Servitisation – The Changing Face of Manufacturing

As the UK sets out on a period of gradual recovery, manufacturers are increasingly having to review their strategic approaches in order to achieve sustainable growth. One trend that has brought them significant benefits is servitisation – with firms starting to offer services and solutions to complement their traditional offerings.

According to Barclays’ 2016 Annual Manufacturing Report, servitisation is the current second most used phrase of new manufacturing terms, behind ‘IoT and Big Data’.

A holistic manufacturing solution

The Aston Business School defines servitisation as “the process by which a manufacturer changes its business model to provide a holistic solution to the customer, helping the customer to improve its competitiveness, rather than just engaging in a single transaction through the sale of a physical product.”

Servitisation is a process that increasingly shapes today’s manufacturing landscape, as it appeals to manufacturers as a way of getting themselves out of any commoditisation trap. Even the longest-established organisations need to be careful that their customers don’t start to treat their once highly valued products as commodity goods that could just as easily be bought elsewhere, and the latest technologies are making it easier for businesses large and small to manufacture products more quickly and cost-effectively in smaller batches at the point of demand. 

It’s important, though, to highlight the role of the customer in driving this paradigm shift. Today’s consumer may not always want to own products but they are looking increasingly for a better service of their existing technology, and are actively seeking out providers who are able to deliver this. 

More than a sales activity

As Phil Wood, group IT director of Rotork, leading actuator manufacturer and flow control company, puts it: “One of the big challenges driving servitisation is the fact technology is moving on so quickly, customers simply can’t get their head round the changes that are happening. They simply don’t understand the more complex technology or what they need to do with it.  That’s why we see servitisation as far more than just a sales activity, it’s really more about how can we help them to exploit the value out of what they have got.” 

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