The impact of the Internet of Things (IoT) on servitization: an exploration of changing supply relationships

Abstract

This research paper explores the emerging potential of IoT technology as an enabler for manufacturers seeking to exploit opportunities for new production, business and operating models. Following an analysis of extant literature and exploration of four in-depth cases, the paper presents four dominant pathways to servitizing the business model through IoT implementation. This first finding is extended in the cross-case analysis, through a categorization of cases into the four pathways, comparing different levels of supplier integration and information exchange. Using this data and categorizations, the paper arrives at certain theoretical propositions regarding the wider impact of IoT technology implementation on information exchange and relational rents through self-enforcing safeguards, risk and financial incentive sharing and lastly transaction cost economics. These propositions lead to the recommendation for suppliers to adopt a servitization pathway of ‘operational service’ models, in order to reap maximum competitive benefit and return on specific investments. This suggests a dependence on the servitization pathway chosen by the supplier, implying that there is no single solution to deal with buyer-supplier relationships in IoT servitization environments.

Keywords:

• Servitization
• IoT
• buyer-supplier relationships
• manufacturing
• services

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Julius H. Boehmer

Julius H. Böhmer holds a First Class BA in Business Management from Durham University and is currently pursuing a MSc in Business Analytics at Warwick Business School. His research interests include the Internet of Things, Operations Management, Business Analytics and Machine Learning.

Manish Shukla

Dr. Manish Shukla is an Assistant Professor of Operations Management at the Durham University Business School, Durham, UK. His research interests include Agri/Food Value Chains, Sustainable Supply Chains, and Supply Chain Analytics & Big Data. He has published paper in prestigious international journals such as Production Planning and Control (PPC), International Journal of Production Research (IJPR), International Journal of Operations & Production Management (IJOPM), etc. His research has been recognized and awarded by a number of reputed international organizations. He has lead a number of Agricultural Value Chain projects as Principle/Co-Principle Investigator. He was a Fulbright Fellow at SC Johnson Graduate School of Management, Cornell University. He is also a member of The Chartered Institute for Logistics and Transport (CILT).

Dharm Kapletia

Dharm Kapletia is currently an Innovation Architect with ADS Group in the UK, specializing in Technology and Innovation Management. He has worked in various research and consulting roles at UWE Bristol, Hewlett–Packard Laboratories and the UK Ministry of Defence. He has contributed to innovation and transformation programmes and agendas in defence, cyber security and healthcare. He holds an industry-sponsored PhD from the Engineering Department at the University of Cambridge and his main research interests include managing innovation in complex systems, as well as science and engineering policy and industrial transformation.

Manoj Kumar Tiwari

Dr. Manoj Tiwari is the Dean, Planning and Coordination and Professor of Industrial and Systems Engineering at the Indian Institute of Technology Kharagpur, India. His research interests are manufacturing planning and scheduling, logistics and supply chain analysis, computational intelligence in manufacturing and logistics and optimization and simulation. He has published more than 250 research articles (Scopus H-index-52) in leading operations and supply chain management journals. He is serving in top journals editorial board as an Editor, Associate Editor or as a Member. He has authored several books, organized many international events, and, received numerous awards and honours. He has been rated as Rank 1 among top 100 individual researchers across the world, who had published research articles in International Journal of Production Research (Taylor&Francis) during the time period 1985–2010. He is listed among Top 20 Most Productive Authors in the area of production and operations management as reported in the last 50 years (published in a survey article in International Journal of Production Economics, 2009, 120, 540–551) and rated second among many researchers working in logistics and supply chain management in India (Analysis of the logistics Research in India-White paper published in the TU Dortmund University, Dortmund Germany-2012).