Services: The saviour of UK manufacturing

But growing existing manufacturers and starting-up entirely new ones in the turbulent, global environment in which we now live is easier said than done. So what practically can be done to grow the country’s manufacturing base?

Something that is not widely discussed is the enormous role that services can play in helping this to come about. Manufacturing and services can, and do, work together in far more tangible ways than are commonly discussed. The SMB sector has a huge opportunity to explore this potential further and thrive as services led, technology driven companies.

In the wake of new figures that suggest manufacturing is in its fittest state for 20 years, now is probably the right time for the sector to make the investments that can secure its future.

Services have allowed large companies such as Rolls Royce to protect its manufacturing activities and achieve growth. Successful services are born out of an organisation’s technological innovation, tightly linked to its products, and can represent up to half of company revenues.

This trend, known as ‘servitization’, is yet to truly enter public consciousness and whilst it may be an inelegant word, it’s a concept that SMBs should be attracted to.

Indeed, some already are; SMB channel resellers of technology are now providing IT related offerings, such as managed print services. These services transform document related business processes and allow customers to reduce costs, while freeing up internal IT resources.

This is just one example of SMBs using existing expertise to add profitable services which in turn boost revenues and growth. Applied country-wide, servitization is a potential goldmine for SMBs, it just comes down to knowing how to exploit this opportunity.

The recent Servitization Impact Study produced by Aston University and Xerox sought to explain exactly that, and from it SMBs can take practical advice on how to make the transition smoothly.

Here are five steps that need to be made by SMEs looking to ‘get servitised’:

1. Understand what you do well

Determine what innovations your organisation can bring to the table, and what new capabilities you may need to develop.

2. Pick your partners

Agree a base of trusted third party providers that can be partnered with or outsourced to. Collaborative arrangements of this kind are vital to meeting new workload demands, particularly if new areas of expertise need to be learned.

3. Start slowly

A phased introduction of added services is safer process for SMBs and mitigates the risk of moving out of perceived organisational capabilities. It also helps to achieve a successful implementation of the service strategy within manufacturing operations.

4. Distinguish the offering

Establish a de-centralised customer facing service unit, with profit & loss responsibility, within the organisation. This should be run as a separate business unit and operated with the parameters of a professional service organisation.

Isolating the service organisation from product development and manufacturing operations may be a critical success factor for managing the transition. Crucially, it can help to avoid a clash between a dominant manufacturing culture and the service-related counterculture.

5. Educate

Above all else, educate employees at all levels that technology innovation can be exploited in the delivery of services rather than simply in products alone.

Then with the mindset of a service culture established, continue training and empowering the people that will offer services. Doing so will encourage them not only to innovate, but to do so in a more effective, efficient and collaborative manner.

The distinctions drawn between manufacturing and services are artificial and unhelpful, when in truth the two are already coming together in a way that is re-shaping the future of U.K. manufacturing.

By evolving into services led, technology driven organisations, SMBs can bring the best of both worlds together, delivering stability as well as cash-flow, which allows them to focus on and further develop their real business of innovation.

Mark Duffelen is the director and general manager of Channels Group at Xerox UK.

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