Driving manufacturing servitization

Posted on 30 Mar 2015 by The Manufacturer

Simon Charlton, Sales Director at Columbus, weighs in on why technology needs to be the main driver for manufacturing servitization.

Simon Charlton, Sales Director at Columbus
Simon Charlton, Sales Director at Columbus.

As the UK manufacturing industry continues to struggle to keep up with cost reductions offered by overseas competition, businesses in the sector are being forced to innovate in order to add value to customers and remain competitive.

For many, this means service innovation, diversifying services to include consulting, design and development or aftersales support; anything that helps the customer improve their own competitiveness, rather than just engaging in a single transaction through the sale of a product or single service.

But this transition to services is rarely straightforward, and adding services can often result in additional costs, forcing manufacturers to investigate new service models in order to make the transition.

This is where advancements in digital technology are aiding manufacturers, enabling them to learn from the consumer-orientated service industry and move from a reactive sector, to a proactive sector, with a constant 360° view of the customer.

With this model, technology becomes a major advantage to manufacturing, and its key suppliers. By allowing technology a larger role in value-added services, and embracing servitisation, businesses are being able to maximise their share of the customer wallet, while also providing added value to make sure their customers are more competitive.

Take Capital Document Solutions as an example. Scotland’s largest supplier and service provider of office equipment and document solutions is utilising Microsoft Dynamics AX technology to increase its field service orders, and deliver an end-to-end solution to its customers.

Columbus PQBy integrating three disparate systems the company is now able to manage every aspect of its business from one place. This means the company’s service works controllers have access to the same information as those working on the helpdesk, so each stage of every work order can be seen by everyone in the business.

When it comes to field service engineering and servicing of parts, the help desk is now often able to resolve an issue without sending out an engineer, saving the business time and money, and its customers too.

It also means when a customer does require an engineer site visit, they receive a quicker and more efficient, dedicated service; boosting customer service but without higher margins for the company to contend with on a daily basis.

Business technology is already playing a large role in manufacturing servitisation, and as OEMs and SMEs in the sector continue to change their business models to better accommodate customers and build long-term relationships, other uses for implementing digital technologies to industrial manufacturing are being recognised.

Analytics and Big Data are being used industry-wide to derive predictive insights from unstructured data, which can then be used to provide value-added services and drive process improvement.

Digital technology is providing manufacturers with an easy transition to a next generation service model.
Digital technology is providing manufacturers with an easy transition to a next generation servitization model.

For example, seating manufacturer Orangebox realised that its existing legacy business system was unable to provide the company with accurate reports on its delivery performance and flexibility, restricting the company from expanding its service offering to customers.

In order to utilise Big Data and analytics more effectively, the business updated its legacy systems and is now able to track the progress of each order and capture the moment of delivery to trigger automatic invoicing, meaning that it can respond to customers more efficiently and reduce errors in the invoicing process.

These are just small changes that contribute to implementing a next-generation service model for manufacturers but by utilising technology as the key driver for change, businesses can go a long way to improving their overall service levels to customers.

The service model a manufacturing business adopts should align customer needs and expectations with its existing strategies for maximum efficiency. It should drive innovation and lean on technology to facilitate the transition to a customer-focused business model, adopting industry best practices to drive the service flow through the value stream.

The opportunities digital technology is providing to manufacturers is facilitating an easy transition to a next generation service model and enabling manufacturing companies to remain competitive globally, even when they can’t afford to quote the lowest price.