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Servitisation

Manufacturing companies who offer their products as a service, can benefit in all kinds of ways. Customer relationships improve, margins increase, and cash flows become stable and predictable.

Servitisation

Manufacturing companies who no longer supply products, but instead offer their products as a service, can benefit in all kinds of ways. Customer relationships improve, margins increase, and cash flows become stable and predictable.

Servitisation

Servitisation is on the rise. More and more production companies are gradually shifting towards offering some or all of their products on a subscription basis in combination with advice and maintenance. A growing number of manufacturing companies not only supply products, but also provide services such as maintenance, financing and advice. Sometimes, companies even choose to overhaul their entire business model and offer their product exclusively 'as a Service'. In this way, they resemble a lamp manufacturer who stops selling lamps and starts selling light, or an aircraft engine builder who goes from selling jet engines to selling flight hours.

Higher turnover and better relationships

Switching from supplying products to providing services can bring significant benefits. Research has shown that companies who make this switch see both their margins and their revenue increase. They also improve their customer relationships, which is essential for success. After all, for a manufacturing company selling services rather than products, the customer relationship is worth its weight in gold. The longer a customer remains enthusiastic about buying a particular product, the higher the revenues they will generate. The focus shifts from the transaction to the relationship, resulting in a stable, long-term income stream.

How should you take the first step?

As the focus shifts from total cost of ownership (TCO) to total customer care (TCC), companies need to think differently. Total customer care starts with outside-in thinking. Stop looking at things in terms of your own objectives, and make your customer the starting point instead. Who is that customer, what are they doing, what are they struggling with and how can you best help them? Bring your service provision into line with this and align your organisational objectives along with it. After that, it is crucial to start actually thinking in terms of 'as a Service'. What products could you offer as a service? Our key advice: start small. It won't be possible to make the switch in one go.

Focus on service

Servitisation has a major impact on the 'back end' of your company. Revenue from services are generally limited in most manufacturing companies, and not much attention is paid to the topic. Servitisation, however, requires a streamlined service framework, as well as in-depth insights into the way your product is used by your customers so that you can respond by tailoring your production processes and services to meet their needs. Digital developments such as big data, digital twins, predictive maintenance and IoT can help you in all kinds of ways.

Getting started with servitisation

Do you want to get started with new service concepts? Would you like to transition from a production-focused to a more service-focused organisation? If so, we would be pleased to help you take the right steps. Ctac helps production companies to focus more on their customers and boost the customer experience – from offering inspiration and exploring possibilities to introducing and supporting new processes.

SAP S/4HANA Cloud Manufacturing

Personalisation, an ageing workforce, the infinite possibilities of innovative technology, and the advent of servitisation – these are the trends that will determine the future of the manufacturing industry.

“Are you being Served?” From production to “as a Service” in four steps

Blog - October 4 2018, Roland van Heesch, 4 min reading time

Manufacturing companies can no longer afford to exclusively focus on just making and selling products. To stay relevant, more and more companies are moving towards ‘servitization’. This means a serious change of gears on all fronts, whether it comes to strategy, processes or systems.

Real Time Insight explained by Michiel Kox

Video

Michiel Kox, New Business Manager Manufacturing at Ctac, talks about his vision of the Ideal Factory and focuses on 1 of the 5 pillars: Real Time Insight.