How to reap the benefits of a servitization strategy

Posted on 29 Mar 2016 by The Manufacturer

HSO, a leading provider of innovative enterprise business solutions, including the implementation of Microsoft Dynamics, looks at how businesses can adopt and benefit from utilising servitization.

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There are multiple benefits of servitisation, but ultimately it’s all about adding value to the customer.

The world in which manufacturers operate is changing rapidly.

Customers demand value and this requires manufacturing businesses to make strategic changes.

Moving to a servitisation led strategy could result in growth of 5% to 10% a year, and cost reductions of 25% to 30%.

In short, there is a need to transform from a product supplier to a total supplier.

The adoption of a servitization led business strategy means aligning deliverables to the specific needs and wants of customers, and with increased customer value comes differentiation, opening doors to additional revenue generating opportunities and ways to drive efficiency savings.

So what steps should you avoid when undertaking this process?

Several drivers exist that motivate manufacturers to change from selling products coupled with a few essential services (e.g. training, spares, etc.), to using services as the basis of their competitive strategy.

A servitization strategy creates a more balanced revenue stream, sets you apart from your competitors and builds customer loyalty.

There are multiple benefits of servitization, but ultimately it’s all about adding value to the customer.

The UK actually leads the world in adoption of servitization.

However, there are a number of reasons why this isn’t yet widespread, which include: organisations aren’t yet aware of it; they don’t know how to go about making the transition; they don’t have the resource to do it, and existing production-centred mindsets in manufacturing.

So what are the pitfalls of this transformation process?

Download our Servitization whitepaper to discover more.

For more whitepapers on the subject of servitization click here.

For more information about HSO, visit the website.