Manufacturing firms in developed economies are finding it increasingly difficult to compete on the basis of cost, customers are becoming harder to win and retain, and added value has become an expectation rather than a perk, Columbus weighs in.
Those manufacturers retaining their competitive edge are the ones that are servitizing their business models; moving away from a ‘make it, sell it’ mindset to provide more advanced service-based solutions, providing a win-win scenario for all parties.
A customer only pays for the value it receives, while a manufacturer effectively locks customers into a longer term contract, gaining a constant stream of additional, incremental revenue.
International consultancy, Columbus, has been helping manufacturing businesses to implement successful servitization strategies with the aid of technology for more than 25 years and will be sharing recipes for success at its upcoming event, Transform 2016 in London on November 11.
Managing director of Columbus, Mary Hunter, explains: “Every day we speak to manufacturers who are facing the same barriers to growth.
“Many are struggling to keep up with changes in the market, others can’t unite their teams around strategic goals and some are just unable to adopt a mindset needed for change.
“The first step to successful servitization is to think differently and be more imaginative. Business leaders need to engage with their customers and understand the extra support they require, and learn from other people’s experiences.
Transform 2016 is about inspiring business leaders to help them harness change and technology and successfully grow their business in 2016.”
Aston Business School has led industry research into servitization for many years and has quickly become an international authority on the topic.
Professor Tim Baines, director of the Aston Centre for Servitization Research and Practice leads a team of 20 and, together with Iain McKechnie, director for Strategic Partnerships, works on the front line of manufacturing in the UK to help large and small businesses to change their business models, adopting advanced services to improve their competitive advantage.
McKechnie will be giving a talk at the event about what servitization means to a business.
“Many manufacturers are already servitizing their business models and aren’t actually aware of the theory or context behind this,” he explains.
“What Aston Business School is working hard to achieve with its partners is to educate the industry that servitization is about real world applications, not just about theory.
“This is a practical service model that can help manufacturers boost customer loyalty and revenue, and doesn’t require huge investment sums – but it does require a change in mindset as manufacturers move from product-centric thinking to thinking about the capability required by the customer. Servitization accelerates this change.”
Digital technology is already providing manufacturers with an easy transition to a next generation servitization model and businesses like Columbus are spearheading this revolution, by helping industrial manufacturers better utilise technology to drive even greater services to their clients.
This may include better analysing Big Data to provide a more personalised customer experience, utilising the Internet of Things (IoT) for machine maintenance and updates, or simply selling service packages, rather than individual products.
Hunter concludes: “Servitization is already happening and now is the time for manufacturers to become more innovative and think about how they can add greater value to their customers.
“The demand for servitization already exists and those manufacturers who don’t embrace it risk being left behind.”
Columbus’ Simon Charlton will be speaking as part of the Manufacturing Services Thought Leadership Network (MSTLN) panel discussion at The Manufacturer’s Annual Leaders Conference (TMALC), which takes place on 25-26 November and immediately precedes The Manufacturer MX Awards.
Click here to find out more information and to register.