Sourcing and supplier relationships for servitized manufacturers

Servitization implies that manufacturers make decisions about the make or buy of the capabilities required to develop and deliver the service elements of their offer-ings, and about how to shape and manage supplier relationships. These two deci-sions are the object of this chapter. Make or buy approaches for developing capa-bilities by manufacturers are addressed through a framework matching three options (pure make, pure buy and mixed) with four classes of services included in the offering (supporting the sales, the after sales, the design phase and taking over customers’ activities). Four profiles are pointed out: After-sales services seller, Af-ter-sales offering integrator, Life-cycle solution seller, Life-cycle solution orches-trator. When an integrator or orchestrator approach are pursued, in particular, manag-ing supplier relationships becomes critical, since large portions of the offer are (developed and) delivered resorting to external suppliers. The characteristics of supplier relationships for service delivery are described according to five dimen-sions (Information Exchange; Operational linkages; Legal Bonds; Relationship-specific adaptations; Cooperative Norms). Against a “one best way” view of sup-plier relationship management, the characteristics of the relationship should be devised considering the service elements object of the relationship. Through these conceptual lenses, the chapter offers support to managers facing the servitization journey.