The Role of Life Cycle Costing in the Servitization Process of Manufacturing Businesses

Abstract

Aim: This study investigates the role of life cycle costing the process of servitizing the value proposition of manufacturing businesses. The aim is to increase the understanding of potential utility of life cycle costing in the servitization process of manufacturing businesses. Additionally, the potential challenges within the process of life cycle costing process are explored. Method: To contribute to a greater understanding, a qualitative case study was conducted at a manufacturing company that is operating in the rail transport industry. A total of ten semi-structured interviews with experts within the case company were conducted. Result: The results of this research imply that life cycle costing can offer great utility in the servitization process of manufacturing businesses. Life cycle costing can support in identifying servitization potential and align internal and external incentives, which are crucial in enabling servitization. The key challenges of life cycle costing are the change in perspective towards a product centric LCC perspective. This requires a change in the design and measuring processes of life cycle costing, while also requiring increasing collaboration with stakeholders in the value chain.