Using new technologies such as IoT, manufacturers can gain significant insights into how their factory is working ensuring they are providing their customers the best possible outcome.
The 2016 Annual Manufacturing Report highlighted that 70% of manufacturers are not implementing servitisation due to a lack of resources. Further noted is that 74% want to develop closer customer relationships and 47% want to increase productivity through the expansion of services. To take full advantage of industry 4.0 and reap the benefits it can bring in terms of servitisation, organisations must begin to change or they risk being left behind.
Being able to adapt to customer needs inevitably leads to increased customer loyalty. The knock-on effect of loyal customers is increased revenue. Research shows that companies who have improved engagement are able to drive up-sell revenue from 13% to 51% whilst also increasing cross-sell by 22%. A large reason for this is due to word-of-mouth, customers are sharing their opinions with their peers and because we are living in digital times it is easier to voice one’s opinions; the 2016 B2B Buyer’s Survey found that 62% of B2B buyers were relying more on peer recommendations than the year before.
As technology is the main driver for change with servitisation, manufacturers are also able to lower costs significantly. The 2016 Global Industry 4.0 Survey conducted by Pwc reported that due to digitalisation, over the next five years costs will be reduced by 3.6% per annum.
Manufacturers are able to achieve new revenue streams by adopting service models. A recent survey revealed that 41% of manufacturing companies have implemented service business models. From this, 70% reported benefits such as achieving higher margins and creating new revenue stream. Tim Baines, a professor at Aston Business School, measured £6 million in growth added value from a collective of SMEs who have adopted servitisation. Offering additional services adds to your bottom line and leads to a happy customer.
As processes innovate and services improve, it becomes increasingly difficult for competitors to emulate what you do. By developing closer relationships with customers, manufacturers gain a better understanding of requirements and can react to necessary changes in quick time. Not only this, but with the use of modern technology manufacturers can also anticipate requirements saving vast amounts of time.
Digital transformation will continue to disrupt manufacturing processes in 2018. We have identified four trends that manufacturers should invest in to ensure success in 2018. Read our blog post to see our top picks.
Our series focuses on five common problems discrete manufacturers are currently facing, and how to solve them, including case study examples of where discrete manufacturers have implemented our solutions and seen success. The full series includes tip sheets – available for download - on: