Is your business on the road to servitization?
Rapid technological advances, increased competition, societal shifts, and changing consumer behaviour. All these factors mean that manufacturing industries need to increase the service component of their business models and core operations. More and more companies are realizing that the aftermarket is becoming the main market. That is where future growth potential is to be found – by adding more services.
It will no longer be enough for businesses to be the most agile or efficient in order to overcome the challenges they face. The winners will be those who succeed in adding different types of services to their products, who create real value for the customer - and for their customers. At Semcon, we have excessive experience in helping our customers create services that optimize the value of a product throughout its lifecycle, increasing customer satisfaction and opening for new revenue streams.
Servitization is the transformation of products into platforms for services, creating benefits and adding value for the customer – who then pass it on to their customers. In order to create beneficial services, there must be a willingness to combine new business models with the innovations made possible by digitalization, and to adapt processes and organizations. To achieve success, it is essential that servitization is an integral component of an overarching business strategy. It is in the aftermarket that the value will be realized.
Servitization – enabling innovative business models
Servitization creates new possibilities in a host of areas. Regardless of the type of product, value is added by improving availability and reliability, strengthening customer satisfaction, streamlining internal efficiency, and optimizing benefits. This also means access to new revenue streams through increased sales in the form of new products, spare parts, and service and maintenance contracts, as well as subscription and streaming services.
What is required to increase servitization?
We have identified four factors that companies must consider:
- Servitization requires a new way of thinking, a service logic. In short, service logic means looking from the perspective of the value a customer is trying to create for their customer. The central realization is that value comes from using a product, as opposed to merely owning the product. In many cases, the long term effect is that the customer is buying the value.
- Ask yourself the following questions: What does a value supply chain look like, and which role do we want to have in it? What is our current business model, and how do our services relate to our offerings? What does the market look like – is it ready? And how will this affect our organization and sales channels?
- One of the pillars of servitization is the use of new technologies to collect and analyze information. Different technologies, such as the Internet of Things (IoT), cloud services, machine learning, and digital twins, are often combined to achieve this.
- It is important to design processes and organizations that will support service delivery in an effective and beneficial way.
We are your partner towards Servitization
By combining these four factors, we at Semcon are continually developing new methods and strategies that help companies grow their business. Our starting point is the end user – their needs and behaviours. We are convinced that those who best know the customer find the best solutions. Our end-to-end engagement means we bring an innovative approach. We are a constant companion on our customer’s journey towards digitalization, adapting their business to the needs of the market and the end user.