Can servitization help to plug the manufacturing skills gap?
There’s no doubt that UK manufacturing has been hit hard by the impact of Coronavirus. While the recovery rate remains promising for the sector and several organisations have pivoted to produce new services such as ventilators and PPE in order to survive, sadly some manufacturing businesses have not been as fortunate. A survey from MAKE UK in June 2020 found that 25% of businesses were planning to cut jobs before the end of the year, and a 45% considering redundancies. When talented people have to leave businesses, they typically take their skillset with them, and this can leave considerable gap in terms of knowledge, expertise and experience.
Everyone within the sector understands how difficult it can be to replace these skills; indeed, UK manufacturing constantly bemoans a lack of STEM (science, technology, engineering, mathematics) talent for several years, with little sign this is improving.
There are a number of ways where servitization can help to resolve a lack of skills:
Reduce the risk by adopting service-based approaches across your business
One of the most valuable skills a person can bring to manufacturing is extensive knowledge and understanding of how a product works. Product managers and salespeople often work with the same products for several years, building up an enviable amount of expertise. When they leave a business, this knowledge leaves also, but that needn’t be the case with servitization.
Businesses that embrace advanced services can gain knowledge of how products work in an entirely different way and then share this information throughout the business, so that it never just sits with one person. The ability to accurately predict repair times and gain awareness of when components need replacing is essential information for any business with products operating in the field. By applying the right telemetry technology to your products, it is possible to monitor their performance in real time and later feed this information back into research and production and development cycles.
Take Decade Monitoring Solutions as an example. The company manufactures power press monitors, production recording systems, assembly machine process monitors, and software for networked measurement and data-logging systems. Its applications support automation within the manufacturing sector. As part of its servitization journey, the business is working to connect customer units remotely so performance data can be collected and analysed. Not only does this enable the firm to see and prevent potential issues before they disrupt customers, but the information collected will be funneled into product development programmes as a more efficient alternative to traditional R&D alone. The data can also be used to inform salespeople of possible upsell opportunities across the company’s portfolio, instead of having to make more traditional sales calls to customers and have someone working to interpret individual customer feedback.
Taking the load off customers
Servitization can also work the other way, in helping customers to plug skills gaps of their own. For example, one industry severely hit by the Coronavirus pandemic is aerospace, where thousands of firms are being forced to take another look at their employee headcounts in line with their business costs. AE Aerospace already delivers servitized solutions which could help aerospace manufacturers to plug gaps in machining.
The company previously sold traditional machining services to customers but felt there may be an opportunity to add greater value and expand their offering. Machining is only a small part of the wider supply chain process, as parts must also go through other processes such as finishing, before they reach the end customer. Where skills gaps may exist in the supply chain, AE Aerospace is helping to plug them by offering a servitized ‘glass factory’ operation. This essentially delivers to customers the technology and infrastructure required to outsource the entire machining process to AE Aerospace. It gives customers their own cells of operation aimed at reducing machining times and lead times for delivery as well as reducing costs and optimising production quality through machining-by-the-hour contracts. This enables AE Aerospace to move from selling a service to selling a business outcome, enabling its customers to focus their skills and time on more core areas of the business.
Services that help customers plug their skills gaps
One industry that has already suffered a catastrophic downturn during 2015 and 2016 which led to thousands of staff being made redundant is oil and gas. Highly skilled engineers and operatives left the sector in a short space of time, leading to a massive skills gap that had a knock-on effect for years. This is an industry that operationally has a lot of safety-critical elements, which added further complications for large scale projects. One company in the Midlands that helped its customers to overcome some of the challenges is Boltight, part of the Nord-Lock Group, which provides bolt tightening solutions for power generation infrastructure such as drilling rigs and wind turbines. They servitized their business during that period by plugging the service maintenance gaps, providing their own expertise to customers on a consultancy basis where it was needed. This helped with upskilling the staff that were left in the industry but the knowledge and expertise within Boltight also helped their customers with looking at safety-critical maintenance operations and what would be required. Boltight is currently helping its customers in a similar way through the Covid-19 crisis, drawing on their experiences during the 2015/16 economic downturn in the sector.
UK manufacturing SMEs have a history of surviving during turbulent times and plugging a widening skills gap through servitized business models and new technology could help the sector maintain good performance throughout the next few challenging years.
The SME Partnership is now recruiting its next cohort of SMEs from Solihull and The Black Country, to take part in 12 hours support, helping to make the transition from making and selling products, to embracing Product as a Service strategies. Places are fully funded through the ERDF. To enquire further, click here.