Fabrizio Battaglia, Head of Manufacturing at HSO, explains how true connectivity, in conjunction with servitisation, can deliver significant benefits for manufacturers who have traditionally focussed on selling 'products' backed by a conventional warranty.
Manufacturing companies are always reviewing their business models and trying to explore ways that they can offer services and 'solutions' to add value to their focal product offering. Many companies aim to become service-led and offer a services approach in addition to traditional sales, delivery and implementation, but it is another matter to fully deliver a complete transparent servitisation-led approach.
The subject of servitisation is one of the hottest topics in the manufacturing industry right now and it has led to some manufacturers seeing the concept of being service-led as a primary concern with putting a service contract in place and then tracking any assets that have been sold. But that is not complete servitisation; the missing link for many manufacturers is trying to create real connectivity. They may be receptive to a dialogue with the customer but do they have a feedback loop that allows the customer's experience and insight to be captured and shared with the production line and design and development departments? Equally, are they able to communicate seamlessly with the whole supply chain, and is there an easy way to share information with international operations across the business?
Many companies are not yet putting all of these key connections in place and, coupled with this, many are not 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 accept this reality and then start modifying their processes and procedures to accommodate it.
After all, it will be those businesses that understand the new connected manufacturing model and tackle the challenges outlined above that will succeed in the future and be best placed to take advantage of the opportunity to develop new services, upgrade existing ones and build sustainable new revenue streams that change the aftermarket process from cost to profit centre.
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 (key performance indicators) they are going to put in place to measure achievement. And they need talented people 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.
Critically, too, they need to have the right technology in place to 'join up all the dots' and turn servitisation from a vision for their business into a practical reality. That is where the latest generation of enterprise resource planning (ERP) software can play such a key role.
The great benefit of ERP in this context is its ability to integrate and connect. Not only can it help to link different kinds of information - from customers, suppliers and partners, both in real-time and historically to drive decision-making - it can also provide a critical link between all the previously siloed departments within manufacturing, including production, marketing IT and customer service, and use that to deliver operational efficiencies and a better response to customer needs.
To maximise the benefits of ERP as an enabler for servitisation, manufacturers also need to consider how it can be applied in conjunction with other emerging technologies. The advent of 'big data' technologies has led to a greater emphasis on collecting data and running analytics. Today, the proliferation of connected devices that drives the Internet of Things (IoT) is growing in significance, serving to extend the potential for organisations to gather information and use it to deliver business benefits.
Information collected from sensors attached to key products could, for example, subsequently be fed back into ERP systems like Microsoft Dynamics AX. Specific parameters related to product lifecycle management, or service and maintenance, can then be set up, alerting businesses to problems, sometimes before they have happened, and proactively triggering maintenance even before an incident occurs.
Organisations can take this a step further by coupling this kind of information with information from social media or other data sitting in the cloud to achieve both a relationship and technically-focused real-time view of customers, suppliers and stakeholders. This enables the business to make more informed decisions about enhancing innovation and efficiencies, to optimise products for consumption, usage, service and maintenance and to improve the overall customer experience.
When delivered with ERP, this enables service, production and engineering departments to combine together on the same platform, effectively delivering true servitisation and launching the manufacturing future. We can now look forward to embracing a new connected generation.
Follow the link for more information about ERP for manufacturing companies from HSO.
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