Servitization, digitization and supply chain interdependency

TLDR

Servitization and digital business models are reshaping supply chain roles, especially in publishing, where dematerialization reduces production and transport costs and changes customer engagement. The study empirically investigates how digital disruption alters B2B interdependencies, proposing that downstream firms can be empowered while upstream firms can capture value through unique digital services. Using a Payment Card method, the authors assessed UK and US consumers’ willingness to pay for eBooks versus printed books, aggregating demand to inform optimal digital pricing strategies. Results show that upstream firms must deploy unique resources during digital servitization to maintain their strategic supply‑chain position.

Abstract

This study draws on literature at the intersection of servitization, digital business models and supply chain management. Work empirically explores how digital disruption has affected Business-to-Business (B2B) interdependencies. Dematerialization of physical products is transforming the way firms are positioned in the supply chain due to a reduction in production and transport costs and the different ways business engage with customers. Specifically, we propose that these new market conditions can empower downstream firms. We further propose that upstream firms can still capture additional value through digital service if their servitized offer includes difficult to imitate elements. The context of the analysis is the publishing industry. The Payment Card method employed is used to test UK and US consumer's perceptions of digital formats (eBooks) and assess their willingness to pay in relation to printed formats. The method undertaken enables us to elicit aggregated consumer demand for eBooks which in turn identifies optimal pricing strategies for the digital services. Analysis demonstrates that during digital servitization upstream firms should seek to deploy unique resources to ensure their strategic position in the supply chain is not diminished.