Tuesday 8 April 2014

Manufacturing intelligent services

We highlight a trend toward value-added services as a means for medium-sized manufacturers to drive innovation.

When you're a manufacturer on a slim budget, it's not easy to muster up the courage to innovate. When product demand begins to decline, however, innovation becomes a necessity. In an effort to survive organisations are seeking ways to commercialise successful innovations quickly. In some cases, the challenge has led medium-sized manufacturers to pursue a strategy called 'servitisation'. It is no quick journey to success, but research insight lends credence to the idea.

To 'servitise' means to combine value-added services with products that deliver additional capabilities to customers on an ongoing, 'pay as you go' basis. If, like other manufacturing companies, you're eager to pump all your innovative forces into generating income and saving money, then you might want to take note of the term, 'servitisation'. Even if you're not interested in the jargon, it's worth considering its essence: the shift from a focus on product to service.

Driving innovation faster

Jon Bruner, Editor-at-large, recently interviewed Joi Ito, the Director of the MIT Media Lab. Ito explained that their lab, a leading-edge specialist in innovation, must now focus their mission on the changing situation to "deploy or die".  To put thousands of devices into the hands of users has become the imperative. Medium-sized manufacturers might follow their lead. Ito adds that the most creative organisations, the ones that drive innovation in the face of the economic crisis, are those which combine both hardware and software strategies as a whole.

The experts at Ascent Look Out have noted a shift in manufacturing "from ‘technology-push and product’ oriented to ‘customer-pull and service’ oriented." A generation of information technology managers now accustomed to cloud service are familiar with "Software as a Service" (SaaS), which is an example of adopting best-in-class functionality within the constraints of time and budget. Services that are either Business-to-Business (B2B) or Business-to-Consumer (B2C) are outdoing the power of physical production alone. Organisations asking how to affordably transition from product to service might look at adopting a Business Intelligence (BI) service to do so faster.

Listening to your customers 

What is innovation, if not investing time in figuring out how to engage your customers?

The term 'servitisation' was brought up in the foresight report by the UK Government Office for Science. It says that the UK manufacturing industry is destined to become, "faster, more responsive to changing global markets and closer to customers", adding that:
"The key role of physical production in unlocking innovative - new revenue streams, particularly as firms embrace ‘servitisation’ and manufacturers make use of the increasing pervasiveness of ‘Big Data’ to enhance their competitiveness."
Successful manufacturers are cognisant of the need for continuous efforts to anticipate change in customer's rising expectations, especially for premium services. It may only be now that an affordable Business Intelligence service can enable them to provide a path to making sense of the mass of data available about changing customer demands.

With increasing access to mobile data from Internet connected devices, such as manufacturing sensors, new services can be built upon the models of automation, to which manufacturers are already accustomed, to better serve their customer's existing and emerging demands.

Partner for value-added services

Sometimes it takes a business partnership to deliver services that meet customer's changing demands:

  • Back in 2006 one of the earliest wearable technologies was released with the noteworthy launch Nike+iPod. The co-created experience was delivered by innovation master Steve Jobs of Apple and Nike’s CEO, Mike Parker, with the campaign slogan “tune your run”.
  • Users would insert a wireless sensor into their Nike shoes and then create a playlist of favourite exercise songs through their iTunes membership. 
  • The automatic sensor supplied lifelogging data about the user's foot movement, rhythm, distance covered, time, and calories burned. 

Since Big Data have become prevalent, analytics can enable partners in manufacturing to better understand their customers needs, potentially co-creating better services in tandem with their products.

In the UK, the manufacturer Alstom Transport maintains its high-speed passenger trains that are operated by Virgin and owned by Angel Trains, a financial organisation. Tim Baines, expert in Product-Service Systems, shares this example of 'servitisation' with researcher Jim Euchner:
"In addition to its role as manufacturer, Alstom maintains the performance, availability, and reliability of the trains so that Virgin can focus on serving passengers. Virgin measures the performance of Alstom on metrics that relate to its own business process, such as any disruption experienced by passengers. Alstom then arranges its operations to perform against such metrics, and so if you look inside the Alstom organisation you see an operation which differs quite significantly from what you'd expect to see in a production world."
In another example, Gary Wyles, MD of Festo Training and Consulting UK helped the German automation equipment provider, Festo, differentiate its products on performance and reliability merits. He explains in the article in themanufacturer.com that:

  1. customer expectations for rapid issue resolution meant monitoring and collecting more data on its performance of equipment; and
  2. as service systems grew, he advised companies to bring specialised data scientists on board.
In the same article, Professor Andy Neely, deputy Director of AIM and Director of the Cambridge Service Alliance, points out that 'servitisation' involves a customer focused logic that is outcome based, which often requires investment in both technology and new skills.

The skills are within reach

From the analysis of operational throughput to the monitoring of usage patterns of the product itself, access to data skills is integral. Big Data researcher Gil Press suggests that data scientists are the new product managers. Press explains that their ability to harness data and turn it into market intelligence makes them prime candidates for discovering innovative ideas.

Hayden Richards of IntelligentHQ notes that the UK is lacking talent to deliver new data-driven services in the manufacturing sector. It seems the pool for data scientists is running empty and the cost of bringing them in-house is ever rising. Richards shows evidence of a skills gap that must be filled as new services emerge around the internet of things (aka "industrial internet").

Manufacturing innovations around new services without these data skills calls for courage, but be emboldened by outsourcing part of the challenge to service providers who understand Big Data and future technologies.

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