Annick Perry, Senior Project Manager, Noventum gives us some insight into the findings of a recent research project that Noventum and Aston Universities Advanced Services Group have undertaken to look at Advanced Services Trend within...
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Mar 05, 2018 • Features • Management • Advanced Services Group • Annick Perry • manufacturing • Noventum • Servitization • Value Change • Servitization and Advanced Services
Annick Perry, Senior Project Manager, Noventum gives us some insight into the findings of a recent research project that Noventum and Aston Universities Advanced Services Group have undertaken to look at Advanced Services Trend within Manufacturing...
In a joint research study with the Advanced Services Group, a centre of excellence at Aston Business School, Noventum explored how five societal ‘Megatrends' bring opportunities for business growth for manufacturing companies through advanced IoT enabled services.
The five societal megatrends we explored in this research are:
- Value change: The increasing importance of transparency, diversity, individualisation and freedom of choice, as well as demand for meaning and connectedness.
- Green and resource scarcity: The increasing consciousness of manufacturers when providing products and services to fulfil human development and at the same time take care of the natural system.
- Health and Aging: An ageing society and the increasing importance of healthy living and lifestyle.
- Globalisation and the need for community: The increasing emphasis on communities, localities, etc. to foster identity in light of a globalised world.
- Inequality and Social Exclusion: The increasing market share of poor customers, means reducing the complexity and cost of a good and its production. Designing products for emerging countries may also call for an increase in durability and when selling the products, reliance on unconventional distribution channels. Globalisation and rising incomes in emerging countries may also drive frugal innovation, which implies that services and products need not be of inferior quality but must be provided cheaply[/ordered_list]
In this article, the focus is on just one of the Mega Trends ‘Value Change’ which provided some interesting insights on how this will impact the manufacturing industry.
Customers’ perceptions of value are changing
Consumer habits are changing, we are becoming more tech-savvy, and less connected to ownership of products and, in favour of experiences delivered by service providers operating new business models, like Airbnb. Expectations of a personalized experience are higher, which means companies must respond to customers’ needs faster and in a unique way. This change is passed on by B2C customers towards their B2B suppliers and partners. For manufacturers, this means staying alert and being proactive. As Anders Mossberg of Scania Trucks stated in our study, “Talk to your customers’ customers because they are the ones that will drive the trends in the future.”
Customers want to Buy Everything as a Service
Manufacturers are recognising the need to find new ways of offering value to customers. Their offerings are changing from a product focus to a service focus, which emphasises providing the customer with the capability to achieve their business goals, instead of emphasising product features. They are now competing through a combination of products and services, enabled by technology, tailored to meet the customer’s needs. Rolls-Royce, for example, sells hours of flight time for its jet engines rather than the more traditional purchase of the engine. These are more sophisticated, higher-value contracts, based on outcomes. They are also higher risk for the manufacturer but with higher potential to create a competitive advantage.
New technologies enable to respond to changing needs
New developments in technology are enabling the value chain to be redesigned. Embedded sensors and processors in assets and devices are increasingly capable of transmitting data to control centres to signal the need for repair or refurbishment. Research participants cited the introduction of driverless vehicles, some of whom mentioned that this is already a reality in some situations, and will increasingly be the case in the future. It will provide the opportunity for companies to take leadership and redesign the value chain to increase efficiency and added value. New configurations of networks allow companies to redefine their role in the value chain.
A transformation is needed
Delivering such advanced service requires fundamental changes in the manufacturer’s operations, relationships, organisational structures and potentially a change in their culture. Denis Bouteille of Fives addressed this in our study by saying, “Talking to the customer, we need people who can really develop the empathy, the listening and the deep understanding.”
Conclusions of the research on societal ‘Megatrends’
This exploratory research concludes that societal megatrends can drive opportunities for manufacturers to compete and grow through advanced services. To realise those opportunities, it’s important that companies exploit the implications of new trends together with their customers and explore what the impact of societal trends might be for future needs. The megatrends explored in this research show a significant potential for companies to develop advanced services and strengthen the competitive position of companies. However, some key factors need to be taken into mind when manufacturing companies take the decision to invest in developing advanced services.
1. Before companies can start developing advanced IoT enabled services…..
- Top management needs to support the development of advanced services and provide clear leadership to staff in the mindset appropriate to the development of the new capabilities[/unordered_list]
2. Stay close to your customers to identify opportunities for advanced IoT enabled services by understanding how value perception and needs are impacted by societal trends
- Understand your companies role in tackling global social and environmental challenges
- Explore the opportunities of the ‘circular economy’
- Recognise the impact of IoT on your customer's value chain
3. When you are developing the business models around advanced services make sure that:
- The tacit knowledge of the very experienced but ageing workforce is transferred into technical solutions to deliver advanced services
- Your company thinks global, but acts local and delivers a superior customer experience
Want to know more? Download an executive summary of this research and learn how the other societal trends can bring business opportunities. @ http://fs-ne.ws/dOId30iepLh
Feb 20, 2018 • Features • Management • Augmented Reality • manufacturing • Michael Blumberg • Blumberg Advisory Group • digital disruption • digitalisation • IoT • Servitization
The digital revolution in the field service sector is continuing to move forward at pace, Michael Blumberg, Principal Consultant, Blumberg Advisory Group helps us keep track...
The digital revolution in the field service sector is continuing to move forward at pace, Michael Blumberg, Principal Consultant, Blumberg Advisory Group helps us keep track...
It seems that there is no escaping the Digital Transformation Revolution in Field Service at this moment. A splendid example of this is the Servitization of Manufacturing. Servitization is about the journey a company goes through as it transforms from a product-centric company where service is an afterthought or a necessary evil to one that generates a sizable portion of revenue from services; where service is the business. The ultimate example is a Product as a Service business.
This is sort of the razor and razor blade scenario where the manufacturer gives away the razor in exchange for the recurring revenue stream that comes from purchasing the razor blades. Instead of razor blades, it services or more specifically, outcome-based services. For example, paying for the usage or result (e.g., outcome) produced by a product instead of buying the actual product. To deliver on the promise, the provider of this outcome most implement a broad array of digital technologies to ensure the equipment is up and running whenever the customer needs to access it. Downtime is problematic so you need to have technologies like IoT, AI, AR, etc. to ensure this high uptime.
In parallel to the servitization trend is the general ethos that businesses need to disrupt or be disruptedIn parallel to the servitization trend is the general ethos that businesses need to disrupt or be disrupted. Uber has become the poster child for disruption. This has lead many Field Service Organizations, software vendors, and technology providers to promote the concept of “Uberization” within field service.
Let’s put the term Uberization into context, when I hear the term Uberization, I think of providing customers with real-time, on-demand, always on, always connected solution. Other terms that people associate with Uberization are agility and frictionless. Agility is the ability to scale quickly, frictionless is where touch points that would delay the time it takes to complete a transaction are eliminated. We might also think of a solution that incorporates aspects of the sharing economy or gig economy.
The Field Service Industry is far from being a laggard when it comes to Uberization. Examples of how Field Service Organizations (FSOs) are achieving this outcome include but are not limited to:
- Utilizing IoT to monitor equipment performance and send notifications and alerts about the condition and performance of the machine
- Leveraging Artificial Intelligence to interpret these notifications, identify and diagnose problems, and take corrective actions
- Transmitting dispatch orders, triggered by IoT alerts, electronically to an ERP or CRM system and using Dynamic Scheduling software functionality to assign the right person for the job based on the needs of the job
- Turning to a freelance management system platform to source and dispatch freelance technicians on-demand to scale to capacity during peak periods
- Using Augmented Reality, Virtual Reality, or Mixed Reality to provide less experienced field engineers with expertise they need to resolve technical problems they haven’t encountered before
- Relying on Big Data and analytics to optimize resource planning and allocation issues.[/unordered_list]
If FSOs are going to remain relevant and create value for their customers, their leaders must adapt and grow within the context of the trends identified above. This motivation is required now more than ever. Technological development and new business models are coming at such as rapid pace that leaders can afford to rest on their laurels or past successes of their company. Past success does not guarantee future results!
In this digital age, companies must be faster, stronger and better than their competitorsIn this digital age, companies must be faster, stronger and better than their competitors. A 5-year strategy is typically out of date within 18 months or less. To survive and thrive in 2018, Field Service Leaders must have a crystal-clear vision about the outcomes they’d like to achieve within their organizations. They must pursue these outcomes with laser-like focus and adopt a sense of urgency about achieving these results.
Accountability to the mission is critical as is a mindset of certainty and a spirit of resourcefulness.
Quite often, the greatest of strategies and best of intentions are not pursued because of a lack of certainty or a perceived lack of resources. The truth is that those who overcome enormous challenges and achieve phenomenal results have done so because of their determination (i.e., certainty) and their resourcefulness. Cultivate these traits and the possibilities are endless.
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Nov 02, 2015 • Features • Management • manufacturing • Nick Frank • Servitization
The world of manufacturing is going through a seismic change with parallels being drawn to the industrial revolution. And as the trend of servitization takes seed the role of the field service engineer takes centre stage and is more important than...
The world of manufacturing is going through a seismic change with parallels being drawn to the industrial revolution. And as the trend of servitization takes seed the role of the field service engineer takes centre stage and is more important than ever before. Nick Frank, Principal Consultant of Frank Partners explains...
‘I am still making order out of the chaos of reinvention’ said novelist John Le Carre as he penned another cold war spy thriller.
Many would say the same is true of manufacturing today. Gone are the days when a manufacturer simply made the product, delivered it to the customer, sometimes supplied some parts & services, and then moved onto the next sale. In today’s unpredictable world, this model is fast becoming unsustainable.
Accelerated by the chaos of the financial crisis and propelled by the industrial internet, many businesses are moving beyond this traditional notion of manufacturing.
Why is this important? It’s not just that product transaction orientated business models are being replaced by those centered on relationships, outcomes and service. But that to achieve this re-invention, manufacturing must overcome a severe skills shortage! Without people and skills, all the advances in technology and thinking will stagnate. Companies need to attract a completely new talent pool into their industry. One that is technically and socially more diverse and which has many of the marketing, customer experience and media skills found in the FMCG and financial sectors.
If manufacturing is re-inventing itself, so must the services back-office. Much has been written around how IoT and analytics will change the nature of field service in terms of efficiency, transparency and customer relationship management. All this is true, but more profoundly as the product/service boundary blurs towards solutions, so the idea of field service as an entity must fundamentally change. Rather than being perceived as a ‘bolt on’ entity fixing customer problems, field service must be integrated into the business. As this happens it too must broaden its skills set, outlook and relationships, especially in the areas engineering, sales and other service back-office operations.
As connectivity and data become more available in real time, so increasingly problems can be solved centrally. As service thinking becomes more embedded in manufacturing businesses, so even self-healing technologies may be introduced into product design. One can see that this will require a completely different approach as to how service organisations are perceived and managed. It is logical that in order to provide seamless outcomes and experiences to the customer, organisations will become much more integrated, between, centralised technical support, the machine itself, local support, 3rd parties and parts and sales/relationship management. Exactly how this happens will depend on the business models being supported.
There are companies in the defence industry who have their service team located in situ on warships where they are contracted to provide availability
We we will also see field service and centralised support organisation being closer to the sales teams. Just look at the emphasis we have seen in recent years on the Trusted Advisor roles and the discussions of how field service as one of the major customer touch-points, has a significant impact on customer experience. Trying to balance relationship skills with technical problem solving is a real challenge for the industry.
The bottom line is that as manufacturing re-invents itself, so field service as an integral part of most service offerings will become a significant part of the companies growth strategy. How this will happen is difficult to tell, because we are still in the early stages of a manufacturing revolution. However, this re-invention of manufacturing is exciting from two perspectives. It means that a more diverse and broader skills set must be attracted into industry. And secondly that field service itself will need to adapt to evolving product technologies and business models bringing new challenges and opportunities for its people.
To be part of this re-invention process, Service Leaders can follow a simple 3 point plan:
- Undertake a strategic re-evaluation of the customer /industry supply chain to identify how services can contribute to sustainable business growth.
- Experiment with and adopt connectivity technologies to discover the cost and business model benefits
- Constantly look at how other businesses are adapting. This Outside-In perspective will speed up your adoption of innovation and can be gained in many ways. You can achieve this through not only reading publications such as Field Service News, but by joining networks such as that offered by ‘The Manufacturer’ to explore the role of Manufacturing Services in industry (MSTLN.com), the Service Community (www.service-community.uk) or the servitization courses for industry by the Aston Business School, UK.
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Mar 19, 2015 • Features • Aftermarket • aston university • Future of FIeld Service • Lely • manufacturing • IFS • tim baines
At the recent AfterMarket conference in Amsterdam Field Service News Editor, Kris Oldland hosted a panel debate with three speakers key to servitization; Professor Tim Baines, Aston University a leading proponent of the movement, Brendan Viggers,...
At the recent AfterMarket conference in Amsterdam Field Service News Editor, Kris Oldland hosted a panel debate with three speakers key to servitization; Professor Tim Baines, Aston University a leading proponent of the movement, Brendan Viggers, Product and Sales Support for IFS Aerospace & Defence division who has worked closely with a number of companies such as Emirates on moving towards a servitization model and Koen D’Haeyer, Global Manager Service Development & Technical Services Lely who had been through the journey himself with Dutch Farm Technology company.
In the first part of this feature we looked at whether servitization was limited to just large size companies and how to manage the change involved in moving to such a radical new approach. Here in the final part of this feature the debate continues....
Kris Oldland: There is a point there that you touch on briefly about not just getting the buy in from the internal teams but also from the customer. Data can play a significant part in servitization and that presents a challenge in it’s own right, as data is very precious currently. How can we overcome that and encourage our customers to let us access their data?
Koen Dyaeyer: To start I’ll mention one thing, there is an aspect on this benchmarking data with your customers which is of course, that you are obliged to do this anonymously that is clear. You can tell the a customer ‘look this is your data this is the rest of the market and this is the variation’ but you cannot be open to all extents.
But the value is not in knowing exactly who is doing what, the value is in comparing yourself with others and knowing what to learn, and how to then improve.
I would say twenty to thirty percent may adopt really quickly, really embrace it and are immeditely fond of the concept, another twenty to thirty percent will be lagging – it is not in their mindset and then the part in the middle is where you have to push
Brendan Viggers: Certainly in the defence market the classic contracting model is performance based logistics where the OEM is providing a platform and then the through life support of the platform as well, so all the servicing that goes with it and they will then offer a SLA or guarantee the fleet availability for 80% of that time.
What we are finding is there is a need for partnership between the OEM and the customer. Because the OEM needs to know how the customer is driving that vehicle. If he is taking that tank and forcing it across a plain over the bounds of normal operational use then it’s going to cost that OEM more to service it. So can be a win-win but if you want that platform you need to be prepared to operate within acceptable bounds.
Koen Dyaeyer: To add to Brendan’s point there I would add that in our case we are looking for the win-win-win because we are in between but if we focusses on the win-win-wins we can really drive forward.
Tim Baines: This debate about ownership of data has been going on for over 10 years. To my mind its the use of the data that is important. I’ve seen it in Xerox’s case where they will turn around and say OK the contract price is this for an advanced services contract on print management but if you let us share that data and use that data it’ll come down to this.
Audience Question: What would you say are your most important KPIs to actually monitor and drive your service business today?
Koen Dyaeyer: The most important group of KPIs are the service profitability KPI’s we have data on overall revenues and data on cost indicators. We cannot always be exact with th eservice cost indicators to the penny but we know what it is likely to be. So the service profitability is a major KPI.
The first question we ask in every technical assessment is what type of customer do you think this is and also is he satisfied? So we link that data to understand the relationship of data to customer satisfaction.
Then for the operations we also have the performance KPIs of the product so mean time between failure, mean time between breakdown, some performance indicators specific to our industry so number of failed milkings for example that help us see if the farm management is running smoothly. So performance, customer satisfaction and service profitability – these are the three main KPI group we use.
Kris Oldland: Have these KPIs evolved as you have moved through this process of servitization? Have they evolved as you gather more data and therefore Insight into your customers?
Koen Dyaeyer: Actually we started with maybe 8 or 10 basic KPIs and what we started to get excited about was the analysis we could do with them. We were able to look at the years of technical experience and see how that aligned to customer experience and service profitability. We learned a lot out of that initial process and then some new KPIs grew out of it .
Tim Baines: I may have seen something slightly different in some of the companies that I have looked at. A quote that comes to mind is by Henry Ford who said profit is a result of service. Therefore when I look at people like Alstom the number one KPI is around customer experience.
That means the customer experience, which in their instance would be the amount of time a customer is waiting because a train has failed to show up, that customer experience is the number one KPI.
For Alstom that’s key because it relates directly to the customers key core business process, which is about moving people. Then there are KPIs around the customer experience when somebody is onboard the train and so on. It’s the manufacturer that then translates those to mean time to failure etc.
What is very interesting to me coming from a world of production, where the main KPIs were cost, quality and delivery and everything was around that then moving to the service world where KPIs are centred around the business processes of the customer
Audience Question: I am understanding this correctly that the fourth industrial revolution is about re using our IP and industrial assets to serve customers better?
Tim Baines: I think that we are looking at a very special form of organisation. What is particular about the technology innovators you see here is that if they have the internal procedures in place to capture how the product is performing in the field and then feedback to the design process so the product becomes better suited for application, then that innovation loop is what is distinctive about the manufacturing companies and is different to technology innovators.
Ultimately it means language like through life support are actually a characteristic of the old product mentality, we’re talking about a capability being delivered. Indeed even the notion of After-sales service is a product based concept because we are thinking of the notion of producing something selling it transactionally and then after sales.
Another point to make is that we talk about servitization from the point of view of a manufacturing company, a company that’s got technology innovation capabilities delivering advanced services. But we also have the phenomena of companies which are service companies, technology integrators, developing their ability to technology innovate.
So there are two ways that servitization can arise. Predominantly we talk about a move from manufacturers to manufacturers that deliver service but we can also talk about service providers developing their abilities to redesign products.
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Mar 09, 2015 • Features • Aftermarket • Future of FIeld Service • Lely • manufacturing • IFS • Servitization • tim baines
Servitization has been talked about for many years but all of a sudden it seems to be a key topic on the agenda of many manufacturing companies and also amongst may service based organisations as well. For those companies that tread the path being...
Servitization has been talked about for many years but all of a sudden it seems to be a key topic on the agenda of many manufacturing companies and also amongst may service based organisations as well. For those companies that tread the path being dubbed the fourth paradigm it will mean a complete rethinking of how they view field service.
At the recent AfterMarket conference in Amsterdam Field Service News Editor, Kris Oldland hosted a panel debate with three speakers key to servitization; Professor Tim Baines, Aston University a leading proponent of the movement, Brendan Viggers, Product and Sales Support for IFS Aerospace & Defence division who has worked closely with a number of companies such as Emirates on moving towards a servitization model and Koen D’Haeyer, Global Manager Service Development & Technical Services Lely who had been through the journey himself with Dutch Farm Technology company.
Kris Oldland: The case studies we hear around servitization to date all seem to involve large organisations with quite complex or evolved business models already. Is it the case that servitization only applies to companies that have the size to make it work?
Tim Baines: I’ve worked with quite a few smaller companies which has been quite interesting first of all to break away from the myth that servitization is just about large companies. By this time next year we will have got around 70 companies within our region of the UK the west midlands engaged in servitization.
By this time next year we will have got around 70 companies within our region of the UK the west midlands engaged in servitization.
But what they are doing now is slowly but surely getting into the space where they are making the pallets, they are designing the pallets for the application, they are working with the customer to make sure the pallets are well suited, they are actually putting the pallet in the system, they’re tracking the pallets, they are taking care of stock control and slowly and surely they are moving to a position where they are becoming the business process outsourcing partner for the customers own material handling system.
Whilst this may not be a perfectly clinical example of servitization by some definitions, but nevertheless it is a good example of a small company that has adopted the principles of servitization and then put them into practice.
Koen Dyaeyer: I couldn’t agree me that smaller companies companies servitization can work. I have a history in smaller to medium sized companies, and we went drastically through servitization aspects even by a make and buy proposition through to quality assurance etc so it’s applicable for sure in all industries.
What I would say is that technology there is an extra opportunity as in complexity it is very much possible to create the value of your expertise which is also holds true of course.
Audience Question: Whenever we decide to do any transformation a big chunk of it is behavioural change, besides the software and the hardware how to you trigger the behavioural change within a company?
Brendan Viggers: For us its understanding the processes, being able to model those processes and work as a team to fully understand what the different functions and responsibilities you have within that team. But its also being able to drive down to having a piece of data that will ultimately help you deliver that new change.
Koen Dyaeyer: My experience is set directions clearly for each individual so people understand what is needed from them to achieve the goal. Also motivate people, there is a study that says people only get a message when it is [quote float="right"]There is a study that says people only get a message when it is repeated twenty three times. That’s often a slogan that I use, just repeat it and to be honest sometimes it may need to be repeated forty six times
repeated twenty three times. That’s often a slogan that I use, just repeat it and to be honest sometimes it may need to be repeated forty six times but energise it, make it engaging.
Tim Baines: The companies that I studied when we wrote made to serve, were all companies that were pulled into the delivery of advanced service by their customers. In some instances companies they were pulled into this space kicking and screaming, they were product based companies and they were given no option.
What’s interesting to me now is this second wave of organisations where in some instances you are not being pulled into this space by your customers, rather your looking at the benefits that organisations such as Rolls Royce and Caterpillar have got from servitization and you want a piece of that action. But you have a different set of challenges. Some of the challenges remain the same but some are very different.
You’ve now got to educate your customers. You’ve got to get the buy in of the whole organisation to the servitization approach
How to inspire the senior management, how to get the messaging about what it is that servitization is about both internally and externally, how to frame servitization so they know what you are talking about. Going to customers and stimulating a customer demand which then pulls everything together.
Look out for more from this debate coming soon...
Dec 06, 2013 • Features • Management • cost centre to profit centre • management • manufacturing • Nick Frank • service business • Service Delivery
It can make or break your service business growth strategy, yet it’s surprising how many service leaders do not appreciate the impact a separate service P&L can have on changing the mind-set of their people.
It can make or break your service business growth strategy, yet it’s surprising how many service leaders do not appreciate the impact a separate service P&L can have on changing the mind-set of their people.
Many just focus on what they believe is the best way to maximise their corporate value. Yes it’s important to ensure we have the systems to manage the value of our enterprise, but we also need to consider the impact of measures on the performance of our people.
Take Textron Fastening Systems who were a $1.8bn global manufacturer of nuts, bolts, rivets, screws and plastic clips. Their European business became the sole supplier of fasteners to the Ford Fiesta, providing an integrated solution consisting of manufacturing, purchasing, logistics and engineering services. As far from their manufacturing core, it was set up with it’s own P&L and dedicated team. They succeeded due to their focus and separation from the main manufacturing business.
But once this $30million service business was stable, we decided to re-integrate it back into the core business. So a dedicated team, was re-deployed back into the operational silo’s of Engineering, Logistics, Purchasing , IT and Sales. What a disaster and I say that as this case study is from my own experiences. We lost focus, drive, energy and sales. Our biggest competitor, who set up a separate service business, grew to 5 times our revenue, from exactly the same starting point in time and experience. 15 years on the Textron Fastening Systems no longer exists, having been bought by Private Equity and then broken up. Ironically the remains of the service business have survived but without growth.
For me this was a very salutatory lesson about the importance of focus. But its not so simple as saying that for an industrial company to succeed you must have a separate P&L or Business Unit.
It depends on the strategic goals of the business and also where it is in the transformation process. For example companies such as Rolls Royce & BAE with over 50% of their revenues from services see it as such an integral part of their business model, they do not have a stand alone services division.
So if you are pondering how best to manage your corporate value and looking to make the profit/cost centre call, you might ask yourself 2 questions:
- In your future business model how integrated will be your products and services offering.
- Is organisational focus the key challenge facing your service transformation programme.
Having a sound service strategy is key to make the transformation to a sustainable high growth profitable service business. If you want to read more about how real companies achieve this goal, you can look at the Bobst case study on www.noventum.eu
Read part one of this series, Creating value through services: Where to Start? here
Read Part Three of this series, Finding nuggets of customer gold here
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