Industrial equipment (IE) manufacturers are increasingly offering services to customers as part of their product portfolios. But doing so also has added to their competitive challenges as provision of these services now involves a wide ecosystem of different providers.
Growing demand for a wider array of both products and services has made service provision another way for IE companies to enhance their competitiveness in the rapidly changing global market. According to a research paper developed by the University of Cambridge—“Can a Product Manufacturer Become a Successful Service Provider?”—more than a third of large manufacturers globally were now offering services, with the proportion increasing to nearly 60 percent in Western economies. Companies are either adding services and solutions to their core products or integrating them in. This is especially the case with manufacturers offering complex engineered products.
Furthermore, there is a growing focus on solutions in addition to products, a greater emphasis on which services would offer customers appropriate value, and a desire to build long-term relationships with those customers. Alliances across industries also are forming because of the entry of more diverse and technology-driven products into the marketplace. Examples include “green” technologies and embedded software for in-vehicle infotainment systems. As a result, an ever-expanding ecosystem of multi-providers is emerging that includes suppliers and allies—all collaborating on products and services.
Optimizing customer services
For IE manufacturers, this shift in market dynamics makes the provision of services to customers more complex, and thus more challenging. However, taking the following actions will help companies optimize their service strategy in today’s highly competitive market:
Adopt a service focus. First, IE manufacturers should make sure their organizational structure is refocused to include a service-oriented approach from top to bottom. This means moving beyond production and product sales to applying a marketing and service approach to every aspect of the customer experience. This would support innovation, allow a quick response to customer needs, and build strong relationships.
Give value-added advice. Offering advice should be part of the service strategy. For example, companies can use analytics to provide customers with additional information about the potential future buying needs of end users, creating new business opportunities for their companies.
Create new areas of value. By systematically developing varied services, including maintenance, repair and upkeep of traditional equipment, as well as insights regarding emerging technologies, manufacturers will have a positive influence on their customers’ value creation chain.
Segment customer needs. Today, a variety of customers exist, including those that are technically capable of maintaining their equipment and only want an ally to provide spare parts and/or an exchange service. Others are efficiency-driven and interested in wider-ranging support from a service partner that includes assuming sole responsibility for the upkeep of specific machinery and/or equipment. Finally, there are customers focused on complex, engineered products, requiring manufacturers to provide solutions that support these products. IE manufacturers should be familiar with all of these customers and have an arsenal of service capabilities to serve their needs.
The new competitive frontier
As more industrial equipment manufacturers pursue services to improve their competitive position, competition will intensify. Some emerging-market IE companies already are adding to global competition by developing service capabilities through alliances with established service providers. Service is becoming part of the new competitive frontier. To achieve high performance in this business environment, companies will need to take a comprehensive approach to providing services, as well as producing products.
>> James Robbins, email@example.com, is Managing Director for the automotive industry and industrial equipment industry, North America, with Accenture (www.accenture.com), a global management consulting, technology services and outsourcing company.