Could servitization revolutionise manufacturing?
Many UK manufacturers rely on their technical expertise to keep them at the bleeding edge of innovation. Others do everything they can to provide a higher quality product. These companies can often stay one step ahead of their competition, but this is not always possible for everyone. Is there another way?
Yes. Many large companies are improving their competitiveness by choosing to take the route of servitization. For those unfamiliar with this term, it is the concept of coupling services to manufactured products and creating a business model that is based more on customer relationships than the sale of products. For example, Xerox, known to be a servitization front runner, offers its customers managed print services to give them control over all aspects of printing; or, more recently, Hewlett Packard offers a service where printer consumables can be automatically replenished just before they run out.
These types of ongoing service arrangements are no longer solely the domain of large manufacturers. Many small to medium sized businesses are now looking to benefit from the addition of services to their business plans and, in fact, many are doing so in response to their customers’ demands.
A 2013 report carried out jointly between Xerox and Aston University found that businesses that incorporate useful services with their existing products realise a growth of five to 10 percent per year, compared to their earlier product-only led business models.
There are four main areas where companies implementing servitisation can achieve direct benefits to their business:
Customer demands: customer expectation is becoming increasingly more sophisticated and in many cases, product innovation isn’t enough anymore. By implementing an advanced form of servitization manufacturers are now able to offer their customers a ‘pay-per-use’ model, rather than their customers spending a large amount of cash up front. By taking this approach the customer also benefits from a guaranteed product performance as well as commitments regarding product development and enhancements over time.
Financial sustainability and security: service level agreements are often long-term contracts offering businesses a level of security and sustainability and the flexibility to scale their organisation’s growth. Pay-per-use agreements are a prime example of this; if consumers choose to take advantage of this type of contract they are agreeing to a longer term relationship over several years and a stronger partnership between manufacturer and customer is formed, providing the obvious benefits of improving long-term cash-flow and customer lifetime value.
Product development: ongoing monitoring and servicing of a product once it has gone to the customer can greatly assist with the manufacturers’ product development. It can help with additional customer-centric improvements and potentially present opportunities for brand new products or add-ons. The manufacturer is also learning constantly about how its products perform and are used in the field.
Customer experience: a long-term relationship with customers helps businesses to anticipate their customers’ changing needs. By offering services such as a helpdesk, periodic maintenance, repairs and equipment overhauls many organisations are more aware of these needs in the first place. Consequently they are in a better position to anticipate areas where customers may experience additional pressure and tailor their services to address them.
Instead of selling products, the manufacturer is now in the business of selling outcomes, bundling together a range of products and services tailored to individual customers. However, the additional complexities servitization brings can put companies under greater pressure and additional demands such as extra invoicing, resource management, a more detailed supply chain and ongoing data management. Companies turning to servitization as an opportunity for growth would benefit from building in appropriate processes and analytics that some of the more established enterprise resource planning (ERP) solutions offer, helping them transition through this period.
If carried out correctly, the business transformation companies experience through servitization should revolutionise the way companies work and allow for a new lease of life for UK manufacturers.
Siemens: Providing the First Industrial 5G Router
Across a number of industry sectors, there’s a growing need for both local wireless connectivity and remote access to machines and plants. In both of these cases, communication is, more often than not, over a long distance. Public wireless data networks can be used to enable this connectivity, both nationally and internationally, which makes the new 5G network mainframe an absolutely vital element of remote access and remote servicing solutions as we move into the interconnected age.
Siemens Enables 5G IIoT
The eagerly awaited Scalance MUM856-1, Siemens’ very first industrial 5G router, is officially available to organisations. The device has the ability to connect all local industrial applications to the public 5G, 4G (LTE), and 3G (UMTS) mobile wireless networks ─ allowing companies to embrace the long-awaited Industrial Internet of Things (IIoT).
The router can be used to remotely monitor and service plants, machines, as well as control elements and other industrial devices via a public 5G network ─ flexibly and with high data rates. Something that has been in incredibly high demand after being teased by the leading network providers for years.
Scalance MUM856-1 at a Glance
- Scalance MUM856-1 connects local industrial applications to public 5G, 4G, and 3G mobile wireless networks
- The router supports future-oriented applications such as remote access via public 5G networks or the connection of mobile devices such as automated guided vehicles in industry
- A robust version in IP65 housing for use outside the control cabinet
- Prototypes of Siemens 5G infrastructure for private networks already in use at several sites
“To ensure the powerful connection of Ethernet-based subnetworks and automation devices, the Scalance MUM856-1 supports Release 15 of the 5G standard. The device offers high bandwidths of up to 1000 Mbps for the downlink and up to 500 Mbps for the uplink – providing high data rates for data-intensive applications such as the remote implementation of firmware updates. Thanks to IPv6 support, the devices can also be implemented in modern communication networks.
Various security functions are included to monitor data traffic and protect against unauthorised access: for example, an integrated firewall and authentication of communication devices and encryption of data transmission via VPN. If there is no available 5G network, the device switches automatically to 4G or 3G networks. The first release version of the router has an EU radio license; other versions with different licenses are in preparation. With the Sinema Remote Connect management platform for VPN connections, users can access remote plants or machines easily and securely – even if they are integrated in other networks. The software also offers easy management and autoconfiguration of the devices,” Siemens said.
Preparing for a 5G-oriented Future
Siemens has announced that the new router can also be integrated into private 5G networks. This means that the Scalance MUM856-1 is, essentially, future-proofed when it comes to 5G adaptability; it supports future-oriented applications, including ‘mobile robots in manufacturing, autonomous vehicles in logistics or augmented reality applications for service technicians.’
And, for use on sites where conditions are a little harsher, Siemens has given the router robust IP65 housing ─ it’s “dust tight”, waterproof, and immersion-proofed.
The first release version of the router has an EU radio license; other versions with different licenses are in preparation. “With the Sinema Remote Connect management platform for VPN connections, users can access remote plants or machines easily and securely – even if they are integrated in other networks. The software also offers easy management and auto-configuration of the devices,” Siemens added.