For the manufacturing industry in certain, the strong gap between customer expectations and after-sales service realities has pushed manufacturers into major renovations to their businesses and, truthfully, the shift to servitization. This shift, where manufacturers must evolve from selling their products outright to selling the outcome or value that products deliver and guarantee maximized product uptime, means focusing more on repair prevention instead of retroactively fixing product failures once they have happened, or repair execution or break-fix.
 
The retroactive, break-fix model of manufacturing has practically been the way the industry has managed since day one. This, of course, implies that a complete upgrade – or even just a fractional shift – away from the break-fix model cannot develop overnight, given how ingrained it is within each aspect of a manufacturer’s business. In addition, achieving such a large shift in business operations comes at a significant upfront investment — including paying for technology costs, retraining employees, hiring and more — that may not be specifically attractive in the immediate term. So, getting buy-in from the boardroom level can be challenging. However, the pros of servitization are quite attractive once the shift is made.
 
I recently had a chance to chat with several service experts about what companies must do to hit the ground running to make the switch over to servitization. Below are a few key takeaways from my conversations:
 
Incorporate automation and machine learning. “Replace historically manual activities with automation and machine learning, like in your forecasting, for example. If you can apply machine learning and [historically excluded] data, forecast accuracy can ultimately make a huge impact.” – Kurt Ranka, Principle Director at Accenture
 
Study customer behaviors. “Look at everything that’s not a value-add to your customers and decide if it’s a priority to you. If the customer is not willing to pay for it, then you shouldn’t [spend time on it]. Time is the one commodity that you can buy, barter or trade, so the quicker customers can get to do what they want to do, the better. ‘Easy-to-do-business-with’ is more valuable than ever.” – Jon Dickinson, Director of Aftermarket Sales at Spartan Motors
 
Challenge, change and create. “I started in the business at Honda Motors and learned to always challenge, change and create. Go into things and ask why you do them that way; question it and try to create a new way to do them. Nokia lost their principle because they couldn’t execute this – they couldn’t transition into the smartphone industry and they got left behind.” – Jay Johnson, General Manager, Daimler Trucks North America
 
Traditional, break-fix service business models were intentionally created to fail at some time during their life cycle. This model created opportunities for manufacturers to sell high-margin parts and service, which worked initially because the responsibility of the repair (i.e. maintenance and uptime) fell on the customer. But that model won’t cut it any longer in today’s always-connected world, just where customers are demanding a change. In an industry that has been grappling with uncertainty for several years, the space is mature for innovation and to drive results. With servitization, manufacturers can modernize their operations, and align themselves better with customer expectations and needs. Moreover, it simply produces better results for customers and helps them drive revenue and growth in return. Each year presents new opportunities for manufacturers, and it’s always interesting to see how things materialize. 2019 will be no different, and it will be intriguing to see which companies adopt servitization and who wins the race.


This article is originally posted on Tronserve.com