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Home » Manufacturing » Servitisation delivers customer outcomes, not just goods

Iain Lewis

Manufacturing Solution Consultant, Sage X3

Rob Sinfield

VP of Product, Sage X3

Process manufacturers are starting to bring capacity back home and that is exposing a skills gap schools and industry must work together to fill.

Process manufacturing is seeing fundamental change as customers are demanding a ‘wrap around’ service that opens up the opportunity for longer-term relationships, which extend beyond simply selling products.

According to Iain Lewis, Manufacturing Solutions Consultant at Sage X3, this shift towards ‘servitisation’ is being aided by digital technology.

Sophisticated software platforms allow savvy manufacturers to streamline operations beyond their own factory floor to allow customers to be kept up to date with orders and service queries.

The result is an industry that is beginning to look unrecognisable from a few years ago and working closer with customers to add new stages to the traditional manufacturing cycle.

“We’re moving away from the cycle of ‘make, sell and use’ to an industry that serves environmentally-aware customers far better and offers complete traceability to aid their social responsibility commitments,” says Lewis.

“That means the industry is now moving to a cycle of ‘make, sell, provision, service, refurbish, break down and recycle’. Process manufacturing doesn’t just provide goods anymore, it delivers on the customer’s desired outcome and, for that, they need a service. That requires not only suppliers to be connected on their platform, but also customers, so they can find out how their orders are progressing or when existing items are due to be serviced or replaced.”

Customers want to understand end-to-end processes

This move means every successful process manufacturer must now answer these questions: ‘Where do they provide customers the most value?’ and ‘Where is their unique selling point in the marketplace?’

“Process manufacturers need to organise themselves around the customer to find out where their clients see value and focus on that point, because different customers will have differing priorities that need to be addressed, now they are buying more than just goods on their own,” explains Rob Sinfield, VP of Product, Sage X3.

We’re moving away from the cycle of ‘make, sell and use’ to an industry that serves environmentally-aware customers far better and offers complete traceability to aid their social responsibility commitments.

Moving production processes closer to home

These changes in the industry are prompting many process manufacturers to rethink where their products are made and how far their supply chains reach.

One of the key findings from the recent “Riding The Wave Of Uncertainty” report, published by Sage, was that many are bringing production back to the UK or nearshoring it.

Production costs are rising in areas where manufacturing has traditionally been offshored.

Businesses are also feeling a need to bring production nearer to home where they have a greater control and visibility over sustainability and traceability, creating a demand for a wide variety of jobs and, at the same time, exposing a skills gap.

“Process manufacturers are telling us they see the skills gap as a risk and, like all organisations, they are keen to de-risk their operations,” adds Rob Sinfield.

Repetitive roles are being replaced by robots

“Part of the issue is that manufacturing has not traditionally been seen as a particularly ‘sexy’ industry to work in. We clearly need to tackle that because a lot of the repetitive jobs people may associate the field with are being replaced by robots. That moves people on to programme the robots, to design new systems, to get involved with marketing and understanding customers as well as liaising with executives in the supply chain. There is a far wider variety of roles in the industry now.”

For Sinfield the answer to closing the skills gap is clear. More work needs to be put into ensuring pupils leave school with STEM and business qualifications, and are then attracted by industry into apprenticeships.

This will ensure British process manufacturers can de-risk bringing production home, or nearer to home, and ensure they can work closer than ever with customers who are deserving a more rounded service rather than just a date their goods will be delivered.

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