Three 2 Kinds of Systems Selling

In doing this, Litton demonstrated that there are, using the conventional terminology, three different kinds of systems selling three different kinds of augmented products : the product system, the contracting system and the service system.

A conventionally defined product system consists of products combined through engineering and design into an operating unit to perform a specific function. The example of the battleship fills that bill admirably, as does Litton's integrated mix of retailer equipment.

Systems contracting does not sell systems, but uses systems to sell. Thus, while our earlier example showed American Airlines creating a product system, the result for Raytheon was its offering to its distributors a Friden Western Union communications devices that would better enable them to buy Rayttheon products. Similarly Beals, McCarthy & Rogers, Inc., an industrial distributor in Buffalo, New York, is a good example of providing a contracting system. It manufactures nothing, but offers customers the use of its computer and data transmission system to facilitate ordering, faster distribution, less paper work, and reduced acquisition cost. Litton's retailer system has the eventual potential of providing similar benefits by linking the Kimball control information directly from the selling floor to suppliers.

The service system achieves the ultimate of total integration. It sells a system, while the system sells both itself and a service. It is essentially an information processing and pseudo decision making mechanism to help customers manage their affairs better and in the process deal more constantly with their originating vendor.

The Carborundu Company also pioneered an interesting system. Instead of merely selling bonded abrasives in the usual fashion, it decided on the necessity of developing a completely integrated capability in steel conditioning. This resulted, as a first step, in its acquisition of the Tysamun Machine Company. At enormous cost over several years, Carborundum developed a method of machine chipping to augment the grinding process, such hat the user in one continuous activity could remove scale and surface defects from a cylinder of steel intone hour and fifteen minutes rather than in the eight hours required by former methods.

What characterized Carbordum's effort was not merely the development of a better method, but the discovery of the necessity for it. Instead of looking only at what potential customers were doing it looked more comprehensively at what they would have to be doing the future. Carbrundum concluded that steel industry would have to concert to continuous casting, which would require hot cutoff and hot grinding instead of the old methods of doing these jobs after the products cooled.

By making an arbor less grinding the wheel's running speed was increased by 25 percent. Then Carborundum's Bonded Abrasives Research Center devised a machine to grin hot steel at 1800o F, so that cooling, moving, devised a machines to grinding wheel, it became possible to more than double the amount of steel that could be removed in an hour.