Enabling the transition from product provider to service provider an empirical investigation in the apparel industry

Abstract

Consumers are expressing preferences based upon some degree of product-service differentiation and not simply on cost. This trend is more prominent among apparel consumers in the major markets. In this context, the success of traditional low cost supply bases will be twofold: first, they can further compete in terms of low cost, or second, they can see opportunities to differentiate themselves through upgrading themselves to provide innovative service offerings. This calls into question the upgrading of the traditional low cost supply bases with the evolving consumer needs to provide innovative service offerings. The strategic management literature domain discusses the need for dynamic capabilities for upgrading the resource base to meet the needs of an evolving market. Hence the stream of literature identifies the need for learning capabilities as an enabler for an industry upgrade. Supply chain management literature emphasizes the need of integrating demand (Market oriented view) and supply (Supply oriented view) to provide the consumer requirements. On the other hand, “Servitization” has been introduced as a concept that describes the process of the industry upgrade for creating customer value. Emphasizing the need for developing super supply chains, this stream of literature also argues the need for knowledge integration for creating customer value. However, neither literature domain provides an appropriate supply network design that enables the industry upgrade to provide the required service offerings. Therefore an opportunity exists to understand an appropriate supply network design that enables the servitization process. The purpose of the thesis is therefore, to link servitization with competitive priorities, network relationships and integrative capabilities. The research design that was developed to address this opportunity is a case with four embedded units of analysis. This provides the opportunity to look for theoretical replication of the guiding principles and generative mechanisms that underpin the industry upgrade for servitization. The research concludes that an industry upgrade for service offerings needs supply networks with appropriate integrative capabilities that both link the competitive priorities of the specific market and enable the integration between cross functions, as well as cross organizations, in order to enable the learning required. Accordingly, the thesis contributes to the applied literature domain through providing an empirically refined conceptual framework for an industry upgrade and further contributes to the underpinning theory through providing an empirically refined conceptual framework for upgrading the resource base. The thesis also provides a practical contribution through identifying a framework for industrialists to upgrade with the changing consumer needs. Accordingly, industrialists should consider incorporating appropriate integrative capabilities through processes, structures, organization design and key performance indicators that align with the market requirements. Finally, the thesis highlights the limitations and proposes further research areas.