Technology has already changed the way we do business in all sorts of ways. Predictive analytics, the Internet of Things, and artificial intelligence are more than just buzzwords: they are upending industries. And in manufacturing, there is a special way all these things are changing the industry: they are ushering a new era of what insiders call servitization.
Servitization basically means offering customers not just a product but a product plus maintenance care for it over its lifetime, Forbes Insights reports. But that’s only half of the story. The other half is that predictive analytics, the IoT, and AI, are turning hitherto useless data kept in silos into a revenue stream for the manufacturer.
In an interview with Forbes, the VP of a GE Digital unit, ServiceMax, said a top priority now was learning what to do with the data that IoT sensors in products collect, how to make it useful. The manufacturing industry, Lubor Ptacek says, has still a long way to go towards a complete transformation but it has begun.
What’s interesting is that this servitization trend would benefit both small and large companies, as long as the products they make require regular maintenance that could be servitized, which means most. The new model enhances the competitiveness of the manufacturers in an increasingly competitive environment.
There could be different approaches to leveraging the potential of this trend. A company could either add its own predictive analytics and AI team to the workforce or outsource the service. Ultimately, it needs to convince its customers to buy a service rather than a product and for this any manufacturer would need an attractive pricing structure and a set of clear benefits for the customer.
Yet it all depends on the product, ultimately. For manufacturers that make products with long lifespans, such as, say, jet engines, the servitization model would certainly make sense. For makers of short-life products it would probably not be as beneficial.