Manufacturers Look To Services To Balance Their Economies

By Tim Baines, Professor of Operations Strategy, Aston Business School, UK

We’ve all seen the news; UK manufacturing faces many challenges. Recently published statistics suggest stagnation in the growth of manufacturing, yet the government sees it as a cornerstone of a balanced economy, and Margaret Thatcher’s recent death has only increased debate around the value of manufacturing in this country.Manufacturers Look To Services To Balance Their Economies

Last week’s GDP figures reveal that it’s a different story for the services sector, which powers more than three-quarters of the economy. It grew by 0.6 per cent in the first quarter of 2013, with output now at about its 2008 pre-recession levels for the first time.

Intriguingly, some businesses in the manufacturing sector are using services to boost their resilience and growth, getting closer to their customers and securing longer-term contracts.  The blurring of the lines between manufacturing and services may not be immediately apparent, but they are already coming together in a way that is re-shaping the future of UK industry. It’s a process known as Servitization.

Servitization is the concept of manufacturers offering services to enhance value creation from use of their products. These services exploit a manufacturer’s intellectual property arising from the manufacturer’s technology innovation capabilities.

This represents a huge shift in our perception of manufacturing and services, viewing them as an integrated whole, rather than separate concepts. This services-led business model offers companies a way to compete and deliver growth. Yet outside of the few leaders in this field, Servitization has yet to be adopted by the economy at large.

Later this month Aston Business School is hosting a two day summit offering the opportunity to learn about the shape and adoption of Servitization in the UK from those that are already leading the way. Stay tuned for the outcomes of this event and the continued deployment of this new model across the UK.

What is your experience? Are you seeing a shift in your industry, or is the first you’ve heard of Servitization? Leave your thoughts in the comments and follow the conversation on Twitter at #Servitization




Professor Tim Baines filed this content as a guest contributor to Xerox. The content is the author’s opinion and does not necessarily reflect the views of Xerox.


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