Is servitisation the future for manufacturing businesses?

I recently bought a pair of running shoes.  It occurred to me that there was a time when I would have simply wandered around the shop to check that they were comfortable and, if they were, I’d have bought them.

Nowadays when I buy running shoes, I’m sold on the technological advancements.  I want to see gait analysis to ensure the running shoes will match fit my style of running and I want to be offered additional products and services to enhance my running.

As customers we increasingly want more than just the product itself and this change in customer expectations is driving many manufacturers to look to servitisation as their business model of choice.

Servitisation is the process by which manufacturers find new ways to identify and respond to their customers’ needs. By doing so, manufacturers can then create new revenue streams and increase margin and profitability by adding value so that they retain their customers and boost market share.

However, the Barclays 2016 Annual Manufacturing Report found that only 30% of manufacturing businesses are implementing servitization. The main reasons for not pursuing servitisation included a lack of staff, materials and adequate resource. More positively the report also concluded 74% of businesses want to build more productive customer relations and 46% want to increase productivity by expanding their services. 

Time will tell if servitisation is the future for manufacturing businesses; it’s obvious manufacturing businesses would like the benefits that servitisation can offer but as yet most are not in a position to be develop to make sure they realise those benefits. 

Like our many manufacturing clients, we look forward to seeing how things develop during the next chapter of this exciting story.

For help and advice on how 'Servitisation' could develop your business

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