Blending of service and manufacturing economies

Posted on 16 Dec 2014 by The Manufacturer

Is the customer-centric mindset of the service economy also Influencing the manufacturing segment? Larry Korak, director of industry & strategy, industrial manufacturing at Infor suggests that improved customer relationships can lead to better products.

Common economic theory states that as nations grow wealthier, they will always transition to a service economy.[1] Today, however, some analysts theorise that this large-scale shift from a manufacturing economy to a service economy is more than just a natural evolution of the economic cycle. They point to other forces such as outsourcing, aging Baby Boomers and the shift to online shopping as having caused the pendulum to sway toward the service economy with greater force.

In particular, Aberdeen emphasizes the role of the consumer as the top driver. “The empowered customer has changed the business landscape. Successful buyer/seller relations today can no longer be managed through a ‘one-size-fits-all’ approach, businesses need to tune into the rapidly changing needs of their buyers in order to delight them in an effective and timely fashion,” Aly Pinder notes in his Aberdeen Group Research report, “The Voice of the Customer.”[2]

As manufacturers—large and small—struggle to gain sure footing following the Great Recession, they search for ways to build a competitive edge against stiff competition. Since many have already made cuts to spending, trimmed staffs and initiated lean manufacturing programs, focusing on customer relationships is the next obvious choice.

However, with far more experience in the nuts and bolts of building products, manufacturers often find the soft and fuzzy aspects of building customer relationships to be challenging. To manage the complexity and heightened expectations for developing customer relationships, manufacturers should concentrate on investing in technology to address this new need.

For example, many manufacturers today closely collaborate with customers. Engaging with the end user gives engineers and product development experts keen insights into the thoughts of the target market, views into buying considerations and insights on how the product is actually used (or not used). The social and collaborative tools built in to Customer Relationship Management (CRM) programs can help manufacturers turn this information collected from customer encounters into data which can be tracked in relationship to product releases and campaigns. What were once anecdotal comments noted on slips of paper, can now be an important part of analysing trends, predicting demands and anticipating purchasing decisions.

By using CRM software and other tools, manufacturers are can achieve a new blended manufacturing-service business model. Customer expectations are driving this evolution, and savvy manufacturers who are getting on board at the early stages are finding that this new mind-set offers a competitive edge.


[1] Berthold Herrendorf, Richard Rogerson and Ákos Valentinyi (2013) ‘Growth and Structural Transformation’, in Handbook of Economic Growth Vol. 2B edited by Philippe Aghion and Steven Durlauf, Elsevier

[2] Aly Pinder, Voice of the Customer: Empowered Customers Bring a Wealth of Business Insight , April, 2013