90% fall in number of servitization ‘sceptics’

Posted on 22 Aug 2017 by The Manufacturer

A dramatic change has occurred over the past 12 months with UK manufacturers becoming increasingly attuned to the benefits of switching their focus from products and production to services.

Moving up the Value Chain: UK Manufacturing’s Servitization Journey - Front CoverServitization is a business model transformation which requires manufacturers to find new ways to understand and then respond to customer needs.

By shifting to a more valuable and richer service-centric model, manufacturers can grow, create new revenue streams, increase margins and mitigate risks. The shift may not be easy nor occur overnight, but the potential rewards vastly outweigh the time and effort required.

There is now an overwhelming majority (72%) of British companies that are committed to servitizing their business model – with 41% already having done so.

A new report – Moving up the Value Chain: UK Manufacturing’s Servitization Journey – has revealed the four traits of servitized companies:

  1. Confident Technology Users – most aware of the enabling role of digital systems, most likely to invest in technology, and most likely to view their use of technology as being more effective than their competitors.
  2. Greater Business Complexity – most likely to engage in cross-border commercial activity, requiring greater administrative and financial resources.
  3. More Direct Sales greater ownership of the customer relationship, thereby retaining a greater share of customer value.
  4. Demand-Led Customer demand disproportionately drives companies’ servitization programmes; servitized companies are most aware of, and most focused on mitigating, supply chain whiplash.

Researched by The Manufacturer in partnership with Salesforce, Moving up the Value Chain is the second annual survey of UK manufacturing and the transition to new service-based business models.

The report reveals the very different ways that servitizing companies view their competitive landscape, how servitization has helped their business, what constrains them from realising more benefits, and where they see the most opportunities to create value in the future.

The conclusions offer companies a valuable opportunity to benchmark themselves against their most servitized peers, and is a useful resource for those organisations looking to better understand the business case for servitization.

You can download the report for FREE today by clicking here.