UK manufacturers lack service understanding

Posted on 5 Sep 2011 by The Manufacturer

Research from Barclays Corporate shows just half UK manufacturers are providing services in addition to core products leaving Britain at a competitive disadvantage.

The Servitisation Report released today includes a survey of 200 manufacturers across the UK.

While the report shows a positive commitment from UK manufacturers to product innovation and bringing high value goods to market quickly, it also reveals that half UK manufacturers have not yet started to exploit after-sale opportunities for growth.

Across manufacturing sectors 44 per cent of respondents still provide no services to accompany their products. Furthermore 82 per cent of this group have no intention of ‘servitising’ their operations.

Servitisation is defined as the process of providing a service offering complementary to key product lines, from maintenance and upgrades to training and end of life disposal.

Key examples of UK manufacturers that are leaders in this area include BAE Systems and Rolls Royce – two organisations who are now key partners to a new EPSRC research centre for Through-Life Engineering Services, located at Cranfield University.

This new centre is now open and leading research into the processes and technologies needed to support successful service operations.

At the launch of the Through-Life Engineering Service centre in July this year a Cranfield spokesperson told TM that servitisation is often erroneously considered to be the preserve of large aerospace firms when in fact opportunities abound across sectors and company sizes.

The Barclay’s Corportate report was co-authored by Andy Neely, director of the Cambridge Service Alliance at Cambridge University. Mr Neely believes that while servitisation is not a silver bullet for developed economies to grow their manufacturing base, it is a vital part of the mix.

“Creation of a service proposition allows for a steady income stream, it also makes sense when considering the installed base argument,” said Mr Neely.

In an assessment of manufacturing servitisation globally, the report from Barclays Corporate finds UK manufacturing is missing an opportunity to move up the value chain and compete more effectively through failing to understand servitisation fully.

Mark Lee, head of manufacturing, Barclays Corporate, said the results showed a sector that was evolving by necessity, but not embracing servitisation fast enough. “Manufacturing and servicing have in the past been somewhat uneasy bedfellows, with manufacturing sales teams focused on big product orders rather than time and resource consuming servicing contracts.

Breaking down what types of services are being offered by the sector, 70% of those with a service offering provide maintenance and repairs, while 53% provide spare parts and 51% offer training for their products.

Just 20% offer transport services and least popular is retailing products; just 7% of UK manufacturers that do provide services are also end user retailers, which equates to 4% of the total manufacturing population.