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The Servitization of Manufacturing: Harnessing Digital Innovation for Enhanced Customer Service



The advancements in digital technology can now enable manufacturers to learn from the consumer-oriented service industry and move from reactive break-fix to predictive service, from transaction-based engagements to lifetime value-based services, and from fragmented to 360-degree view of the customer.


Read on to know the opportunities and possibilities for the manufacturing industry to

reimagine its service business models using digital technologies.

The 'Service Focus' in Industrial Manufacturing

There is an immense untapped potential for Original equipment manufacturers (OEMs) to increase their revenue by focusing on their services segment. In the industrial manufacturing scenario, the key to tapping the service opportunity is forming long-term relationships with customers, which in turn can be achieved by using interactions or touch points to deliver differentiated and consistent experiences. Manufacturers seek to maximize their share of customer wallet by considering a larger role for technology in value-added services, a concept often referred to as ‘servitization’.

Digital Forces Enabling Innovation in Service

The trends in industrial manufacturing service indicate five digital forces at play which have the potential to create business opportunities and can lead to a radical shift in the business model when they converge.

Machine to Machine (Smart Machines): By combining smart machines, diagnostic software, and customer service applications, manufacturers can respond quickly to failure, improve first-call resolution (leading to cost reductions), and increase equipment uptime.

Mobility: The ubiquitous mobile device has emerged as an important tool to engage with the customer throughout the service lifecycle and deliver value continuously, be it in the form of improved service levels or quick and accurate problem resolution.

Analytics and Big Data: The tools derive predictive insights from this unstructured data which can then be used to provide value added services and drive process improvements in service.

Cloud: Manufacturers are looking at the cloud not just to reduce costs but also to generate more revenue by offering cloud-based solutions to their customers, dealers, and third-party associates as a collaboration tool.

Social: Manufacturers are now embracing Social Media for all customer-facing activities like marketing, sales, and service.

The Next-Generation Service Model

Manufacturers have been using conventional models which have not helped them grow their service businesses at the desired pace and deliver outcomes with shifting customer preferences.

The Service model that a company adopts should align customer needs and expectations with the OEM's operational strategies to create a win-win situation. It should drive innovation to facilitate transition to a future-ready business model. The shift includes:

  • Reactive to proactive service-delivery model
  • Transactional engagement to lifetime value-based service
  • Fragmented to 360-degree view of the customer
  • Traditional to self-service channels
  • Standard pricing to more flexible pricing models

Next Generation Servitization Model

The figure depicts the next-generation service model that enables this shift. By identifying the experience drivers and creating solutions around them, manufacturers are able to engage with customers throughout the product lifecycle across various touch points and channels. This empowers manufacturers to respond to different customer segments with relevant solutions which in turn leads to desired results in service business and helps meet the overall business objectives.

Reimagining Service with Digital Technologies

Manufacturers looking to implement next-generation service management systems need to take a focused approach. They must adopt industry-specific best practices and processes based on 'pull' principles that drive the service flow through the value stream, while enabling the right technology. The components that should be implemented to achieve the shift include:

  • Consolidated Contact Center
  • Customer Self Service Portal
  • Knowledge Management
  • Ecommerce
  • Mobile Field Service Applications
  • Remote Diagnostics / Installed Base Analytics

The Way forward

The opportunity that digital technologies have created in service is unique and organizations that tap it will gain a significant advantage over their competition. What is important is to have a long-term road map and a competitive plan, much like any other business strategy to ensure that their investments are future ready over a sustained period of time.