

customers, eliminate waste, improve effectiveness and reduce time-to-market by making use of

lean and IoT. Build upon the purely the suggested framework of Cohen, Agrawal, Agrawal

(2006), it also serves as a guideline to provide effective product-oriented service, related to a

customized product domain.

Against this background, the paper contributes to the emerging field of research in lean

operations of PSSs as currently there is a lack of how to provide efficient aftersales service. The

objective is to extract crucial information for product-centric services in a high variety, low

volume domain and guide organizations on how they can assess and apply these information into

their individual aftersales business strategy. Further, this study looks for constraints and

influential factors that have effects on the lean servitization process.

For a better understanding, the paper is structured as follows: Section 2 presents the

necessary background terminology. In particular the lean thinking approach, product-service

systems, business models and related terminology to digitization is examined. Section 3 exposes

the proposed methodology to investigate this topic in-depth with an explicit explanation of the

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building blocks and the conceptual model. Section 4 presents the case study analysis, followed by

the findings and discussion section and subsequent conclusion, limitations and further research.

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2. Theoretical Background

This section presents background information of the paper. The terms being elaborated

more in detail are: lean in the product-service context and digitization. First mentioned reflects

the lean thinking approach in relation to product-service systems (PSS). More specifically the

terminology of servitization is examined carefully with its link to business models. The second

part digitization then elaborates on smart objects and an example of itself - the Internet of Things

(IoT). In both sub-chapters the current state of research is pointed, with respect to the integration

of lean and IoT.

2.1 Lean in the Product-Service Context

2.1.1 Servitization

Servitization can be described as the capability and processes of organizations by selling

products and associated services to create and add value (Neely, 2008). First defined by

Vandermerwe and Rada (1989) in the European Management Journal article with the title

‘Servitization of Business: Adding Value by Adding Services’, servitization offers entire market

packages or bundles that include goods, services, support, self-service and knowledge. The

primary aim is to add value to the original product sale. Later, Wise and Baumgartner (1999)

argued that the product sale only accounts for a small portion of the revenue. They summarize

that in automotive and personal computers industries the ongoing costs are five times the initial

purchase price and in the locomotive industry the total expenditures are even 21 times of the

original purchase price. Although different research communities use a different terminology for

the same concept (Germany: Industry 4.0; Scandinavia: Product-service systems; UK/US:

Servitization) a change of the value downstream towards the customer is observable (Wise and

Baumgartner, 1999). Therefore, servitization represents the mind change of organizations to

change their business models from a ‘pure-product’ view towards integrated systems.

Barnett et al. (2013) refers to servitization as a rather strategic decision that has the aim to

gain value from the service with associated products. They state that incremental changes are

insufficient and instead an entire change of the strategy is needed. Hence, the concept of

servitization provides a mean to organizations to find additional profit centers by adding ongoing

service activities to its product. In order to make use of the extra source of income a paradigm

shift of the aftersales business model is crucial.

A framework to generate revenue from the aftermarket is presented by Cohen, Agrawal

and Agrawal (2006). They recommend service activities should be seen as revenue-generating

product rather than cost drivers and proposed a six-step approach: (i) distinction of which

products will be supported (ii) separate/offer different service qualities, i.e. platinum vs. silver

service (iii) select a suitable business model, i.e. dependent on the product offering and if product

failure is tolerated by customers (iv) determine organizational structures, i.e. establishment of

joint services-manufacturing teams to set priorities upon parts (v) creation of post-sales supply

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chain, i.e. prioritization rules for customers and attributes that are of importance for customer,

such as speed, quality, security (vi) monitoring of service performance. The framework is being

used as a base for the development of the proposed theoretical framework and is adapted in light

with digitization. By following the argumentation of Baines et al. (2009), additional value can be

generated by reshaping an organizations’ aftersales business model. Due to the fact that the

framework covers a complete end-to-end view of the product-related service process, it has been

found useful for this research.

2.1.2 Product-Service Systems

Parallel to servatization the term product-service systems (PSSs) has been established in a

different research community. PSS is defined as ‘a marketable set of products and services

capable of jointly fulfilling a user’s need. The product/service ratio in this set can vary, either in

terms of function fulfilment or economic value.’ (Goedkoop et al., 1999). Later Mont (2000)

expanded PSSs to a combination of product and services to fulfil customer’s needs while having

a small impact on the environment. Thus, PSSs can be applied when a firm offers a mix of

product and services and has great potential to achieve economic and environmental efficiency.

Enterprises show growing interest in the past decade to implement PSSs into their business

strategy (Tukker, 2013). In comparison to a ‘pure product’ environment, PSSs entails three sub-

distinctions which are dependent on the level of service: (i) product-oriented, (ii) use-oriented

and (iii) result-oriented (Tukker, 2004). First mentioned adds some services to the initial product,

in the use-oriented context the product is still owned by the provider but offered in a differ form

and finally in the result-oriented branch provider and client agree on a result regardless the

involved product.

Similar to servitization, the concept of PSSs show growing importance for a company and

is critical to an organizations success in the future. Due to the growing competitive markets and a

widespread decrease in margins, streamlining and improving the aftersales process offers a way

of value generation and enhancement of customer satisfaction (Vandermerwe & Rada, 1989).

One mean to improve the service process is the use of proven tools, such as lean. Although the

lean approach emerged within the manufacturing context, several authors’ state that lean is

applicable in the aftersales process (Ahlstrom, 2004; Baines, 2015). In light of this the lean

approach is discussed and linked to current research in PSSs.

2.1.3 The Lean Philosophy

Derived from the Toyota Production System, lean is a management philosophy and has

been successfully implemented into several fields, such as the automotive industry or healthcare.

Originating from the automotive industry, the term lean manufacturing became popular by

Womack, Jones and Roos (1990) and is defined as doing more with less. Later Womack and

Jones (1996) provided a vision of what lean is and identified five principles on which lean is

based upon: (i) provide the value customers actually desire; (ii) identify the value stream and

eliminate waste; (iii) create continuous flow; (iv) pull production based on customers

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consumption; and (v) the pursuit of perfection. They revealed that a general distinction between

value-adding and non-value adding processes should be made. Examples of lean tools embrace

Value Stream Mapping, Six Sigma, 5S, Kanban and the like. In manufacturing, lean tools support

the visualization of the work flow and simplify the complexity of the operation. The desire to

adapt lean in the product-service context is more difficult to realize because delivering services is

more complex and requires different approaches in product-service design, the organizational

strategy and transformation (Baines et al., 2009).

Generally lean has been linked a lot to aftersales process in recent years. Examples of

forerunners are General Motors, Caterpillar or Saturn Corporation with its aftersales service

business. By providing top aftersales service with making use of lean, it resulted in an efficient

supply chain. Abdi et al. (2006) related the initially mentioned five principles of lean into the

service context to point out main characteristics of lean services. They found out similarities

between the lean approach and the service role models. Recent studies revealed characteristics

and enablers of lean operations in product-oriented PSSs (Elnadi & Shehab, 2015; Resta et al.,

2015). Overlapping results show that internal human resources, supplier and customer relation as

well as work progress and management strategy are of necessity when designing PSSs more

effectively. Therefore, the lean philosophy can be seen as a positive mean to improve the

aftersales process. Following a lean servitization strategy bears several opportunities for a

company to add value to their product-oriented PSSs and customer value. Consequently, lean

plays a vital role within the product-service context. By investigating a company’s product-

centric aftersales processes this study aims to make lean even more applicable in the context of

digital PSSs.

Recently, lean experiences growing interest to combine it with digitization. Researcher

within this field try to establish common pattern across different areas, for instance lean applied

to digitize project management” (Nicoletti, 2010), lean applied to digitize procurement (Nicoletti,

2013), lean in combination with the smart factory approach (Radziwon et al., 2014) or lean in an

IoT environment (Wang, 2015). Main findings of their researches include, that an organizations

internal process have to be first streamlined, before applying digitization means. Further, they

point out that a process has to be mapped out to make lean and digitization to a value added mean

in an organization.

2.1.4 Business Model

Although the terminology business model is widely used, a clear definition is often

missing (Morris, Schindehutte & Allen, 2005). Steward and Zhao (2000) define it as “a statement

of how a firm will make money and sustain its profit stream over time”. Chesbrough and

Rosenbloom (2002) point out a more detailed and operational definition of a business model.

They state that the six functions of a business model are (i) express the value proposition, i.e. the

additional value for users with regards on the technology; (ii) identify the market segment, i.e.

what users do profit of that technology and how is revenue generated; (iii) the definition of the

value chain structure; (iv) estimation of cost and profit streams; (v) description of the

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organization within the network and (vi) a formulation of how competitive advantage can be

gained and hold over rivals. It can be concluded that business models intend to create sustainable

competitive advantages in specific market domains. Business Models have been developed and

applied successfully into different industries. A success story is the in 2003 introduced Apple

iPod. Apple revolutionized portable entertainment and created new markets by combining a good

technology with a great business model. Unless earlier companies, such as Diamond Multimedia

or Best Data, they provided a mix of hardware, software and service in their innovative business

model. Other examples include Wal-Mart and Target with their pioneering business model or the

rapid increase of low-cost US airlines of the market share to over 50% (Johnson, Christensen &

Kagermann, 2008).

The strength of business models is that they visualize the entire process of creating,

delivering and capturing value. Kindström (2010) identified key aspects to consider when

developing a service-based business model. The importance lies in the development of a holistic

scheme with a strong link to the customer in order to offer dynamic services according to their

needs. Driven by both – new customer demands and competition – product-based companies

need to develop a concept in which they can sell their services at best. Amit & Zott (2012) came

up with a set of questions that need to be tackled when inventing new business models. They

state, that business model innovation provides an alternative cost saving tool compared to product

or process innovation. Consequently, well-constructed aftersales business models provide

significant benefits for organizations across industries.

Neely (2008) described the interplay of service business model innovations of

manufacturing organizations with product innovation. Service business model innovation

describes the shift from “pure-product” business models to a “service-oriented” model

(Cusumano, Kahl, and Suarez, 2014). Visnjic, Wiengarten and Neely (2016) found out that a

successful interplay between the service business model innovation and product innovation

results in long-term profit. On the contrary, solely focus on the service business model innovation

results in short-term gains and hinders long term success.

In literature, Gassmann, Frankenberger and Csik (2014) present the magic triangle

approach as a tool for business model innovation. It is built upon three important cornerstones,

namely Value Proposition, Value Chain and Revenue Model and provides a simplified tool to

depict a company’s service activites. Similar, Osterwalder and Pigneur (2010) released the

Business Model Canvas (BMC) template with nine reoccurring elements, visualizing the

product’s value proposition and distribution strategy to the customers in 2008. Due to the

different benefit that each approach bears, a selection according to the case on-hand, personal

preferences and adaption suitability should be carried out. While first mentioned approach

provides a shortened version and operations can be seen at a glance, the BMC allows a more

detailed transcription of processes. The BMC serves as base in which the findings are built upon.

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Below figure depicts the BMC of Osterwalder and Pigneur (2010):

Figure 1: Business Model Canvas (Osterwalder & Pigneur, 2010)

Osterwalder and Pigneur’s (2010) definition of a business model is “the rationale of how

an organization creates, delivers and captures value.” By taking into account the customer needs,

it can be used for depicting existing or develop new business models and provides a strategic

management tool. Since its publishing date, researchers have expanded the BMC to different

settings and new canvases for specific niches appeared (e.g. Lean Canvas). Figure 2 presents the

published template of Osterwalder and Pigneur with its labels. As the topic of this thesis is lean

servitization the focus is drawn to the elements on the right side, namely “Customer Segments”,

“Value Proposition”, “Channels” and “Customer Relationships”. The reasoning behind this

approach lies in the provision and creation of revenue and more importantly Value Proposition

reflects the most important segment (Gassmann, Frankenberger & Csik, 2014; Osterwalder &

Pigneur, 2010). Similar to lean, it presents the market players and provides a visual tool of how

revenue is captured.

2.2 Digitization

In the past few years attention has been drawn to the topic of digitization, heralding a new

era. Digitization describes the process of converting analog information into a digital format in

order to compute, store and interact with their environment (Miche et al., 2009). Porter (1985)

points out the importance of information for an organization and that it is of strategic

significance. He summarizes that progress and new developments in information technology in

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combination with the available information are the driver for an organization’s competitive

advantage. Therefore, the collection of information and data shows increasing importance for an

organization. For example, within the automotive industry General Motors and Ford collect data

about their car systems and use them to provide additional information to the customer. Similar,

in maritime industries vessels are equipped with ‘smart’ devices and are able to provide real-time

data about the location of the vessel, temperature inside of a container and historical data.

2.2.1 Smart Technology

Constant development in modern technology increases the use of smart devices in

practice. Two components are of importance when talking about ‘smart products’ and shape this

terminology – the physical product and the information product. Enablers of this change are

advances in technology to a more favorable cost-effectiveness balance and therefore multiple

industries get attracted by smart technologies (Mattern & Floerkemeier, 2010). Porter and

Heppelmann (2014) strengthen this statement by arguing that smart products have the ability to

change the value creation process for the customer and also the competition of organizations at

the market. They conclude that smart and connected products have an even larger impact and

commence the next era of IT-driven productivity, affecting different industries directly or

indirectly.

New technology developments in combination with the advent of an enormous amount of

information lead to a mind-shift across companies (Mattern & Floerkemeier, 2010; Kiritsis, 2011;

Kagermann, 2015). Unless lean, digitization does not examine existing operations and takes

action on waste generators, rather it builds a virtual counterpart to the real-world, implementing

information of the product-life cycle. Kiritsis (2011) conducted a case study to investigate the

importance of a closed-loop product lifecycle management. Findings show that a trend is

observable in incorporating information from the extended product lifecycle (use and end-of-life

phase) obtained through smart products. Similar, Främling et al. (2013) point out that smart

products show growing interest in industry and in the everyday life. Especially in manufacturing,

the use of smart technology to capture information, such as Big Data, radio-frequency

identification technology (RFID) or Internet of Things (IoT) require companies to go beyond lean

and being agile. Tao et al. (2015) addressed issues when shifting from product-oriented

manufacturing towards service-oriented manufacturing. Similar to lean, findings show that

modern technologies, such as IoT, provide a mean to positively contribute to a company’s mind-

shift towards digital PSSs.

2.2.2 Internet of Things

As Mattern and Floekemeier (2010) state, smart technology is a key requirement for the

adaption of IoT practices. The term IoT was initially coined by Brock (2001), one of the founders

of the MIT Auto-ID center. ‘Auto-ID’ technologies describe a wide range of wireless

technologies applications to automate processes and increase efficiency of industry companies,

such as bar codes, radio frequency identification (RFID), biometrics and sensors. Their aim is to

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connect objects to computers to create a digital network. The most promising ‘Auto-ID’

application in practice is RFID, where a tag is placed on a physical object. Retrieving current and

historical information about the product-in-use in real-time is promising to streamline

manufacturing and distribution processes of a product (Welbourne et al., 2009). IoT is one

concept that goes one step beyond RFID and envisions a future vision to integrate the physical

world with the virtual one. During the industrial revolution machines learned to do, in the past

decades they learned to think and with IoT machines shall learn to sense and respond (Miorandi

et al., 2012).

Bearing new challenges and opportunities for various sectors, IoT assesses information of

the extended lifecycle and the information flow within a company. The communication and

information exchange between machines - machine-to-machine (M2M) - is the leading paradigm

towards IoT (Wu et al., 2011). According to Atzori, Iera and Morabito (2010) this shift should

focus on information as the core of communication and networking in order to be a viable option

for an organization. However, current research shows struggle on implementing IoT into an

organizations business model. At this moment no common IoT standard concept exists that can

be used for IoT implementation (Chan, 2015; Kuber, Främling & Derigent, 2015).

Closely related to the terminology of smart devices, is the smart factory. A smart factory

represents the future, in which devices are communicating on a M2M basis and making

decentralized decisions. By making use of the IoT, real-time communication with humans is

possible. Radziwon (2014) describe it as the future of manufacturing, which has not reached its

full potential yet. While a clear linkage between IoT and lean is not established yet, researchers

trying to figure out a way to integrate those two means. For instance, Nicoletti (2010) points out

characteristics when applying lean to digitize project management. He suggests, that in an

intangible environment, such as project management, an increase in digitization is essential for

business process improvement. A second proposition of his work says, that it is important to

streamline processes first before applying digitized means.

Innovation plays a major role in the digitization era, as it represents the search for new

business ideas. Parmar et al., (2014) present in their work five patterns for innovation for

business innovation and relate it to real-life examples, which are (i) augmented products to

generate data, e.g. advanced sensors allow capturing of data in different contexts, such as SKF’s

bearings with their self-powering ability and constant communication; (ii) digitizing pattern, e.g.

3D printing to create spare parts or digital models of a body in healthcare for surgeons; (iii)

combining data within and across industries, e.g. automation of payment in healthcare sector or

collection of delivery pattern to depict traffic jam and optimize software; (iv) trading data, e.g.

the commercial value of information between Vodafone and TomTom, where TomTom is able to

predict traffic jams through information provided by Vodafone and (v) codifying a distinctive

service capability, e.g. cloud computing. Hence, business innovation is closely linked to the latest

technology and requires organizations to adapt them in order to stay competitive.

11

3. Research Design

This section describes the method of use for the research. At first the methodology will be

described, followed by the conceptual model. Further, the data collection protocol will be

discussed, wrapped up by the collection and analysis approach for this research.

3.1 Methodology and Conceptual Model

The proposed framework is built upon a combination of existing theory in literature, an

in-depth explorative onsite case research and two follow-up case researches. This sequential

approach strengthens the robustness of the findings to other domains and enhances the

generalizability. Since the focus of the study are ‘how-‘ and ‘what-type’ questions, a clear link

between the modern phenomenon lean within digitization has not been established yet and it is on

the verge of a new era. A suitable method to answer that type of research questions is case

research, with its focus on developing and testing theory (Voss, Tsikriktsis, & Frohlich, 2002). In

their paper Voss, Tsikriktsis and Frohlich (2002) further point out that a longitudinal case study

enhances the opportunity to observe and identify mechanisms of the relation between cause and

effect. The creation of a new artifact, namely Lean Servitization, shall frame the terminology that

is being used throughout. This study aims to develop a contemporary approach for organizations

with customized products to add value to their aftersales service business model by taking into

account lean and digitization. Below figure represents the preliminary conceptual model that has

been assumed before conducting the research:

Lean Aftersales Service

IoT

+

+

Figure 2: Preliminary Conceptual Model (own figure)

From the graph above it is expected that both, lean and IoT, contribute positively to the

product-centric aftersales service. In particular, it is assumed that an organizations predominant

lean maturity and a comprehensive understanding of lean across all department adds value to the

aftersales process in terms of cost savings, increased speed of the aftersales process and higher

customer satisfaction. IoT strengthens this connection through the growing availability of data

and new ways of communication channels. The effect on the aftersales service result in a win-win

situation, in which the product-service organization improves time of service, increases volume

and fastens internal processing and the customer receives the serviced product faster with new

add-ons or features. Through the growing availability of information it is possible for

12

organizations to detect pattern, which have not been seen before and come up with innovative

solutions.

Multiple sources of evidence for data gathering have been used for triangulation in order

to strengthen construct validity (Yin, 2009). The case studies were used to identify, evaluate and

match patters from a within case analysis in accordance with a theory building approach. In a first

step it was necessary to become familiar with each case and identify case specifics. Later, cross-

case analysis has been applied to identify common patterns (Eisenhardt, 1989). The obtained

results were used to build the theoretical framework for a customized environment in the lean and

digitization era. Various theoretical perspectives have been used for the creation of the Lean

Digitization Canvas and the theoretical framework in order to strengthen internal validity

(Gibbert et al., 2008; Yin, 2009). Reliability and Validity are strengthened through the use of a

well-defined case protocol (Yin 1994).

3.2 Case Protocol

Case study research is appropriate to investigate the context of phenomena in its real-life

setting and meaningful insights can be gained through observing practice. Further, case research

is applicable when variables are still unknown and the interconnection has not been fully

understood (Meredith 1998). In order to standardize data collection and compare results, the

creation of a case research protocol has been established. The case protocol serves as a guide to

be followed for each of the case researches in which it describes the methods, instruments,

procedures and general rules to be followed. It is divided in three phases – pre-visit preparation,

on-site data collection and follow-up activities. Steps to be taken are explicitly described in the

case protocol. Areas that are examined of each company are the business and manufacturing

context, lean context, aftersales context and the digitization context. Later on, the case protocols

shall be used as a base for the analysis of the obtained information and how companies can win in

the aftermarket. The entire data collection protocol of each case can be seen in the appendices.

3.3 Data Collection and Data Analysis

Data and information were gathered in the field during case studies. Various sources of

methods, instruments and procedures to collect data have been used. For the five week

longitudinal case research at Kendrion direct observation through facility tours, informal

conversations with key stakeholders about the topic on hand, structured interviews with experts

(e.g. business unit manager, quality manager, R&D manager, service manager, lean manager

and/or operations manager ) and attendance at meetings and events provide multiple information

sources. The sequential case research at NedTrain included an onsite tour explaining the

aftersales service process with observations and a subsequent semi-structured expert interview

with the lean program manager. For all cases, the onsite interviews were carried out in a separate

room.

13

4. Case Analysis

A case study protocol has been created and later on it has been applied to two case

studies: Kendrion in Germany and NedTrain in the Netherlands. Each case study has been

investigated in terms of business and environment context, lean context, aftersales context and

digitization context. In particular, those four areas represent the core of this research and make it

possible to compare cases and come up with suggestions of how those companies can benefit

from digital PSS solutions. Results of the observation are summarized in Table 1. The

information have been obtained through company tours, informal conversations, semi-structured

interviews (interview questions can be found in Appendix IV) and attendance at meetings.

Cases were selected based on a set of criteria. Most importantly the case companies are

located in a customized domain – high variety, low volume. The application of lean principles

and lean methods for their operations reflect a fundamental prerequisite. Companies operate in

their business for more than 50 years and are well established in their domain. Further, an

aftersales service offering for their customized product has to be apparent. In general, the selected

cases are eager to apply digitization instruments to further increase their revenue streams, provide

innovative solutions and retain/gain customers. For the case selection procedure the company

shall also represent a large sized company.

Characteristics Description Kendrion Nedtrain

Business &

Manufacturing

Context

Lean Context

An overview of the

company’s products and

services shall be given. This

section deals with a

company’s main products to

service, their hierarchy, and

business environment and to

which degree customization

does happen. Further, the

degree of innovation is

investigated.

To which extent does the

company support and apply

lean principles? Particularly,

coaching and guiding of

employee’s towards lean

principles, corporate lean

programs, the areas of lean

application and maturity of

lean is described.

On a supplier pyramid the

company can be considered as

TIER I-TIER II (component

supplier to OEM) with

customized electromagnetic

breaks and clutches for

industrial applications. The

organization is divided by

function and operates in a MTO

environment. The competitive

market requires them to

constantly look for new

solutions for their product-

service offerings. With 22

facilities worldwide and a

workforce of 2700 people they

generated 440M revenue in

2015 and their main focus lies

on the European market.

Use of lean principles mostly

applies to production but also in

management areas. English

classes to staff, feedback rounds

and on-job training helps

employees to grow further. The

use of 8D (Eight disciplines –

process to solve complex

problems) shows a strive

towards process stability

On the supplier pyramid the

company provides service to

OEM products. They are the

service company of NS, their

parent company. The area NS

operates in belongs to an ETO

environment, as trains usually

first need to be designed and

are of high investment. The

market requires NedTrain to

constantly provide running

trains with an increasing

amount of features, such as

A/C, WI-FI, screens, plug in

solutions etc. NedTrain

employs 3500 people and they

perform MRO (Maintenance,

Repair, Overhaul) to NS

trains.

As a sole operating product-

service company, the company

uses lean in their maintenance

activities. They perform MRO

of trains and use visual

equipment (Board, Screen) to

show trains that need to be

maintained, have been

maintained or left the facility.

Further the use of CIP

14

Lean Context

(cont.)

Aftersales

Context

Digitization

Context

How close is the interaction

with the customer? A careful

examination of the channels

of contact, KPI’s,

surveillance of service

activities and the importance

of the aftersales service is

being done.

This part presents the data

sharing/use of real-time

information of the case

studies, the possibility to

apply digitization means and

if awareness of the potential

benefits across the company

is recognized.

(important for lean) and the

awareness of lean is apparent in

key departments. Unlike in

another business unit of their

company, no augumented

reality (short video of how to do

the task) is apparent.

Distinction of the aftersales

service in warranty vs. non-

warranty products. Customers

mostly contact customer service

via phone or submit their claim

online. Departments lack in

collaboration in the process

which results in long processing

times of service claims.

Although service is a strategic

pillar of the organization, it

bears potential.

Pilot study of performance

surveillance at lifts is currently

done. A shift from mechanical

solution to sensors is observable

to add value to the products and

attract additional customers.

However, cost-effectiveness

needs to be considered.

Traceable attributes such as

performance, switch cycles,

temperature, life time duration

are of interest

measures and regular training

sessions enhances this process.

With the “Pit-Stop” program

(service within 24h) they were

able to cut service time by far

more than 50% - This is a so

called Kaikaku approach

(make radical changes to the

system instead of tiny steps)

Close collaboration with NS to

determine date & time of

arrivals of train. 24 hour target

for “Pit-Stop” train. Order for

product-service is security of

passengers, quality of service

& speed. Close collaboration

between departments and after

every shift a feedback and

transition time slot is reserved

to update the following shift.

NedTrain currently works

closely on a pilot project to

make use of real-time data

information to sense potential

failures in advance – success

rate 50%. Management can

also see status of trains on

smartphones. Lead time

reduction and common

understanding helps them to

extract potential benefits.

Table 1: Overview of Case Studies

Table 1 represents the summarized representation about operations at the case companies,

following the described research design in chapter 3. The entire data can be found in Appendix I-

III. A short description of the companies with an extensive within-case analysis to clarify why

and how the companies could benefit from digital PSS solutions is carried out in the following

sub-chapters.

4.1 Kendrion N.V. – Germany

DESCRIPTION

In most electromagnetics markets Kendrion holds a leading position and can be

considered best-in-class and was used for the longitudinal case research. Located in the industrial

division it operates in various fields, such as automotive and machine building. They provide

ready-to-use solutions, manufacture innovative high-quality electromagnet components and the

products are used in daily life, such as cars, lifts, medical equipment, air-conditioning

installations and many more. Most of the customer-specific products are produced in facilities in

15

Germany. A minority of the production and assembly is performed elsewhere around the world.

Strategic pillars for a long-lasting, sustainable relationship with its customers are the provision of

solid know-how, a service-oriented approach and reliability. With their 2.700 personnel,

Kendrion achieved sales of EUR 442 million in 2015. Kendrion's shares are listed on Euronext's

Amsterdam market.

Kendrion is subdivided into five business units and operates on 22 locations worldwide.

The main market is in central Europe. Their headquarters of the business unit Industrial Drive

Systems (IDS), a full-line provider of customized electromagnetic brakes and clutches for

industrial applications, is located in the southern part of Germany and employs more than 200

people. Within their process they apply lean methods in production and perform aftersales

services, such as replacement, repair and customer support. Their business activity and location

within the industrial sector according to predefined criteria, makes this case reasonable to

conduct an in-depth case research for customized products. Customization is being performed on

a make to order (MTO) business production strategy. The MTO manufacturing process implies

that manufacturing of the end product is released upon a customer’s order. Finished goods are

typically customized to buyers’ specifications with minor variations. This creates additional

waiting time for the customer but flexibility and a lower inventory level are the benefits (Gupta &

Benjaafar, 2004).

ANALYSIS

While the organization applies lean in production, other sectors are barely affected of it.

Within production common lean practices, such as 5S or 8D (Eight disciplines – process to solve

complex problems) are performed to streamline the process. Extending the lean thinking to other

areas of the organization could bring possible benefits and related competitiveness, such as faster

processing of claims and related customer satisfaction or cost saving. Through discussions and

interviews different employees emphasized following:

Back and forth between departments to process a customer claim

Lack of centrally located customer center to share expertise

Stash away newly developed technology rather than making use of it

To encounter some of the above mentioned sentences it is conceivable to create a centrally

located order center, which higher management is aware of. By seating employees for a few

hours a day next to each other, expertise is shared and faster processing of claims is possible.

This enables the creation of flow in the processing of the claim and represents one principle of

lean as pointed out by Womack and Jones (1996). Especially in a customized MTO domain,

expertise of key departments is crucial. Additionally, visual boards could serve to visualize the

activities and/or information about the failures and show KPI’s. While in production lean

visualizes the flow of tangible goods, the core thoughts of lean are applied to the aftersales

service. Another beneficial approach could be the use of augmented reality to supply the

workforce with a short video of how the aftersales service should be handled. Further, the use of

16

the SIPOC method (Supplier, Input, Process, Output, and Customer) can help to understand the

process and come up with improvements.

Management recognizes the benefit that customized product-service support bears and

research and development (R&D) is being performed. Digitization plays a vital role in that

process, as new technologies enable the provision of additional value to its customers and hence,

make the product more attractable. However, this process is at Kendrion in its beginning and

further work is needed. Although pilot testing of IoT related technology is being done on

Kendrion products to surveil operations and get real-time information, the entire potential is not

utilized yet. Newly developed technology by R&D is partly in the drawers due to staff turnover

and scarce collaboration across departments. Various solutions to prevent this situation are

conceivable. For instance, short weekly meeting with specialists of all departments about the

current state of operations or performing tiny improvement steps at a time by actively involve

employees can be applied. Currently, this approach exists, namely the existence of a Kenny

mailbox system, but is underutilized. Rather than doing a Kaikaku (a radical change) a step-wise

approach to improve operations is possible.

Other distinctive features that were observed during this longitudinal case study include

the support of higher management and contact channels. Top management level realizes that

additional profits can be realized through an increase of engagement in the aftersales service. For

instance, personalized features or different customer support levels (platinum, gold, silver) can

help to increase the customer intimacy. Also, the creation of an online platform to document the

customer claim and upload failure data of the serviced product provides an opportunity and new

ways to apply lean and IoT to the company. With learning by doing the company can further

utilize the potential of their personnel. Motivating the workforce to personally produce new ideas,

e.g. an award system, helps the company to do better and achieve sustainability in the aftersales

process. When providing aftersales support, the safety for the user of the product is most

important to the company (e.g. electromagnetic break in a lift). Thus, it is crucial that products

are functioning well and potential errors can be perceived in advance to grant safety. Quality of

the product is then also assured. Speed as a measure is ranked behind safety and quality, as it is

less important than those.

4.2 NedTrain – Netherlands

DESCRIPTION

NedTrain (NTR) is a subsidiary of the Dutch Railways company, Nederlandse

Spoorwegen (NS), and performs the locomotive and rolling stock maintenance and repairs of

their fleet. NS has the preferential right of the Dutch Government to be the principal passenger

railway operator. Due to wear and tear of the equipment (trains), NedTrain provides services to

NS and keep the trains in a running condition. The expected lifetime of a train is determined to be

between 40 and 50 years. Majority of the maintenance is being done in the main locations in

Onnen and Leidschendam. NedTrain’s headquarters is located in Utrecht and the company

employs a total of approximately 3500 employees, from which approximately 2500 are doing

17

operational and 1000 administrative work. Generally NTR can be seen as a large sized company

that is operating independently of their parent company NS.

The ratio of planned maintenance and unplanned maintenance is about 70:30 (percentage

of all maintenance activites). Planned maintenance occurs in intervals of three months to ensure

safe travels. Unplanned maintenance, such as breakdowns, A/C problems, engine problems, is

performed as a reactive measure. The range of maintenance activities reaches from small bolts for

replacement up to complete engines. Maintenance is often subject to regulations of the Dutch

Government. In the location at Onnen four tracks are used for maintenance service. Maintenance

personnel works in three shifts, each eight hours and after every shift discussion rounds and

feedback for improvement are being done. Within the last few years they introduced and

implemented successfully lean measures in operations. The recent introduction of “Pitstop” can

be seen as a Kaikaku approach to radically change operations. “Pitstop” means that once a train

enters the facility the target is to perform repair within 24 hours on one dedicated track. They

were able to cut down the needed repair time by far more than 50% by doing this change. Visual

equipment, such as the lean board or time system on a TV, supports them to monitor their

performance and see the current status in operations. On top, executives have access to the

current maintenance status of all trains on their smartphones. Similar to Kendrion, NedTrain

follows the order of safety, quality and speed, meaning that all attributes have to fulfilled in

mentioned order in their aftersales process. Safety for passengers, quality of their products and

lastly time needed to perform aftersales service.

ANALYSIS

While the aftersales process of trains has experienced immense improvement through the

Kaikaku approach, it still holds room to perform better. The current predictive maintenance

accuracy of about 50% of engines is not satisfactory and pursuing a higher percentage bears

potential for further improvement. R&D is crucial to utilize the current state of technology and

connecting it to new IoT solutions. Hereby, the connection between the original product and the

latest technology plays an important role. Transmission of the real-time data and analysis are

follow-up steps, but they are highly dependent on the IT infrastructure.

Next to improving the forecasting of failures, the maintenance of trains other companies bears

potential. By providing aftersales service to trains other than NS, new revenue streams can be

utilized. However, this also bears risk and challenges as know-how could be lost or other trains

require different spare parts, machines to repair, different specifics and the like. Also, separating

the maintenance of the trains in sections (top, middle, bottom) could lead to a faster maintenance

of the trains. When looking at the current transmission of the data to the facility, it becomes clear

that the issue/report lacks in terms of what needs service. Often a low understanding about the

causes of the train drivers is the reason. Instead of performing a root-cause analysis, quicker

processing and release could be the benefit.

18

Currently the company applies the idea of tiny improvement steps, utilizing the ideas and

suggestions of the entire workforce. This procedure has shown overall improvement within the

aftersales service and enhanced cross-departmental collaboration. Although the success of the

suggested improvements is undoubtable, further ideas of strategic importance are required. For

instance, NedTrain could benefit from using 3D printers for small spare parts. Instead of buying

or storing them, new technology enabled the use of advanced solutions and therefore can further

contribute to their current success. Also, augmented reality could be applied to show maintenance

or repair personnel short sequences of how to perform aftersales service correctly. Advantages

could result in quicker release of the trains and a more accurate and qualitative aftersales service

(Parmar et al., 2014). In general it is of even more benefit to implement latest technology and

shift towards a predictive maintenance strategy. Within predictive maintenance it is of

importance to use the growing amount of data in the correct way. The increasing availability of

real-time data about operating trains and subsequent analysis, require skilled personnel and

filtering of important information is required.

19

5. Discussion

This chapter discusses the findings and presents the developed Lean Digitization Canvas

and related theoretical framework.

5.1 Lean Digitization Canvas

This section describes the development of the Lean Digitization Canvas (LDC), a

suggested business model that can help companies to depict their current aftersales service. It is

also applicable to the production process and other areas of interest. After describing and

analyzing the aforementioned cases to identify common patters (Eisenhardt, 1989), the LDC has

been developed to incorporate the two pillars lean and digitization. It also serves as a first step to

answer RQ1 and RQ2 of how lean servitization can be brought into context of a company’s

aftersales business model. Restating the research questions, shall help the reader to follow the

line of thought:

1a: What product-lifecycle information are of importance for lean servitization?

1b: What information level layers are touched upon?

2: How can the gathered information are brought into context with an organizations’

aftersales business model?

Figure 3 shows the suggested LDC, a modification of the BMC template of Osterwalder

and Pigneur (2010:

Figure 3: Lean Digitization Canvas (own figure; based on Osterwalder & Pigneur, 2010)

20

Above figure includes findings of the case analysis and serves to help companies to depict

and improve their current aftersales service process. Sequential-case analysis was carried out in

order to improve understanding and increase generalizability of the suggested business model. In

terms of lean maturity, both companies scored medium to high (subjective observation) leading

to the conclusion that “Lean” is one key element to succeed in aftersales services. While teaching

the workforce that lean concept, they should be actively involved in doing the changes. Findings

are underpinned through an employee’s understanding of lean and implemented corporate lean

programs. Especially in NedTrain this has shown immense improvement in operations. This is in

line with Bortolotti, Romano and Nicoletti (2009), where they investigated the process

improvement of pure service-providing companies by applying lean. In particular, an

organization shall have developed a mature lean thinking approach and score high on lean

implementation across departments.

As mentioned before, the BMC of Osterwalder and Pigneur (2010) build the fundament

with the four attributes customer segment, channels, value proposition and customer relationship.

Those four attributes represent ways to deliver value to the customer and shows the company’s

interaction with the customers. Specifically, a company shall ask below example questions when

investigating their current operations:

CATEGORY EXAMPLE QUESTIONS Customer Segments

Channels

Value Proposition

Customer Relationship

For whom are we creating value?

Who are our most important customers?

What will your customer experience when they buy your product or service?

Through which Channels do our Customer Segments want to be reached / status now?

How are our Channels integrated?

Which ones are most cost-efficient?

How are we integrating them with customer routines?

What value do we deliver to the customer?

What bundles of products and services are we offering to each Customer Segment?

Which customer needs are we satisfying?

What type of relationship does each of our Customer Segments expect us to establish and

maintain with them?

How are they integrated with the rest of our business model?

Table 2: Generic BMC Template Questions (adapted from Osterwalder & Pigneur, 2010)

While notepads help to visualize and answering above questions, the lean thought shall

not be neglected. For instance, reflecting on current procedures and actively involve key

stakeholders in the process can help to generate new ideas of how to reduce waste and streamline

operations. Further, in lean one principle is about pulling (Womack & Jones, 1996). As it is

observable, the arrows are showing from value proposition to the customer, meaning that the

customer pulls the value. During the case studies it became obvious that every customer has a

different view about value. Some required immediate processing of their requests, others were

more focused on the quality of the aftersales service. This requires a company to be innovative

and come up with sophisticated solutions in light of digitization (Parmar et al., 2014).

21

The value proposition part in figure 3 is highlighted yellow and implies the actual value

generation activity to the customers. Fleisch, Weinberger and Wortmann (2014) present in their

work a five layer value creation model in IoT-solution with a physical and a digital world in order

to achieve customer value. These five layers are also apparent in the Lean Digitization Canvas,

when linking back their findings to this case research. The physical world includes two layers,

namely the physical entity (the product) and the sensors/actuator (current technology). On the

opposite the digital world includes the layers of digital services (i.e. mobile services for

smartphones or front-end) and analytics (i.e. analyzing, synchronizing of data or back-end). In

particular, security, structure and content management are related to the back-end, whereas the

users interface and continuous monitoring are related to the front-end. Both, physical and digital

world should be connected to leverage existing functions with the opportunity of new services. In

both research cases differences are apparent in the activities of aftersales services provided and

size of the serviced products. The applicability and use of digitization means differs between the

two companies. Whereas Kendrion currently is testing a shift from mechanic collection of data to

sensors with pilot testing, NedTrain appears to be one step ahead already receiving some real-

time information about their fleet, shifting towards preventive maintenance. Generally, in both

case researches this seems to be a prevailing challenge and is the core to deliver value to the

customer.

Also, Value Proposition is the area where RQ1 comes into play. Information are captured

from the utilization phase (growth, maturity, decline) of a product’s lifecycle, depending on the

five layers mentioned before. The better a company connects the physical and digital stream, the

more information can be gathered. This affects all management layers and has to be

communicated from top to bottom. Especially, information about performance, temperature,

activity (on-off) wear & tear, geography and application area (car vs. truck) are of interest.

5.2 Theoretical Framework

In combination with literature review, the comparison and analysis of the two cases,

served as the base to build the theoretical framework for Lean Servitization, as shown in figure 4.

Based on the article of Cohen, Agrawal and Agrawal (2006), it presents an extension and updated

version in light of digitization and aims to answer the research questions in this paper.

Specifically, a process is presented to achieve lean servitization, mentioning information of

importance and relate them to different phases. Finally the sub-steps are brought into context with

an organizations’ aftersales business model.

The proposed framework focuses on superb execution, shall be highly efficient and

effective in streamlining operations, and reduce costs and cycle times in digital PSS’s. Therefore

cross-departmental collaboration and qualification of employee’s is crucial for success and IT

security and IT architecture plays a vital role. In order to answer the research questions, the

proposed framework plots a sequential nine-step approach with the rationale to show crucial

information for lean servitization. Later, the various steps are brought into context with the earlier

presented Lean Digitization Canvas.

22

Customer Relationship

Value Proposition

Customer Segments

Operational/ Tactical Level

1. Identify Products

2. Customer Intimacy

3. Determine Operating

Domain

PRE-PHASE SERVICE-PHASE POST-PHASE

A) INDIVIDUAL

SERVICE STRATEGY

4. Type of Service

6. Access Ressources

8. Monitoring

C) SUSTAINABILITY &

OPERATIONAL

EXCELLENCE

Channels

9. Coaching & Guiding

Cross-Departmental Collaboration

B) PERFORM PRODUCT-

ORIENTED SERVICE

7. Interim Period

Strategic Considerations

5. Commercial Value

of Information

Lean Maturity

Figure 4: Theoretical Framework for Lean Servitization (own figure)

As argued by Ives and Mason (1990) the customer value creation life-cycle is built upon

four consecutive phases, namely requirement analysis, acquisition, ownership and disposal. The

first two phases can be seen as “pre-customer value” phases (i.e. perception of customer needs,

adaption to market) and ownership describes the actual activity (utilizing and operating the

product) and is some sort of “post-customer value” phase (i.e. training, monitoring, evaluating).

Similar, the proposed framework consists of three phases – pre-aftersales service, the carry-out

service and a post-service phase. Within those phases a total of nine sub-steps have been found

crucial for organizations to deliver lean servitization. An overview of the nine steps is presented

in the following table:

23

GROUP STEP # EXPLANATION

CU

ST

OM

ER

SE

GM

EN

TS

1. Identify Products

(Innovation)

2. Customer Intimacy

3. Determine Operating

Domain

4. Type of Service

5. Commercial Value of

Information

6. Access Resources

7. Interim Period

8. Monitor Performance

9. Coaching & Guiding

Questions to be asked should include: which products are going to be

supported/ discontinued for service; how critical is support; are there

synergies between products? Management should look out for current

innovative business solutions that could be applied to the service process.

Customer needs are described and a strong customer relationship is

determined. Personalization (e.g. customer’s logo) on products if possible.

This generates additional value to a company’s products.

B2B or B2C environment? Does the company provide support for

customized or standardized products? Are there any procedures/processes

of similar companies available?

Determination of after-sales organizational structures, e.g. does the

company have warranty-related support and non-warranty-related support?

By gathering / processing this information, the user/producer might benefit

during the after sales period. For instance, information about the products

behavior in use could be beneficial for component suppliers to improve

their aftersales process and/or initial sales offerings.

This step includes processing the claim from ramp-to-ramp, provide the

actual aftersales service by using internal resources.

Provision of a certain time frame to check and see if service was completed

successfully for a pre-determined time (e.g. two weeks)

This step includes visualization of performance through continuous

monitoring equipment and communication of those to employees.

The last step enhances employees for an effective and efficient provision

of aftersales service in topics such as lean and digitization through

discussion rounds. This improves the motivation of staff and results in

higher quality of the aftersales service.

VA

LU

E

PR

OP

OS

ITIO

N

CU

ST

OM

ER

RE

AL

TIO

NS

HIP

S

Table 3: Roadmap towards Lean Servitization (own table)

Treacy and Wiersema (1993) point out three principal dimensions that are of importance

for customer value:

i) Product Leadership: an organizations focus on innovation and product performance

ii) Customer Intimacy: describes the satisfaction of customer needs and a strong customer

relationship is determined

iii) Operational Excellence: the aim is to operate cost-efficient in order to reduce price/cost

Customer disciplines ‘i’ and ‘ii’ can be related back to the “pre-aftersales service” phase.

Hereby, the organizations individual aftersales service strategy is described and supported by

high level management. For instance, NedTrain has a strong focus on applying lean to their

service operations to fasten the process and Kendrion currently undertakes a transformation to

increase their attractiveness of their products and related customer base. Further, the decision-

making process and information of relevance occur on a rather strategic management level, in

which the individual product-service strategy is explained, e.g. break down into needed time,

costs, location and the product that needs service. When linking it back to the presented Lean

Digitization Canvas these steps belong to the section “Customer Segments”. Osterwalder and

Pigneur (2010) describe it as “the different groups of people or organizations an enterprise aims

to reach and serve.” Available information and awareness of mainly higher management about

the serviced product, customer’s interests and a product-oriented service strategy are basic

conditions for effective aftersales service (RQ1b).

24

A vital link is depicted by the “Channels”. More specifically, in which way does the

organizations in a customized domain interact with their customers. A possible innovative

solution is the creation of an online platform where customers can state their claim and give

details about the product that needs service, i.e. product/order number, failure area, details about

failure, performance, temperature development, usage pattern (RQ1a). In this process employees

from all levels are involved, as a change in the channels could result in higher initial costs with

different process sequence. Required skills are proper planning and scheduling and change

management has to be communicated to the workforce (RQ1b). Other ways to interact are via

phone and/or mail but have the disadvantage of a longer processing time.

Following the framework, the next sub-steps belong to the “Value Proposition” section.

This section mainly belongs to the carry-out phase, as the physical and digital streams are

combined to provide lean servitization. The importance of value proposition is widely described

as the most important segment (Gassmann, Frankenberger & Csik, 2014; Osterwalder & Pigneur,

2010). Most of the time operational staff is involved in this area as they deal with the product-

oriented service. Especially for Kendrion step 5 (commercial value of information) could be of

great importance as they are a component supplier. By having information available about the

extended lifecycle of their products (i.e. electromagnetics breaks in lift and/or engines) they could

generate additional value. Utilizing and applying sensitive information, such as reliability or

performance, can be of great advantage. For instance, the company could be interested in

purchasing specific data of users that are using the product to detect patterns and enhance value

of their products. For NedTrain it can be of importance to get or keep information from

competitors (e.g. maintenance service of trains in other countries or reliability of trains in other

countries) to see why they do better. NedTrain might be interested in selling specific data to their

component suppliers in order to provide them with user patterns, resulting in a higher quality of

their products. After completion of the aftersales service an interim period of a predetermined

time generates value, as the customer has some security that the product is as-good-as-new.

Last section to elaborate on is “Customer Relationships”. As it can be seen in the

framework it is placed in the “post-aftersales service” section, as a mean to strive for long-term

success. Treacy and Wiersma’s (1993) third customer‘s value discipline ‘Operational Excellence’

comes into play and wraps up the constructed framework. Achieving operational excellence and

sustainability from a company’s view requires coaching & guiding, monitoring, evaluating and

tracking, as described by Ives and Mason (1990). Both in this paper investigated companies

making use of those measures, striving for operational excellence. Differences are observable in

the time invested into coaching and guiding. In particular, NedTrain invests a lot of time on

qualifying their employees. When looking at monitoring of real-time information, both

companies are at an early stage. However, both companies do very good to track their

development of the aftersales service they provide, i.e. set goal to do performance, number of

claims per month or quality of their aftersales process. The outcome a company should perceive

is sustainability and operational excellence (OE). With those terms it is meant, that all employees,

25

from executives to service personnel, see the flow in their operations and are able to solve

problems by themselves, eventually leading to business growth.

Lean PSS‘s

IoT

+

+

Aftersales Service +

Figure 5: Revised Conceputal Model (own figure)

Picking up on the conceptual model, figure 5 represents the revised model. Results of the

sequential case study approach shows that lean and IoT application in the aftersales service also

affect initial sales. This results in a PSS rather than in a sole improvement of aftersales services.

This is in line with Raddats, Burton and Ashman (2015), where they point out that the benefit of

an effective aftersales service is making it easier for an organization to sell new products to

existing customers, retain customers and reach new customers. As the interview at Kendrion

confirmed (Confidential Appendix V), they apply the latest technology to their original products

in order to attract customer to expand their market position. Similar, NedTrain (Appendix VI)

decreases the expenses for new trains NS through a higher availability rate (extending the

lifetime) of the in-use trains. By shifting towards a digital PSS, the company is currently working

in close collaboration with NS on the analysis and implementation of IoT solutions with real-time

data transmission. An effective service concept guarantees high reliability and availability of

transport systems with possible extension of the service life. Service contracts can be an incentive

to boost the efficiency of rail operations. Next to maintenance service, spare part service, digital

services or upgrade services are imaginable. In both case companies the organization profits in

different ways of a better aftersales service.

26

6. Conclusion, Limitations and Further Research

Investigations of different product–service offerings at the German headquarters of

customized electromagnetic breaks and the Dutch locomotive and rolling stock maintenance

company, lead to new insights of how an organization’s aftersales business model is affected by

digitization. This work reflects a Lean Digitization Canvas with a distinction of value proposition

into five layers. By presenting a newly developed business model, companies can apply it to their

current operations in aftersales process to visualize it in the context of digitization and streamline

their business processes. With respect to the research questions, crucial information have been

found on different management levels and brought into context of an organizations’ aftersales

business model. The subsequent, proposed theoretical framework reflects the principle

dimensions for customer value and provides key activities to follow when engaging in the

aftermarket. The sequential case study approach in a customized product aftersales service

environment revealed that an organizations aim is to provide safety for the user first, followed by

quality of the serviced product and then speed of the process. Cost describes an end result, rather

than a primary goal. Also, findings show that in product-service systems lean maturity and

collaboration across departments are crucial for success. The creation of innovative solutions in

conjunction with support of higher management level is needed for success.

The model may serve different needs for researches and practitioners. The proposed Lean

Digitization Canvas and the theoretical framework can be used for researchers to understand how

to add value to the product-centric aftersales process within the digitization era. By following this

approach, crucial information can be extracted (e.g. performance, application area and wear &

tear), latest technology is considered and organizations innovativeness can be depicted on a

guided path. For practitioners the value of the research is that it presents a way towards an

efficient and effective aftersales process, by making use of lean methods and business innovation.

It could enhance the overall performance of the organization by considering the areas of interest

and applying innovative solutions. Lean is a prerequisite in digital PSSs and later on digitization

means, such as IoT, adds additional value to it.

As a follow-up the presented findings give directions and questions for further research,

moving beyond the reshape of an organizations aftersales business model and addressing the

applicability of the proposed findings. Due to the limited cases involved, it cannot be considered

extensive and implies limitations that can be overcome by further research.

i) Application to standardized products aftersales service, i.e. high volume, low variety

domain to see if findings are in line with the presented ones in this thesis

ii) Enlarge the number of companies to generalize findings

iii) Test the applicability of the framework in start-up organizations or small- and

medium-sized companies and investigate if the outcome shows the same

Word Count: 11.850 (incl. all pages before)

27

APPENDICES

Appendix I: Case Study Protocol

Case Study Protocol

Lean Servitization: adding value to the product-centric aftersales process in light of digitization

Martin Rudnick

University of Groningen

Groningen, Netherlands

m.rudnick@student.rug.nl

This protocol serves as a guide to be followed for each of the case researches and is divided in three

phases – pre-visit preparation, on-site data collection and follow-up activities.

Pre-Visit Preparation

Before the actual company visit a primary contact person of each company has to be identified. Initial

information shall be asked/researched about their domain they operate in (low volume – high variety),

their current lean program and use of internet of things. Further information about each company shall be

used to determine the suitability of the company for the case research.

A brief summary of the research to be conducted shall be given as executive summary to the primary

contact person in order to give them a heads-up about the case research. Leading persons, such as

production manager, quality manager or business unit manager of departments/plants should then receive

notification about the research with a phone number and e-mail provided for possible inquiries.

Once a contact person has been identified, regular/multiple company visits and discussions should be

mediated before gathering information about the company and their industry.

On-Site Data Collection

As this research is subdivided into two parts – longitudinal case research and sequential case research –

different on-site data collection methods take place.

i) Longitudinal Case Research

Hereby the first step is the assistance of a contact person to get to know people within the company that

are relevant for the research. The establishment of a friendly environment with key stakeholders (sales,

quality, management, production, service) is beneficial for the case study. Following that, the current lean

program is pointed out with a link to service activities.

Once the processes and procedures within the company are known field data gathering can be done. Next

step includes discussions and observations with key stakeholders about the area of interest. Last step to be

done is leading semi-structured interviews and/or focus groups with one person of each key stakeholder

area. At the start the moderator should acknowledge the presence of the audio recording equipment (if all

participants/interviewee’s agree), assure participants of confidentiality and provide the interviewee the

opportunity to withdraw if they are uncomfortable with being taped.

28

ii) Sequential Case Research

Opposite to the longitudinal case research, a sequential case research is subject to time limit. Hereby the

findings of the aforementioned study serve as base to generalize findings. First step is a short company

tour through their aftersales service process and their current lean program. This shall give an impression

about their lean program and what kind of service activities they perform. Following that, an interview is

going to be conducted with a management person of the company. A semi-structured interview, mainly

about the three pillars lean, aftersales service and internet of things, shall help to strengthen the findings of

the longitudinal case research. The questions that serve as base can be seen in Appendix IV.

Following areas shall be examined in detail:

i) Business and manufacturing context – in particular the context area of the research and their

environment. Hereby, general information about the company are captured.

ii) Lean context – in particular the application of lean principles the company’s maturity of lean.

Hereby, the extension of lean is captured.

iii) Aftersales context – in particular areas/operation of service activities. Hereby, information

about the current aftersales process is captured.

iv) Digitization context – in particular the current/intended future use of internet of things.

Hereby, information about the company’s use of up-to-date technology within the aftersales

service is provided.

Follow-up activities

This section applies only to sequential case research. Upon the data collection a filled in case protocol will

be send to the contact person(s) for review to ensure correctness of the data obtained. Once received, a

comparison with the findings of the longitudinal case research is being done.

In case of shortcoming/missing information of the sequential case research it may occur to contact a

company via e-mail/phone again to fill the information gap.

29

Appendix II: Kendrion Analysis

30

Appendix III: NedTrain Analysis

Table 4: Business and Manufacturing Context of Case Company B – NedTrain

Context Area Questions to be answered Notes

Main products Defined as the most important product to the company

(module) with highest occurrence in production, aftersales

service and or sales.

Trains, only MRO organization

Business

Environment

Key characteristics of the business environment (e.g. area of

operations, industry type)

NedTrain are the locomotive and rolling stock maintenance

and repair company of the Dutch Railways company,

Nederlandse Spoorwegen (NS)

Organisational

structure

Hierarchy, Roles and Responsibility, Number of employees, Clear structures, hierarchical, 3500 employees,

Degree of product

customization

Nature of customization, type of manufacturing (ETO; MTO;

ATO; MTS)

ETO – according to request of customer, long life time of

trains 40-50 years

Financial

Performance

What is the company’s yearly turnover? N/A

Main service

activities

Determine what kind of aftersales services are apparent

(warranty vs non-warranty) and product-centric activities

(repair, maintenance, support)

Non-warranty – maintenance and repair of train if A/C is

broken, transmission, breaks etc…

Innovation How does customization work?

Has there minor or major changes to be made?

N/A – Innovation needed in order to stay competitive, for

small bolts a 3D printer could be useful

Table 5: Lean Context of Case Company B – NedTrain

Context Area Questions to be answered Notes

7 wastes Does the company perform/pay attention to the 7 wastes?

(TIMWOOD)

Yes

Value stream Is the current value stream in operations depicted? No, but not necessary as only 4 tracks available

Qualification Does the company qualify employees and train them? Regular training sessions and feedback rounds

Empowerment Does the company empower employees through rotation? Employees move every shift to another train with different

service aspect – hence, unlike in production no

empowerment applied

Standardization Does the company standardize processes and procedures? Yes – lean board and tables for improvement

potential/feedback/service performance

5S Is 5S applied within the company? Yes – marks on the ground

Display Do they display information? If yes, how (digital, paper)? How On a lean board upcoming trains that need service are

31

information many times is it updated? To whom is it shown? depicted, as well as arrival time and what kind of service

they need

Total Quality Do they apply TQ principles? What kind of TQ is applied? N/A, but quality is one of the most important factors for

their maintenance activities

Service- production

sequencing

How does the release of service/production orders happen?

Is there priority of service over production or vice versa?

Train is being scheduled for maintenance with a given

arrival time in Onnen//Arrival of the train @location and

waiting for available track //Rails dedicated to shifts and

dedicated workforce tries to solve defect within 8 hours’

time frame //Truck is released and documentation//Review

of service provided

CIP Does the company have a continuous improvement program? Yes

Cross-functional

planning

Do the different departments of the company interact together

or do they operate individually?

Close collaboration between maintenance and

Administration

Process quality How is the quality of the processes ensured? 14 days of quality check after train leaves facility

Maturity in lean

practices

How mature is the company culture in lean? Very mature, regular lean sessions and every employee

understands it

Table 6: Aftersales Context of Case Company B – NedTrain

Practice Questions to be answered Notes

Contact Channels How do customers contact the company in terms of an

aftersales service?

Call from NS to NedTrain and heads-up for company about

arriving trains that need service – with a fixed date and time

of arrival on-site

Management of

requests

How does the company process the request of a customer to

perform aftersales service?

Who is the point of contact (POC) for the customer?

POC is Administration – see above: service-production

sequencing

Departments What departments organize the aftersales process? Management, Administration

KPI of aftersales

process

Do they have any KPI’s that are related to service

performance?

24hrs target “pit-stop”, green and red digital display – see

attachment “Further Notes” for details

Priority in

aftersales activities

Is there a distinction of different customers that want to have

service?

Yes “pit-stop” with 24 hours target and regular service on

remaining three rails

Continuous

monitoring

Does the company surveil current operation of product? Partially, as pilot testing is being done in order to apply

preventive maintenance action (e.g. engine when pattern is

shown)

Data sharing with

customer

To what extend does the company share data with customers

(cont. monitoring)? Is security a reason?

Security and running of trains is most important, sharing of

data non-apparent, data is provided by NS

32

Awareness of

potential in

aftersales service //

Involvement

Do they appreciate the potential that services bears? To what

extent is the company involved in aftersales services? Is it a

strategic pillar? How long do they operate in that area already

in?

Yes, involved a lot and significant improvement in lead-time

and cost-related in past six months. Due to success it has

been introduced to a second location as well.

Table 7: Digitization Context of Case Company B – NedTrain

Context Questions to be answered Notes

Internet of Things Does the company apply internet of things methods currently?

Does the company collect field data of operations at the

moment?

Yes, management can see progress on smartphone and

current progress, shift towards digitization recognizable; also

partially collection of field data

Technical

feasibility

To what extent is it feasible to add digitization items to the

initial product?

How does/can the monitoring of the data be done?

It is feasible but still challenging as collaboration (sharing of

data) is needed between NS and NTR. Also very costly to

add thing to existing trains in order to monitor them

Data sharing How reluctant are customers to share data? Does it bother the

customer at all?

NS has seen positive improvement of the lean program and

they are willing to share partial data with NTR

Awareness of

potential of

digitization

Does the management know about the potential that

digitization can bear? Do they recognize difficulties/obstacles

in this process?

Yes – cost mostly hinders this process.

Applicability What kind of value can the company offer/add to its product? Continuous monitoring to surveil performance over time,

running status, location

33

Appendix IV – Interview Questions for Key Stakeholder

General Questions

Are you aware of any Lean Program at Kendrion? If so, tell me more about it.

How do you see the collaboration and work between departments?

What values do customers appreciate most in the aftersales service process?

Tell me more about your customer relationship and the sharing of data.

Along the supply chain, do you maintain a close integration with supplier and customer?

Lean-Aftersales connection

What kind of lean methods are currently applied? To what areas are they applied?

Do you think lean thinking is applied to the aftersales process yet?

Do you consider to apply/apply lean methods in the aftersales service process? Do they improve

aftersales service operations (financially and timely) compared to the “no-lean approach”?

In your opinion, do you think lean and aftersales service go hand-in-hand?

IoT-Aftersales connection

Do you gather information of the products in the field? Do you consider this as an effective and

efficient process at the moment?

In light of digitization, how could the aftersales service process benefit from IoT?

How does the provision of field data/real-time data add value to the aftersales process? Do they

imply additional costs that are charged to the customer?

Does the increasing amount of data availability help you to improve aftersales services? What are

data of relevance in your specific area?

Both, lean and IoT proved their success – Is the application of lean and IoT compatible in the

aftersales service process? What methods/approaches do you follow to increase margins in this

area?

As a final statement, do you think IoT and lean are contrary means? Why/why not? Can it be

applied/is it applied to your business?

34

Appendix V: Interview with Key Stakeholder at Kendrion – Summary of all Interviews

Below list represent the list of key stakeholder to be asked:

i) Longitudinal Case Research

a. Management

b. Service /Customer Support / Customer Service Centre

c. Quality Assurance

d. Production / Lean Manager

e. R&D

ii) Sequential Case Researches

a. Management / Lean Manager

Before the actual conduction of the interview, the topic is explained in detail in order to make the

interviewee aware of the topic. Following questions show the results of the interview with key

stakeholders at Kendrion.

General Questions

Are you aware of any Lean Program

at Kendrion? If so, tell me more

about it.

Yes – Lean at Kendrion but applied to PC – mass production for

automotive industry. Lean mostly applied in Production and flat

hierarchy within the company. Management undergoes a reshape

to fasten processes

How do you see the collaboration

and work between departments?

Lots of contact in between departments, R&D less contact to

customers, there customer service is the contact person

What values do customers appreciate

most in the aftersales service

process?

For one of their breaks longer support is needed as it is a must due

to regulation. Other factors are the availability, wear and tear and

status of the breaks

Tell me more about your customer

relationship and the sharing of data.

So far it is not digitized, but the actor delivers automatically

feedback – active (only if in use or not)

Along the supply chain, do you

maintain a close integration with

supplier and customer?

In R&D a close collaboration is apparent to all departments within

the company – sales relates to customer and purchasing mostly to

suppliers

Lean-Aftersales connection

What kind of lean methods are

currently applied? To what areas are

they applied?

In production methods such as Kaizen, 5S to make production lean

but also in Management to fasten processes

Do you think lean thinking is applied

to the aftersales process yet?

Yes, as the customer support is aware of what lean is and is

constantly trained on it

Do you consider to apply/apply lean

methods in the aftersales service

process? Do they improve aftersales

service operations (financially and

timely) compared to the “no-lean

approach”?

It is definitely reality that it can be applied to aftersales service

and company is doing some pilot testing at the moment. But still

considered to take a few years before offering it to customers.

There is a shift apparent that customers want more “plug and play”

solutions rather than hire a third company to install the component

(in this case the break)

In your opinion, do you think lean

and aftersales service go hand-in-

hand?

Most people replied that those are complementary means and the

lean thought can be applied to the aftersales process. They think

that the adaption of state-of-the-art technology is the key to

success.

IoT-Aftersales connection

Do you gather information of the Most of the data are claim figures that can be used for quality

35

products in the field? Do you

consider this as an effective and

efficient process at the moment?

assurance but they are not digital yet. After receiving data they

will be evaluated but in a reactive manner, not preventive.

In light of digitization, how could the

aftersales service process benefit

from IoT?

It is a challenge to integrate the product offerings into, for

instance, elevators with all the sensors, magnets etc.

How does the provision of field

data/real-time data add value to the

aftersales process? Do they imply

additional costs that are charged to

the customer?

Customer wants better products to a reduced price – if company

can handle this it will be an advantage over other organizations.

Does the increasing amount of data

availability help you to improve

aftersales services? What are data of

relevance in your specific area?

Yes especially wear and tear, life time, switch cycles, temperature,

and performance

Both, lean and IoT proved their

success – Is the application of lean

and IoT compatible in the aftersales

service process? What

methods/approaches do you follow

to increase margins in this area?

Challenging to realize the data gathering but it also depends on

application area of the product.

As a final statement, do you think

IoT and lean are contrary means?

Why/why not? Can it be applied/is it

applied to your business?

Complementary means are lean and digitization. Digitization

should be in use and lean then applied to make this process more

effective. Generally lean is necessary to have a successful to make

positively use of digitization.

36

Appendix VI: Interview with Key Stakeholder at NedTrain – Lean Program Manager

Below list represent the list of key stakeholder to be asked:

i) Longitudinal Case Research

a. Management

b. Service /Customer Support / Customer Service Centre

c. Quality Assurance

d. Production / Lean Manager

e. R&D

ii) Sequential Case Researches

a. Management / Lean Manager

Before the actual conduction of the interview, the topic is explained in detail in order to make the

interviewee aware of the topic. Following questions show the answers of the Lean Program Manager from

NedTrain.

General Questions

Are you aware of any Lean Program

at Kendrion? If so, tell me more

about it.

The so called “Overstag-Program” – which is operations based for

maintenance and service (NedTrains main operation) – getting

waste out of process to reduce throughput time so people work

smarter (change of pull vs push)

Use of “snowball” principle – start small to see if it works and

then apply it to the entire company – so far it works out better than

expected

How do you see the collaboration

and work between departments?

Pretty good, as feedback round are apparent and coaching and

guiding is applied in order to take control and continuously

improve operations – principle: show them, let them do with few

interactions, and in the end leave it completely up to the workers

Visualization and flat hierarchy make it possible to work closely

together to one common goal

What values do customers appreciate

most in the aftersales service

process?

Order is Safety is top priority, followed by quality and then speed

(time needed) to maintain train – Application of KaiKAKu

(complete turnaround) and mind-shift of working culture was

necessary

Tell me more about your customer

relationship and the sharing of data.

NTR gets customer to use what they deliver – NS does the

planning & scheduling of the trains – NTR strives for business

intelligence and gets data about number of trains running or in

maintenance

Along the supply chain, do you

maintain a close integration with

supplier and customer?

The maintenance program is set for 15 years in which 20-30% are

unplanned maintenance. Most of the time they receive no specific

report about the failure of the train drivers only that something is

wrong. They apply, like in Formula 1, a plug principle but far less

advanced to measure resistance, speed, engine, electricity.

Lean-Aftersales connection

What kind of lean methods are

currently applied? To what areas are

they applied?

“Overstag Program” – Pit-Stop – 5 why’s, and all other traditional

ones like visualization, Kanban…

Do you think lean thinking is applied

to the aftersales process yet? NTR operations fully focuses on aftersales services – YES

37

Do you consider to apply/apply lean

methods in the aftersales service

process? Do they improve aftersales

service operations (financially and

timely) compared to the “no-lean

approach”?

Yes, NedTrain is currently applying lean methods to the aftersales

process (Pitstop program, visualization, 5S). It showed significant

success with cutting costs and increasing lead-time.

In your opinion, do you think lean

and aftersales service go hand-in-

hand?

Lean is applicable to the aftersales service as shown here.

Operations have been improved (lead time) by 70% by applying

these means – important is coaching and guiding to make the

workers aware of the change

IoT-Aftersales connection

Do you gather information of the

products in the field? Do you

consider this as an effective and

efficient process at the moment?

They have different information systems but using the same

platform – Integration is not given between NS and NTR – not

effective but both organizations are working on a closer

collaboration

In light of digitization, how could the

aftersales service process benefit

from IoT?

Visual Management, Innovation, Adaption of new technology

How does the provision of field

data/real-time data add value to the

aftersales process? Do they imply

additional costs that are charged to

the customer?

There is reactive and proactive measures that can be performed.

For instance, proactive measures are currently tested on new trains

to see which signals are of importance to shift more to preventive

maintenance in light of real-time monitoring. Success rate is 50%

so far to predict a failure.

Does the increasing amount of data

availability help you to improve

aftersales services? What are data of

relevance in your specific area?

Yee they do- important data are performance, running condition,

location of the trains, how train driver operates. Also the

implementation of Value Stream Teams are working on it to

improve the process

Both, lean and IoT proved their

success – Is the application of lean

and IoT compatible in the aftersales

service process? What

methods/approaches do you follow

to increase margins in this area?

Already mentioned in previous questions. Overstag Program,

Visual Management Teams, CIP, coaching and guiding.

As a final statement, do you think

IoT and lean are contrary means?

Why/why not? Can it be applied/is it

applied to your business?

Lean is the process that adds value and digitization is functional

which takes a lot of effort to implement. However, the

implementation of digitization means should happen in a right way

in order not to be pointless – such as a wrong ERP system.

Generally they are complementary and go hand-in-hand when

applied correct. But visual management should be also considered.

38

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