Manufacturing is embracing global shift to servitization
Predictive capabilities have allowed manufacturers to evolve beyond inefficient preventative maintenance models and focus more on providing cost-effective service when it’s actually needed. However, transitioning to a service-oriented model also requires a shift in thinking for the manufacturing sector.
The trend toward subscription models and buying products as services is well understood by consumers, as we pay to stream films through Netflix or listen to music through Spotify. We don’t own the programs or music but they are available whenever we want and we are happy that our entertainment needs are being met.
Applying the same logic to manufacturing may seem less straightforward but it is not a totally alien concept. In 1962, Rolls Royce was offering engine and accessory replacement on a fixed cost per ‘flying hour’ basis. ‘Power by the Hour,’ as it was known, was an early pioneer of what we now call ‘servitization,’ but advancements in digital technology are enabling even more manufacturers to deploy similar models and drive significant growth.
OUT WITH THE OLD
Historically the most common types of maintenance and service models were ‘reactive and preventative.’ ‘Reactive’ being the easiest to understand: when a piece of equipment breaks, the owner arranges for a repair. Preventative maintenance attempted to address this rather simplistic approach and involves regular planned maintenance visits where parts are replaced to a schedule.
While a seemingly effective strategy, planned maintenance is incredibly inefficient. Since parts are replaced and equipment taken out of action for maintenance irrespective of whether it is necessary, there are high costs and high levels of downtime and inconvenience for the user of the equipment.
DATA AND ANALYTICS
To solve this, manufacturers have started using IoT technology and sensors to collect and analyze the operational data, so ‘predictive’ maintenance models can be developed. It is this technology that has had a significant impact in allowing manufacturers to develop servitization models through ‘predictive’ maintenance.
Predictive maintenance has seen maintenance models shift so they are based on the ‘condition or use’ of the equipment. Sensors monitor all aspects of the equipment and the most effective models use IoT technology so this data can be monitored online. This moves maintenance to a fact-based model with only the necessary parts replaced. Downtime is also reduced, leading to cost savings, reduced environmental impacts and happier customers.
Collecting data is only part of the challenge and powerful analytical techniques are required to turn the data into meaningful information. Data overload is a real danger but our technology at IFS can decipher data and identify the root cause of malfunctions. The AI and ML solutions we develop provide powerful anomaly detection, showing the significant events that need attention so practical maintenance programs can be initiated. It is important that recommendations made by our platform are trusted by the users which is why we use AI to make ‘meaningful observations,’ effectively drawing attention to an anomaly but also explaining why it has been flagged as significant.
THE FUTURE IS PROACTIVE
Technology is also powering the development of the next stage of maintenance, as companies move from ‘predictive’ to ‘proactive’ models. In these models, a manufacturer moves to selling outcomes rather than equipment . For example, an elevator manufacturer would no longer sell elevators but the ability for people to move efficiently around a building. The building operator will generally have little interest in the belts and pulleys that operate their elevators but will happily buy a service that guarantees 100% uptime. IoT technology and advanced data analytics make this level of servitization a reality and it shows how manufacturing can use a servitization model similar to the Netflix or Spotify subscriptions.
By aligning the interests of the customer with those of the manufacturer, servitization ensures everyone benefits. It is now in the manufacturer’s interest to ensure they produce and maintain high quality assets because this ensures they can provide the highest quality service.
Servitization also ensures manufacturers effectively become strategic partners who are intrinsic to their customers’ businesses. Using the elevator example again, the manufacturer has strengthened its role within the client-company, because it is now responsible for the happiness of hotel guests by ensuring they can freely move around the building. They no longer just fix the lifts.
Switching to this mindset can be challenging for some manufacturers, but the ones that do will be rewarded with higher customer retention and increased revenue through subscription fees.