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How ERP can support manufacturers on the Servitization journey

5 January, 2017
Manufacturing_Servitization_ERP
Servitization and ERP

For manufacturers, it is no longer enough to just make the products. The new industry trend – Servitization – has begun to take hold, and take manufacturers on an interesting journey to providing advanced service contracts for their customers.

Customer service is the key to the success of any business, and we aren’t talking about the service that stops after the sale of a product, we are talking about the type that continues through and past the purchase to long-term care plans.

Servitization is all about really understanding the customer, and their business needs and understanding the ways that your product and your service can help the customer to become more successful, in turn, making you more successful.

So how can manufacturers enhance their products to meet customers’ needs better, how can they ensure people buy into the concepts long term, and how can this be cost effective?

Introducing ERP

Enterprise resource planning (ERP) provides business with that critical link between otherwise completely separate departments, enhancing productivity and efficiency. It provides an integrated and continually updated – in real time – view of core business processes and business resources, flagging any area where an error could occur before it happens. The control and transparency of processes that comes with ERP means that businesses are in a better position to respond to customer needs and increase operational efficiency.

By making a move to ERP, you really have the opportunity to redesign your business and how it functions. The opportunity to take a close look at each area of your business will help you to develop an understanding of areas that are working, and those that could be better, enabling you to move to more of a best practice approach, with servitization in mind.

The benefits of ERP for servitization

As you many know, ERP systems are able to solve numerous challenges that you as a manufacturing organisation could be facing, this includes reducing costs and boosting growth. ERP software integrates all areas of a business (materials, inventory, production, operations, sales, accounting, finance etc.) so that each area just relies on one single database.

This ‘information hub’ delivers accurate real-time information, crucial to the manufacturing industry, and servitization. Further benefits include:

Streamline processes

With servitization, there is no doubt that your operations and service offerings will become more and more complex. By using ERP, your business operations are automated increasing efficiency and productivity by helping users navigate through the complex processes. Real-time data from your processes will also help keep your service plans on track!

Reduce costs

As ERP gives you one source of accurate, real-time information, your costs on admin and operations will be significantly reduced. By proactively managing operations, you can prevent disruptions and delays which means that equipment for your customers will run a lot more smoothly. Keeping them happy and staying on track with your service plans is what will ensure the success of servitization in your manufacturing business.

Flexibility

You might be thinking that there is not one software solution out there that could possibly integrate with your complex business processes, especially with servitization on the horizon. You’re wrong. ERP isn’t a one size fits all proposition, they can be tailored around the unique needs of a business which includes any new service offerings you develop.

And once more, it has the ability to adapt with the changing needs of your growing business, which is ideal if you’re pushing for growth and implementing servitization.

The bigger picture

To maximise the benefits of ERP for servitization, you need to look at the bigger picture, and into other emerging technologies such as the Internet of Things (IoT) which is also growing in significance by extending the potential for businesses to gather granular data and use it to enhance their service offerings.

As an example, an international truck manufacturer created a new revenue stream by fitting their trucks with sensors for predictive maintenance. The system automatically schedules repairs when needed and orders parts that are required for the repair, ahead of time.

The result of this is an interconnected web of sensors and operational systems that communicate to save time and money across the whole operation… None of which would be possible without ERP or IoT.

Bringing together emerging technologies and integrating them within your manufacturing business can yield significant business enhancements, both in terms of product development and service offerings, which is perfect for servitization.

The demand for servitization among manufacturers

In discussions that we have had as part of The Manufacturer Thought Leadership Network, it became clear that many manufacturers were keen to learn more about servitization and how it could benefit their manufacturing businesses. What we also realised was that many weren’t sure how to go about this process, and the next steps that they needed to take.

To give manufacturers what they needed, we worked with Aston Business School - who had been actively researching servitization – to create ‘Unlock your Insights’, a game on servitization.

Professor Tim Baines, leading global researcher at the Advanced Services Group said:

“This game is a quick and fun way to take a snapshot of your current strategy with regards to the add-on services your firm provides to your customers. The tool also challenges you to think about how you will compete in 3 to 5 years’ time. You can then easily share the experience with colleagues, prompting an informed debate in this critical area, which will result in opportunities to grow your business by providing advanced services.”

If you’re looking to see how servitization could benefit your business, and to learn what your next steps should look like. Play our game on servitization here, the results will give you a detailed report showing what you need to do to get started on the servitization journey.

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