Rolls-Royce: A Manufacturer at Your Service
Why can we state that Rolls-Royce has become a service provider? What kind of services do they offer?
Rolls-Royce took back control of their after-sales in the late 1990s (because competition led to a drop in margins) and they became a significant source of revenue for the company (63% of total civil aerospace revenues come from aftermarket services). Before that, much of after-sales service had been given to third parties. After-sales is actually a service and that is why we can state that Rolls-Royce has become a service provider. They created a highly customer-centric business model that combined manufacturing and services.
The services ...view middle of the document...
* Rolls-Royce formed a joint venture (DS&S) with an IT company (SAIC). It provided its customers with engine health management, predictive maintenance technologies, and asset management services. The EHM service consisted of remotely monitoring the working of the engines and detecting and rectifying engine anomalies. The services were provided to customers through the websites enginedatacenter.com and aeromanager.com. The latter portal offered the aerospace customers a number of services such as an online facility to order spare parts, the ability to view the status of engines under repair, etc.
* Rolls-Royce also built a global repair and overhaul network with service centers, workshops, and teams of technicians around the world.
* On-Wing Care: an intermediary service between flight line maintenance and regular maintenance checkups for civil aerospace customers. It provided 24/7 maintenance field support and helped minimize time-consuming overhaul shop visits.
What are the operational capabilities to be successful in this service business?
The company needs a good tangible product as an order qualifier in the first place. On top of that, Rolls-Royce also has to maintain the technological lead over its competitors. The services are the order winner. However, the company needs to have an integrated system where production and service are both important. Providing a mixture of both will set up barriers to entry for competitors and create switching costs. It also makes the competitive strength of the company less transparent for competitors and thus more sustainable. The...