Industrial Internet Servicing

Si2’s Nick Frank gave the keynote presentation at eWON’s FlexThink Developer Conference in Birmingham on 25th May 2016. eWON are the global leader in smart IoT enabled router technology for connecting too machines and industrial assets.

May this year,  we helped a Service Management and Design (MSC) student at Warwick University completed a research on the evolution of M2M communications and Servitisation (Industry 4.0). The results surprised us...

For those of you that read this blog, you will know that I have always been a great optimist on the value that Services can bring to British industry. Well another optimist Tim Baines last week ran the 1st Servitisation Conference at Aston University.

By adopting the latest Internet 4.0 technologies, machine builders and process equipment suppliers can maximise their revenues by offering new value-added services that improve their customers’ performance.

As technology becomes easier and faster to copy by low cost competitors, manufacturers are now seeking out new services to offer to their customers, in order to give their machines or process equipment an edge over competing products. Leading equipment suppliers around the world now increasingly provide a variety of services – from 24/7 spare parts delivery to predictive maintenance, remote condition monitoring and availability guarantees – to not only improve their own machines, but also to improve their customer’s performance.

Servitisation is a new phenomenon that is sweeping across European Industry as they struggle to find growth through turbulent times. But what does this mean?

The servitisation of products describes the strategy of creating value by adding services to products or even replacing a product with a service. Selling maintenance contracts for capital goods is an example of a service being added to a product. Contracting tyres by the kilometre to haulage companies instead of selling them outright is an example of a service replacing a product.

These days no matter what business we are in, continuous on-going cost reduction while increasing value to the customer is the challenge most service leaders have to face every day of the week. As with most things in life there is no magic strategy. Although technology is an enabler, the most important element is to develop a culture that challenges ourselves every day to find new ways of doing things more efficiently or that offer more value. Here are potentially 7 habits you might want to review if you want to evolve in to a low cost, high value product services organisation.  

1. Manage the Total Service Resource to reduce waste, gain efficiency & a critical mass of capability

Whether you have a direct service team or work through 3rd party providers seeing and managing the TOTAL services resource as an entity can lead to increased efficiency and improved satisfaction.

Within field based organisation this does not necessarily mean forming big teams that no longer are flexible to the needs of the customer. But by sharing information on capacity planning and available expertise can lead to improvements of up to 10%.

Looking at the research and writing on industrial companies who want to develop services as part of their business, there seems to be significant work in specific areas of the field, but not much that develops a holistic roadmap for the development of services in product centric companies.

There is now a significant body of work driven by the manufacturing community around the need to make a clear strategic choice. For example, can a manufacturing company continue to create value through its products and manufacturing processes, or does it need to look to Services to create differentiation?

Rolls Royce Aerospace is one of the best current industrial examples of how a company has turned data into profits. Over the past 10 years they have fundamentally changed their business model from break fix based charged by time and materials, to offering a managed service that delivers power from an engine.  The corner stone of this transformation has been the development of very sophisticated remote/telematics technology to provide real time data on engine performance, and then align the complete organization including R&D and Service behind the customer’s need of engine power when they need it.

This transformation has led to Rolls Royce this year declaring that more than 50% of their revenues now come from services. Quite surprising for one of the UK’s most well known global manufacturing businesses. This has been no accident, but a conscious decision to change Rolls Royce from a product/technology company selling engines, to delivering ‘Total Care’ that improves their customers operations.

‘Assets will no longer be bought, but provided as a Service!’, brainstormed a senior UK manufacturing executive at a recent workshop on UK manufacturing facilitated by Cranfield University. If true, the whole nature of manufacturing, engineering and service will change forever.