Fabrizio Battaglia, Head of Manufacturing at HSO Enterprise Solutions, explains the vital role that ERP (enterprise resource planning) software can play for engineer-to-order manufacturing companies wanting to increase revenues through value-added services, commonly referred to as servitisation.
We are in the midst of a period of dynamic change which is impacting every aspect of the manufacturing sector today. One of the key enablers is connected manufacturing which has the potential to help to link together all the components of the chain - from the supplier to the production line, reseller or distributor, and finally end customer. All of these elements, and the last named, in particular, are key to the concept of servitisation.
This has become the "holy grail' for many manufacturing businesses today. We are already some way down the path to achieving it. Manufacturers are already accessing information about the supply chain and their products through the Internet of Things (IoT). The new paradigm is enabling them to extend the connection to the end customer and start to feedback information assembled there to production to adapt the value chain.
This new connectivity enables manufacturers to find out more about how their customers are using their products. Moving a further step forward, manufacturers can use that information to improve the product but embed it with services that both align with customer needs and deliver incremental revenue streams. It is an evolution of the whole design concept and it requires a complete mind-shift. Manufacturers no longer simply have to consider the shape, form and build of the product but they now also have to think about how best to embed services into the product too.
Customer usage can increasingly be tracked, and this knowledge shapes the ongoing development of the product. If a particular function is not being used, it can be removed. On the other hand, if a function is being used intensively, its capabilities can be developed further in the next release. In a sense, the customer is in charge, driving the evolution of the product based on the way they are using it. It's also critical to have a feedback loop in place so that customer complaints can be fed back into the design and development process. If customers are complaining to customer service that a valve has broken, for example, then the design team also needs to be aware of it so that they can adjust the product accordingly.
The concept of connected manufacturing represents not just a big change but also a major challenge to manufacturers. Their focus is no longer on simply creating a product and then selling it. Instead, they need to gather together and leverage information about how the product can be used and serviced. Doing this successfully necessitates cross-department collaboration.
Manufacturers need to ask themselves the key question: is their customer service team working as a siloed department, or is it really open to the customer and linked back to production, design and the wider supply chain? In other words does it have a feedback loop in place?
Many companies are not yet putting all of these key connections in place and coupled with this, many are not yet grasping all the opportunities that exist around the feedback loop and the ability to evolve the design with service in mind. This is at the very heart of the concept of connected manufacturing. Manufacturers need to first understand and accept this reality and then start modifying their processes and procedures to accommodate it.
Having an understanding of the challenge and a determination to tackle it is, however, not sufficient in itself. Manufacturers also need a clear view of the broader context. They need to know what their ultimate goal is - what they are looking to achieve - before they switch to the new model. They need to understand, for example, what markets they want to target, what demand is likely to be and what KPIs are they going to put in place to measure achievement. And they need to have a talented team of people in post who can read and analyse information coming from the customer and then kick-start the development of new products and services that address this new insight into behaviours and preferences.
Manufacturers today can't afford to adopt a purely sales-focused approach. Instead, they need to go further than that to draw on the data resources they have across the organisation and beyond in order to understand clearly how the customer is using the product and what they are looking to get out of that usage. That's the key benefit of the feedback loop. They also need to develop a strategy to collect data and analyse it as well as putting in place of team of people capable of carrying that process out. And of course, it also means bringing in the right technology, typically including enterprise resource planning (ERP) to enable this vision to happen.
With all of that implemented, manufacturers have a solid foundation to enable the delivery of value-added services that allow them to build a long-term relationship post-sale, improve the user experience and tap into incremental revenue streams. Putting a feedback loop in place is just one element of this, of course, but it's a critical one for any manufacturer that wants to achieve servitisation success
For more information about sevitisation and ERP software please visit www.hso.com/uk.
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