Manufacturers opt for value-add over cost

Posted on 29 Jul 2009 by The Manufacturer

Britain’s major manufacturers are increasingly moving towards customisation and additional service models instead of trying to compete on cost, according to a report from Cranfield University.

The report – The Policies, Practices and Performance of UK Manufacturing Industry – says that by offering services such as maintenance or design alongside their products, manufacturing companies can increase revenue, offer greater value to their customers and differentiate themselves from the competition. And Cranfield’s research found 1 in 5 companies making a greater return on sales for their services compared with their products.

“The figures show that quality is a major strategic priority,” said Dr Marek Szwejczewski, principal research fellow at Cranfield School of Management and author of the report.

And Szwejczewski thinks the results point to a bright future of manufacturing, based on high technology sectors like defence and electronics, despite decline in other areas of the industry during the downturn.

Dr Szwejczewski went on to say: “My advice to those sectors that are experiencing decline is to refocus their business strategy and to focus on one or two areas where they can make significant improvements,” he said. “I would also advise that these companies don’t lose sight of the importance of continuing to invest in their staff. This will put them in a stronger position for the upturn.”

The research also highlighted a move towards green manufacturing, with companies reducing levels of waste, improving recycling and reducing energy usage.

Click here for a copy of the report.