Servitisation: 4 things OEMs need to keep in mind as they make the switch
Servitisation – where companies shift from strictly new product sales to instead selling the outcome a product delivers – is an embodiment of change. And we all know that regardless of the circumstances, change can be unnerving. The manufacturing industry in particular has remained relatively unchanged for decades, but this new era of servitisation is requiring original equipment manufacturers (OEMs) to completely upend the status quo.
For years, the onus has been on end-users to absorb the brunt and costs of ongoing maintenance and repairs. Due to the boom in servitisation however, it is now the OEMs that must take responsibility for ensuring equipment is up-and-running as much as possible – leading to an increased focus on maximising product uptime and pre-emptively repairing equipment before it ever fails.
Increased uptime and preventative maintenance have obvious benefits for the customer, and the OEM is in the best position to ensure the products are designed and manufactured in a way that will best achieve these results. The servitisation shift also means that OEMs are no longer making money on the selling of highly expensive spare parts – but rather on the assurance that the equipment works and delivers its output. This means the whole business logic and incentive structure changes dramatically, and will require OEMs to redefine the way they operate.
Here are four key points OEMs need to bear in mind as they shift to a servitisation-centred business model:
1. Bring in far-reaching service technology
Many after-sales service businesses still manage their service parts supply chain efforts through time and labour intensive processes. In the shift to servitisation, however, OEMs must take a much more comprehensive look at their operations and invest in technology that can help them manage the real-time service needs that arise in a servitisation-centred world. This includes tools that allow for enhanced data analysis, as well as IoT and customer service technologies. The sooner OEMs put themselves in a position to adopt new technology, the smoother the transition to servitisation will be.
2. Consider adopting a subscription-based service model
In the future, many OEMs will no longer report on the number of new products sold, or even service parts revenue. In fact, they will follow the path many SaaS companies have taken, reporting on recurring revenue from subscription-based services. Customers will subscribe to their equipment much in the same way as they do their Netflix subscription, paying for output and value.
3. Always question
Why are we doing things this way? Are the processes we have in place delivering the results we need? Are they helping us to be in the best position to tackle the problems of tomorrow? These are questions that leaders at global OEMs need to be asking themselves every day. Just because a certain method has worked for years, doesn’t necessarily mean it’s the right way today – or especially for the future. Thinking critically and asking the right questions will enable team members to deliver creative and more effective solutions.
4. Invest in workforce training
A majority of companies have a tendency to prioritise speedy onboarding versus comprehensive workforce training. However, the companies that trade in hurried, one-off onboarding and focus on continuous training and development will have a competitive edge. People are a company’s best asset. So, taking the time to provide thorough training simply makes sense to help them feel comfortable, thrive and achieve the results that a company is aiming for through this new business model.
It’s fair to say the industry has been slow on the servitisation uptake, because the move from making products to delivering product-centric services is no mean feat – it means transforming both the organisational structure and processes. Particularly over the past few years though, the widening gap between customer expectations and after-sales service realities – in addition to the emergence of Industry 4.0 – has accelerated demand for the model, serving as the catalyst for manufacturers to make major changes, and ultimately, shift towards servitisation.
This shift brings with it many exciting opportunities, but that doesn’t necessarily mean the transition will be easy. Despite any apprehension to change, OEMs can begin taking small steps today to lay the foundation for a successful servitisation-centric approach, and most importantly, prepare their businesses for the next iteration of the manufacturing industry.
By Gary Brooks, CMO, Syncron
Fluent.ai x BSH: Voice Automating the Assembly Line
Fluent.ai has deployed its voice recognition solutions in one of BSH’s German factories. BSH leads the market in producing connected appliances—its brands include Bosch, Siemens, Gaggenau, NEFF, and Thermador, and with this new partnership, the company intends to cut transition time in its assembly lines.
According to BSH, voice automation will yield 75-100% efficiency gains—but it’s the collaboration between the two companies that stands out. ‘After considering 11 companies for this partnership, we chose Fluent.ai because of their key competitive differentiators’, explained Ion Hauer, Venture Partner at BSH Startup Kitchen.
What Sets Fluent.ai Apart?
After seven years of research, the company developed a wide range of artificial intelligence (AI) software products to help original equipment manufacturers (OEM) expand their services. Three key aspects stood out to BSH, which operates across the world and in unique factory environments.
- Robust noise controls. The system can operate even in loud conditions.
- Low latency. The AI understands commands quickly and accurately.
- Multilingual support. BSH can expand the automation to any of its 50+ country operations.
How Voice Automation Works
Instead of pressing buttons, BSH factory workers will now be able to speak into a headset fitted with Fluent.ai’s voice recognition technology. After uttering a WakeWord, workers can use a command to start assembly line movement. As the technology is hands-free, workers benefit from less physical strain, which will both reduce employee fatigue and boost line production.
‘Implementing Fluent’s technology has already improved efficiencies within our factory, with initial implementation of the solution cutting down the transition time from four seconds to one and a half”, said Markus Maier, Project Lead at the BSH factory. ‘In the long run, the production time savings will be invaluable’.
Future Global Adoption
In the coming years, BSH and Fluent.ai will continue to push for artificial intelligence on factory lines, pursuing efficiency, ergonomics, and a healthy work environment. ‘We started with Fluent.ai on one factory assembly line, moved to three, and [are now] considering rolling the technology out worldwide’, said Maier.
Said Probal Lala, Fluent.ai’s CEO: ‘We are thrilled to be working with BSH, a company at the forefront of innovation. Seeing your solution out in the real world is incredibly rewarding, and we look forward to continuing and growing our collaboration’.