The Blue INNOship project completes successfully
Photo: Andy Li on Unsplash
The Blue INNOship project completes successfully.
The Department of Operations Management has recently completed a four-year project on ’Servitization: Creating the Market by Understanding Price, Cost, Contracts, and Financing’. The project is part of the Blue INNOship program, which is Denmark’s largest maritime innovation collaboration among 35 partners, focusing on creating growth and employment in the Blue Denmark through the development of green and energy-efficient solutions.
Leading the Work Package 5, the Department has teamed up with the CBS Law and Danish Maritime, to advance the competency of maritime suppliers when introducing value-added services to their traditional product offerings. The project focuses on the price, cost, contracts and financing aspects in achieving a successful transition to servitization.
Servitization of manufacturing has long been a key research theme in the Department. This project has further enriched the research of servitization to a better understanding of critical factors in accordance with commercial and economics and provided valuable implications for the maritime industry on the following aspects:
- The project investigates the role of target costing as a strategic tool to improve cost management, as well as to ensure the commercial success of product-service offerings.
- The analysis of the pricing strategies as well as the pricing practices of maritime product-service provides, offers an essential insight by identifying their key pricing challenges including diversified customer needs, complex stakeholder interactions, customer value assessment and price setting.
- The project applies the modular concept on pricing when pricing for multiple products and services. It this way, each product or service is offered as a module, so suppliers can either set different prices for each module or offer a couple of modules at a bundled price. Pursuing price bundling will allow suppliers to balance the tradeoff between customization and standardization in pricing.
- From a legal, game theoretical, and strategic perspective, the project finds relational contracts to have the potential to “change the game” in the maritime sector in regard to innovation and servitization as they support the use of an alternative contract model that focuses on joint utility. Importing relational contracts supports an optimizing legal behavior that differs from the traditional contract law perspective and thus helps increase growth and value.
- Based on an analysis of sector characteristics and current financial models, the findings support the need for innovation within servitization business models. Via an empirical analysis the project proposes a new set of financial models for a future maritime industry servitization business case.
Along with seven thematic seminars organized and conducted through close interaction with the industry partners and researchers, the project has also published seminar reports on different themes, as well as the final project report. One Ph.D. dissertation entitled ‘How relational contracting can optimize and create value for the shipowner and supplier?’ has also been completed. More project details can be found here or by contact Carsten Ørts Hansen and Liping Jiang.