Three examples that make the case for service-based models

In the past few years, the function of a manufacturer has drastically changed. With a growing number of businesses in a variety of sectors stepping into the services field, what manufacturers can now offer has transformed.

Agribots could offer a wide amount of automation technologies to boost the agricultural sector - image courtesy Depositphotos.
Servitization is expanding the capacities of manufacturers – image courtesy Depositphotos.

The skills, tools and business plans of manufacturers are changing, as models continue to move away from products and toward service-based – or servitized – approaches.

Servitization is expanding the capacities of manufacturers to ultimately improve the experience of the end consumer.

There are many benefits manufacturers can enjoy from servitization. One key benefit is the opportunity and ability to develop longer-term relationships between manufacturers and their customers.

Customers will be reliant on the manufacturer for their service, be that monthly or whenever routine maintenance or otherwise is needed.

This reliance therefore will be over a much longer period of time, far longer than just the supply of the project. This strengthened relationship results in a greater profitability.

At present servitization, although naturally with its own obstacles, is in manufacturers’ favour.

Here are three businesses in different sectors utilising and exploring servitization.

1) Agriculture – agribots

Small Robot Company are employing a pay-as-you-go robotic system for agricultural farmers.

Agribot, Tom is pictured - image courtesy of Small Robot Company.
The company are offering agribots; Tom, Dick, Harry and Wilma, on a service payment system – image courtesy of Small Robot Company.

The company are offering agribots; Tom, Dick, Harry and Wilma, on a service payment system.

Ben Scott-Robinson, co-founder of Small Robot Company said to The Manufacturer: “If we can deliver a healthy crop at the end of the year, and for that we charge a certain amount per hectre, there is no upfront money, the farmer doesn’t have to worry about how reliable the robots are, they just pay per hectre. At the end of it all, the risk is on us.”

The agribots; Tom (a crop and soil monitoring robot), Dick (a precision spraying and laser weeding robot), Harry (a precision drilling and planting robot), and Wilma (the operating system), have their own roles but are designed to work in tandem.

Farmers are asset-rich but income poor, so offering a service-based model to them could be much more beneficial than the cost of an automated system upfront, as farmers are not likely to have – or be willing – to spend a large amount of money upfront on very new technologies.

2) LED Lighting 

Belfast-based lighting manufacturer, Lumenstream, is providing customers with fully installed and maintained LED lighting, for no upfront cost.

Belfast-based lighting manufacturer, Lumenstream, is providing customers with fully installed and maintained LED lighting - image courtesy of Depositphotos.
Belfast-based lighting manufacturer, Lumenstream, is providing customers with fully installed and maintained LED lighting – image courtesy of Depositphotos.

As electricity prices continue to rise year-on-year, more businesses appear to be turning to LED lighting, which can reportedly offer a 60% reduction in energy costs.

The start-up, set up just over a year ago, will offer no initial cost to the customer; instead, the LED technology will be reportedly paid for based on a share of energy savings achieved over five years.

According to the company’s website, they are the first lighting manufacturer to offer a complete solution and have “disrupted the lighting industry in the greatest possible way.”

The business has just secured their first major contract worth £4.8m with a major UK energy company, Argus Energy Management, to provide LED lighting.

3) Plastics – recycling and repurposing  

Plastic Mouldings specialise in providing adaptable products for their customers and are consumer focused - image courtesy of Plastic Mouldings.
Plastic Mouldings specialise in providing adaptable products for their customers and are consumer focused – image courtesy of Plastic Mouldings.

Coral Products (Mouldings) LTD, a plastic injection mould manufacturer, is investing in an in-house recycling facility, to offer councils and housing associations the opportunity to recycle their unwanted plastics.

The Manufacturer spoke to Coral Products (Mouldings) LTD, managing director, Neil Ashurst about the proposals which are to be based in the company’s Haydock site in Merseyside.

Ashurst explained: “The recycling plant will mean that we are able to offer councils, housing associations and other companies the option of recycling their waste plastic or old containers, and we can then use this new recycled material to create other products.”

The recycling plant will see the business utilise waste plastic from the surrounding areas to produce their products, offering a mutually beneficial service that is also more environmentally friendly, as total volume of plastic created is reduced.