Are you already a servitization pro but don’t know it?
One of the most exciting aspects of our work is meeting different manufacturing SMEs from across the region. Whilst they all have their different stories of innovation and enterprise to tell, it never ceases to amaze us here at the Advanced Services Group how far advanced a lot of them are when it comes to developing services that add value to their clients business and in turn their business.
In fact, a large proportion of manufacturing SMEs are already practising some form of servitization, but under a different guise. For example, lots of manufacturers are already offering support services to customers, supplying spare parts, or guaranteeing performance through the restoration of products. To us, these are great examples of early servitization, but to a lot of businesses already offering these services, they often see this as just great customer service (and are consequently giving away potential value and revenue).
The servitization staircase, designed by the Advanced Services Group, is a tool for business practitioners and executives to understand and gauge the level and positioning of their services, from basic services, to intermediate and advanced services, delivered as part of a full scale servitized business model.
A lot of manufacturing SMEs have already begun their journey on the staircase and don’t realise it. They just don’t label it servitization primarily because their basic services were added as a bolt-on following customer demand. This is common in field service, where manufacturing businesses not only sell products but also help to repair and maintain them to minimise downtime. For a lot of manufacturers, this is an effective method of guaranteeing uptime and maintaining a loyal customer base. To us, it’s early servitization.
The really interesting aspect is when businesses begin to ascend the servitization staircase. For example, businesses that don’t just maintain the condition of a product, but which actually support the business processes of the customer’s outcome-based contracts, create a true manufacturing partnership. This enables manufacturers to benefit from long-term commercial and environmental sustainability.
Through the SME Partnership, the Advanced Services Group is committed to supporting manufacturing SMEs move up through the servitization staircase to help them create a position where they are adding long-term value for customers and themselves benefitting from greater loyalty, additional profit and enhanced sustainability.
Ascending the servitization staircase
To find out where your business is on the servitization staircase and how we can help you move up a step, or even several steps, let’s take a look at what each stage of the journey looks like:
Steps 1-2 (Basic Services)
Base Services (Product Provision) - You’re probably already doing this! This is the basics of manufacturing business – build and sell. Once it leaves the factory, the product ceases to be a concern to the manufacturer, but it also ceases to be a revenue stream (unless maybe spare parts are required)
Steps 3-5 (Intermediate Services)
Intermediate Services (Product Condition) Servicing, repairs and training etc. The ongoing maintenance of a product provides a source of revenue for manufacturers.
Steps 5-8 (Advanced Services)
Advanced Services (Outcome) - Taking aftersales to the next level, advanced services are more relationship focused and customer-centric than just selling and maintaining a product. In many cases, advanced services are delivered on a subscription model in which the consumer pays for the outcome – whether that be hours of jet propulsion or pages printed.
Wherever your business is on the servitization staircase, we can help you take the next step upwards. The SME Partnership is currently recruiting its next cohort of manufacturing SMEs from Birmingham, Solihull and the Black Country to take part in a fully funded programme which offers 12 hours funded support in the first phase, with the opportunity for further support for eligible businesses.
This is designed to help your manufacturing SME make the transition from making and selling products to embracing servitization and a move towards advanced services. For more information, message me or contact The SME Partnership by visiting: https://www.advancedservicesgroup.co.uk/sme-programme-home