Author : admin | Friday, 3 May 2019
Author : admin | Friday, 3 May 2019
Today’s most
successful original equipment manufacturers (OEMs) have begun to specify the
way in which they do business— switching from a reactive, break-fix method of
service to one that centers on maximizing product uptime. Servitization, where
more and more companies are moving from selling products to selling access to
and the outcome those products deliver, is driving this change.
As an
element of this shift, manufacturers must learn from leaders and laggards
within other industries, e.g. Netflix vs. Blockbuster or Uber vs. taxi
companies. Today’s OEMs are at a pivotal point in their histories and they must
decide: do they want to be in advance of the curve and conform to change, or
maintain the status quo and get left behind?
The best
thing is that many manufacturers are looking hard at sticking to uptime-centric
business models. In reality, according to research conducted by my company,
Syncron, alongside Worldwide Business Research (WBR), 66 percent of
manufacturers say that their executive suites are currently pushing a move
towards uptime.
But what
resources are needed to make uptime a reality? Below are three big needs for
manufacturers as they embrace this shift:
Modernize
the Service Supply Chain
The
manufacturing industry has operated off the same script for even more than a
century: a piece of equipment is made, sold, and then ultimately repaired after
it fails. Until recently, end-users had no choice but to eat the costs of this
downtime. Now, with breakthroughs in IoT and predictive analytics,
manufacturers no longer want to be on the hook for equipment that can’t
function. On the other hand, they want their products up-and-running all the
time — because customers are demanding it.
This means
that parts need to preemptively be available when and where they are needed,
and proactive maintenance needs to take control in order to avoid breakdowns.
Therefore, manufacturers must overhaul their supply chains and distribution
strategies to allow this preventative maintenance to take place.
Establish a
Subscription-Centric Focus
Sometime
soon, OEMs will will no longer report on the number of new products sold, or
even service parts revenue. In actual fact, they will follow the path many SaaS
companies have taken, reporting on recurring revenue from subscription-based
services. Customers will sign up for their equipment much in the same way as
they do their Netflix subscription, paying for output and value.
Adopt
Dynamic Pricing for Service Parts and Contracts
It might
appear obvious that selling a service part or service contract for the optimal
price is a key way to create competitive differentiation, but unfortunately, a
great number of manufacturers are still using outdated methods like cost-plus
or simple spreadsheets. With e-commerce players like Amazon and eBay coming to
be more focused on the service parts space, competitively priced parts would
become more important than ever. Modern service parts pricing technologies
ensure the end customer has a great experience, while the manufacturer is
simultaneously maximizing revenue and margins.
Servitization
is obviously making waves in the manufacturing industry. And without the proper
planning, manufacturers stand to be swallowed up. Nevertheless, by laying out a
carefully-planned strategy, these large, global brands can set themselves up
for a smooth transition to a new way of doing work and give themselves the best
chance at success for years ahead.
This article is originally posted on manufacturing.net
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