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Manufacturing companies that ignore servitization will lose market share

 HANS HOUMES | IT EXECUTIVE | 26 JULY 2017

Hans Houmes, PA manufacturing expert, has had a byline article published in IT Executive sharing the key findings from PA’s new research on servitization. 

Hans sets out how manufacturing companies that ignore servitization – the process of developing services and solutions that complement traditional product offerings – will lose market share. And how companies that succeed in servitization saw a sharp rise of up to 35% in their service margins.

According to the research, industrial manufacturing companies recognise the importance of servitization (75%) but few have the strategy, capabilities and leadership to successfully introduce this proposition (30%). This will put pressure on their future competitiveness and profitability.

Servitization has implications for every aspect of the business – from strategy and positioning, to operational challenges surrounding technology, data and opportunities to work with customers. There are also many questions about how servitization can be organised and how a company can develop new service-oriented models to offer higher margins. Our research shows this is possible and it pays to invest time and money to work out new ideas with customers.

Servitization report

 

From Products to Services

How do you do create sustainable growth in manufacturing through Servitization? 


Download the report

 

 

The top 20% of successful servitization companies pull together technology, data and customer service to create their offerings. Focusing on working with customers is also important, with 70% of the best companies co-creating.

Servitization is crucial to the future of industrial manufacturers, and ignoring this trend can be fatal. It is so important for companies to implement a consistent strategy for delivering a service for every part of their business – from strategy to operations, sales to online. Our research also proves those who do this get more profitable and keep ahead of their competitors. Businesses must learn from the success stories and adjust their business models.

Find out more about our work in manufacturing.

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