Hybrid products in logistics – part 2
Hybrid products in logistics – part 3
Hybrid products in logistics – part 4
Background of the problem, or market conditions
We are currently witnessing fundamental changes in the economy, characterized by the gradual displacement of classical factors: land, raw materials, labor, and capital. At the same time, competition based on exclusive knowledge and creative ideas is gaining importance. More and more know-how is used to produce sometimes seemingly simple material goods, which is visible, for example, in the case of an ordinary beverage can, which seems to consist almost entirely of knowledge itself, excluding the piece of metal and the energy required to produce it. It is no wonder, then, that many companies decide to turn their knowledge into products. Thus, steel producers sell Engineering-Know-how, machine manufacturing companies maintain training centers for potential and actual buyers, and airlines generate profits not only through transport activities but also through the operation of ticket reservation systems (and thus through the sale of information), to name just a few simple examples. “Knowledge flows” from producers to customers not only in the form of products, as “intelligent products” are gaining importance, i.e., those that contribute to increasing the level of knowledge among buyers. With the increase in the share of knowledge in products, new challenges and opportunities arise for the broadly understood service sector (Figure 1).
Service-oriented activity is developing in the processes of manufacturing material goods. Research and development on one hand, and active marketing on the other, are obviously gaining importance. Implementing the concept of teamwork and group work contributes to the integration of service activities and competencies with manufacturing processes. Competition among manufacturing companies is encountering increasing difficulties in the market. Shaping market strategies solely through the differentiation of physical goods is becoming increasingly burdensome. Products with the same or similar utility values and properties can now be manufactured all over the world by many market suppliers, often at very low costs. Companies can survive in the market based solely on production to a limited extent. The result can be (partially ruinous) price competition leading to a significant shrinking of producer margins in many product markets, which has been noted more and more frequently in recent years (Table 1). For producers, a possible way out of this situation is to provide a product portfolio in the form of so-called hybrid products. This refers to an integrated bundle of services consisting of tangible goods and accompanying intangible services, aimed at solving problems specific to a given group of customers. The essence of the offer is to focus on the holistic, comprehensive creation of specific benefits for buyers. Changing customer preferences and their individualized, often unique wishes, therefore force a change in the market behavior of industrial enterprises, consisting of offering solutions to their diverse problems instead of a product. In place of a pure market transfer of a machine or device, which traditionally constitutes the essence of an industrial offer, there are integrated bundles of services focused on solving customer problems, consisting of hardware as well as software, along with the necessary accompanying services. In the future, therefore, one should expect changes such that isolated, traditional tangible service offers will not meet the growing requirements of customers in B2B markets, which may call into question the competitiveness of certain groups of producers – suppliers. Instead of traditional sales, for example of IT equipment, due to the differentiation of competitive strategies, individually designed combinations of hardware and software services, in connection with complementary services, will be offered to an increasing extent.
While the basic material product may develop in the direction of an imitative, standard, and therefore easily replaceable good, the intangible components of complex solutions are seen as the decisive opportunity for competitive differentiation. In the optimal case, the use of such solutions can significantly facilitate taking the lead in the application of desired system solutions in the market and gaining a competitive advantage. In the modern economy, there is a growing demand for innovative services, in particular those that support the use of knowledge. These are, for example, certain types of services from the area of specialized IT companies. In the global economy, products and services have increasingly shorter life cycles. At the same time, they are becoming more complex, with ever-increasing customer requirements. Therefore, innovative services, positively verified by buyers, play an increasingly important role in achieving the economic success of companies. Furthermore, the use of knowledge has become the most important factor of development in enterprises. Companies that understand the need to link knowledge with services and production along value chains have a chance to survive in international competition. Knowledge-intensive services are used in almost all industries along supply chains. They exist in classical service industries, in industry and crafts, research and development, but above all in the new areas of multimedia and IT. It is no wonder, then, that the development of innovative services is supported in many countries, especially with regard to shaping market exchange processes in such a way that they support the creation of added value in enterprises using high technologies in production; High-tech-Services, which aim to integrate production and service processes, are becoming the challenge of our time.
The article comes from the magazine “Logistyka” 2/2011.