Why Servitization is Vital to UK Manufacturing Growth

By Tim Pearce, European offer manager, Large Enterprise Operations, Xerox Europe

Next week, Aston Business School will be holding a two-day summit to explain the concept of ‘servitization’ in the UK. Aston and Xerox are also jointly launching a new report that looks at the benefits servitization is having on manufacturers, their customers and the wider implications for the UK economy.

But what is servitization and why are we getting behind it?

Xerox is a company founded on developing print and copy-related devices, after our founder Chester Carlson invented a dry-writing technology to produce multiple copies of the same document. While we remain extremely proud of our heritage, we see the real value being in offering services tightly coupled to the products we produce.

Our initial drive was to help customers gain control over all aspects of their print infrastructure, rather than just offering them the next generation device. The result was the creation of our Managed Print Services.

It began by monitoring and maintaining equipment and grew to the point where today over half our business comes from services, which have become international outsourcing contracts underpinned by our own technology.

This is the essence of servitization; utilising technology to offer services tightly coupled with existing products. The success stories are numerous but Aston’s research finds that the concept has failed to permeate the market at large.

In fact less than 30 per cent of UK manufacturers are believed to offer services as well as products, compared to more than 55 per cent in the United States.

One of the challenges we face is the way that ‘services’ and ‘manufacturing’ are identified by media reports (on government reporting of GDP) as completely separate strands of the economy. However, by evolving into a business that focuses on offering services to customers as well as the products we sell, we have continued to thrive as a services led, technology driven company.

For manufacturers, servitization can offer increased revenue streams, and builds closer ties with customers that ultimately helps us add the most value to their operations. It is clearly an idea worth exploring.  What are your views on the current state of servitization in the UK?