Why servitization is something your manufacturing business needs to consider

by   |    |   2 minutes  |  in Business Agility, Digital Transformation, Manufacturing, Process Manufacturing, Strategy   |  tagged , , , , ,

You may think that servitization will never apply to your business, but there’s a reason why it’s occurring across many different sub-segments.

If you are a manufacturer, then you may have already heard the term “servitization” and ticked it off on your buzzword bingo sheet and moved on with your normal days’ work. If you have done this, then you need to start giving it some serious consideration. If you have not yet heard about this term, then you also need to start giving it some serious consideration.

Why Now?

Well, the manufacturing industry is becoming more and more commoditized and the need to differentiate yourself is key to survival. If you don’t, then you may see your revenue start to decline in the coming years unless you can continue to create uniqueness in the market.

What is servitization?

Servitization is a way for a manufacturer to add additional capabilities to enhance their overall offering and remove the focus away from the product itself. Apple did this a few years ago when they had gained the majority of market share with the iPod and introduced iTunes to generate more revenue.

You may think that it will never apply to your business, but it is occurring across many different sub-segments. For example, Philips now provides Amsterdam-Schiphol airport with “lighting as a service” which has resulted in a 50% reduction in electricity consumption without having to buy a lamp.

So what’s next?

Once a manufacturer understands how servitization can add value to their business and the benefits it can bring, then it is all about how they go about the journey. The benefits can include such things as better margins, more predictable income streams as well as business growth.

If this is something that you think is applicable to your business, then please read my white paper on the subject, “Servitization: Preparing the manufacturing industry for what’s next.”


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