By Alan Charnley, managing director, Xerox UK and Ireland
The last time I was on the campus of Aston University, I was receiving my MBA in Business Administration. The year was 1982, a fact I’m not keen to recall!
But last week as I returned to the University, a lot of positive memories came flooding back. Memories of how the institution has UK manufacturing at its heart. During a three day conference, some of the country’s leading academics and professionals came together to share ideas on how to shape the future of the industry.
As has been covered in previous posts, the industry is looking for new ideas, having halved in output over the past 25 years.
Servitization is not a new idea, having existed since the mid-1980s. But few have heard of it, and less still understand it or know how to quantify it. This is what our new Servitization Impact Study seeks to do.
Launched during the Servitization Summit for Industry, the report contains the testimony of 27 leading UK companies, finding that manufacturers incorporating useful services with existing products are seeing business growth of 5-10% per year.
Servitization success stories to emerge here were numerous. Consider for example Alstom Transport Services, who have increased passenger numbers by 19 million on the West Coast Mainline, since taking over train maintenance for Virgin here.
Or the University of Nottingham, whose document management systems are 70% greener since adopting a managed print services contract.
Both of the above organisations spoke passionately about the need for more manufacturers to think about the revenue opportunities from services, and it’s a view I share.
We can’t simply judge servitization in terms of production. It’s not just about making ‘bits’ – it’s about delivering stability as well as cash flow. The market’s understanding of manufacturing and service is the first area that needs to be addressed, and then financial institutions may recognise the long-term benefits of lending to companies looking to servitize.
The UK will clearly take time to embrace servitization. Some are not ready for it. But managed properly, the whole economy benefits.
Were you at the event this week? Or if not, do you see an opportunity for your organisation to innovate through services?
It has been an enriching experience, the insights provided by Tim Baines earlier and the motivations in Xerox, that Alan Charnley shared is truly phenomenal. It is worthwhile to note, how Xerox has transformed taking cues from the business trend and how services lead their strategic initiatives.