Servitisation, the process of adding services to traditional product offerings, has emerged as a game-changer in the manufacturing landscape. To shed light on its potential benefits and implementation strategies, a roundtable discussion with members of Made in the Midlands was held this week. Led by Tony Sartorius, the visionary CEO of Alucast, a pioneering manufacturer that successfully integrated servitisation into their business, the discussion unveiled valuable insights for small and medium-sized enterprises (SMEs) looking to embark on this transformative journey. Other member panelists included Jennifer Hughes of Transiscon Ltd, Mark Hanson of HCM Engineering, Jon Stone of Frederick Cooper, Nick Godfrey of Central Scanning, Luke Appleby of Equilibrium Risk, Steve Whitehouse of Winman ERP, Tom Harris of Wavenet Cyberguard, James Grant of Powdertech, Emma Grant of IG Masonry Support and Emma Hill of Winman ERP.
At the heart of the roundtable discussion was Tony Sartorius's journey of introducing a servitisation component to Alucast's business. Traditionally a casting process consultancy firm, Alucast embraced servitisation by offering comprehensive end-to-end solutions to their clients. This strategic shift enabled them to diversify their revenue streams and achieve impressive results, aiming to generate around 10% of their annual revenues from services.
Key Takeaways from the Roundtable Discussion:
Customer-Centric Approach: Servitisation revolves around understanding the needs and pain points of customers. By transitioning from a product-centric to a customer-centric model, manufacturers can identify opportunities to enhance their offerings through added services.
Enhancing Product Value: Integrating services with products can elevate their value proposition significantly. Services like maintenance, repair, and training create stronger customer relationships and boost customer loyalty.
Revenue Diversification: Servitisation allows manufacturers to reduce dependency on product sales alone, creating new revenue streams and a more resilient business model.
Data-Driven Insights: Adopting a servitisation model provides access to valuable data on product performance and customer behavior. Leveraging this data can lead to continuous improvements and informed decision-making.
Collaborative Ecosystem: Manufacturers need to build strong partnerships with service providers and suppliers to ensure seamless integration of services into their product offerings.
Step-by-Step Guide to Identify Potential Servitisation Streams within a Manufacturing SME Business:
Step 1: Customer Research
Conduct thorough market research to understand customer needs and pain points. Identify areas where services could complement existing product offerings.
Step 2: Value Proposition Analysis
Assess the current value proposition of your products and explore how added services can enhance them, what is being under utilised? What areas of the business has latent capacity?Determine the potential impact of servitisation on customer satisfaction and loyalty.
Step 3: Service Ideation
Brainstorm and ideate potential services that align with your products and address customer needs. Consider both pre-sale and post-sale services, including maintenance, training, installation, and support.
Step 4: Feasibility and Viability
Evaluate the feasibility and viability of each service idea in terms of resources, expertise, and market demand. Focus on services that align with your core competencies and can be delivered efficiently.
Step 5: Collaborative Partnerships
Identify potential partners and suppliers who can assist in delivering services effectively. Build strong collaborative relationships to ensure seamless integration and customer satisfaction.
Step 6: Piloting and Feedback
Start with a pilot program to test the selected service offerings. Gather customer feedback and refine services based on their experiences.
How to Implement Servitisation Successfully:
Step 1: Internal Alignment
Communicate the servitisation strategy to all stakeholders within the organization. Ensure that the entire team understands the value of adding services to the product offerings.
Step 2: Resource Allocation
Allocate resources, both financial and human, to support the implementation of the chosen services. Develop a clear roadmap with timelines and milestones.
Step 3: Marketing and Communication
Develop a marketing strategy to promote the new services to existing and potential customers. Highlight the value and benefits of the services and how they complement the products.
Step 4: Training and Upskilling
Train employees to deliver the new services efficiently and effectively. Invest in upskilling the workforce to adapt to the changing business model.
Step 5: Continuous Improvement
Continuously gather feedback from customers and adapt services based on their evolving needs. Monitor performance metrics and make data-driven decisions for improvement.
The roundtable discussion with Made in the Midlands members, spearheaded by Tony Sartorius, brought servitisation to the forefront of manufacturing SMEs' strategic considerations. By following the step-by-step guide and learning from Alucast's success story, businesses can confidently embark on their servitisation journey. As the manufacturing landscape continues to evolve, embracing servitization offers an avenue for growth, customer-centricity, and enhanced revenue streams that will set SMEs on a path to future success.