A service-based model can mean that maximizing product performance and longevity becomes more important than minimizing the cost of production. In the second of a three-part blog series, IFS examines why, when products become servitized, they must also perform better and last longer.
In my previous blog I considered the change in approach required to address the challenges surrounding moving to outcome-based revenue streams. In this blog I’ll unpack some of the wider implications, including how and why servitization can impact both product design and manufacture and service capability going forwards.
To succeed, Product as a Service (PaaS) business models require two things to be in place. The first is a customer who wants a servitized solution to a problem; the second is a product capable of delivering the required reliable performance day in, day out, year after year.
Designing and manufacturing products that are to deliver outcomes requires a different mindset to developing products that are to be retailed. Suddenly it is not about delivering the cheapest manufacturing solution or trying to undercut the competition. Instead, it’s about focusing on product quality and reliability: putting the customer experience, and business outcome, front and center whilst charging customers appropriate recurring fees to do so profitably.
Everything centers on quality
Embarking on a servitization journey means developing a much deeper relationship with each customer. It also affords the opportunity to own that customer lifecycle. Down the line, when the customer is in the market for an upgrade or a change, they’re far more likely to remember your brand and remain loyal based on their experience to date.
This means that manufacturers need to think about quality on two fronts. Firstly, quality in terms of the product they provide to the customer. Increasingly, connected devices, remote monitoring and IoT are playing a part in product performance and reliability, providing data that can be captured and leveraged to inform cost-effective, condition-based servicing or updates. The result is that outcome-based services feature products that are designed and built to minimize the likelihood of breakdown requiring a repair: manufacturers know the cost and inconvenience of field service visits and the value of maintaining a happy customer base.
Secondly, a servitization-based model means that equipment, assets and machinery used by manufacturers to produce products must also be maintained at high quality. Monitoring performance and health may mean utilizing IoT data to plan and execute appropriate preventative and predictive maintenance programs, so increasing the longevity of assets.
Connected relationships with IFS Cloud
With the advent of digital transformation, manufacturers have already begun enabling products to garner the power of data. Let’s take cars for example. New vehicles are fitted with advanced sensors and technology designed to alert drivers to any issues and ensure optimum reliability, performance and maximize vehicle lifetime. Vehicle data can now also be streamed to the cloud, allowing manufacturers to prevent issues before they arise and improve future product design.
In both scenarios, IFS Cloud provides the capabilities for manufacturers to provide customers with better, more reliable products that last longer and generate greater revenues. For example, the solution can handle new service contracts linked to IoT-enabled machines by using real-time operational device data and observations. Embedded functionality lets manufacturers rapidly create, monitor, manage and monetize truly customer-centric service level agreements.
As well as supporting cost effective maintenance for manufacturing assets, advanced Field Service Management capabilities in IFS Cloud provide everything needed to control and deploy a mobile workforce and on van parts inventory. Dynamic scheduling minimizes the number of technicians on the road whilst allocating resources and skills as efficiently as possible. When out in the field, engineers enjoy wireless access to IFS Cloud data and apps on any tablet or smartphone, presented via intuitive customizable dashboards called IFS Lobbies. Immediate access to a large knowledge base, coupled with enhanced reality support on the job, results in more efficient diagnostics and higher first-time fix rates.
We have already touched on the product quality and longevity implications of prosecuting outcome-based revenue streams. My final servitization blog in this series, appearing on 10th February, will look at the need for servitized products to be designed with cradle to grave servicing in mind, and the ways technology like IFS Cloud helps to sustain a circular economy.
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