The future of manufacturing relies on what’s known as ‘servitization’, according to a leading academic in the Advanced Services Group at Aston Business School.
Speaking in the latest ‘Aston means business’ podcast, Dr Bigdeli explained servitization as focusing on the services provided by manufacturers, rather than the product.
He said this helps manufacturers gain and maintain competitive advantages by expanding operations directly to customers and consumers, increasing their revenues and financial sustainability.
One of the best examples of servitization was Rolls Royce’s ‘power by the hour’ approach to airline customers.
Dr Bigdeli said: “Instead of just selling gas turbines to the airlines, Rolls Royce has put lots of digital technologies and sensors around the engines to help airlines’ fuel consumption and operations, ultimately charging airlines based on the number of hours they are using their engines.”
Other examples included Xerox not just making printing machines but assisting companies in their document management, and Goodyear not just manufacturing tyres but helping commercial customers keep their trucks on the roads.
He said: “Servitization involves manufacturers building their revenues from services – from actually doing things for us, rather than just making things.
“It’s all about moving away from what you use into the outcome you’re going to get, as all us – whether we’re business customers or wider consumers – are more interested in that outcome.”
Dr Bigdeli said applications of servitization in the consumer market included companies seeking to help the NHS by fitting homes with intricate sensors to predict exactly when elderly people might need assistance, rather than having to hospitalise them after falls.
Another example might eventually see boiler manufacturers selling consumers the services of having a heated home and hot water, rather than just selling them a boiler.
He added: “The benefits of servitization could be huge, as companies are going to have recurring revenues.
“If you imagine them selling products on a transactional basis just once, now they’re providing lots of services on a long-term contract, so they have more stable revenues coming in.”
The latest ‘Aston means business’ podcast, released on Tuesday 25 February, was presented by Steve Dyson, a business journalist, former daily newspaper editor and BBC HARDtalk interviewer.
Professor George Feiger, the executive dean of Aston Business School, said: “Servitization is a long word that defines a complex process, yet Dr Ali Bigdeli summarises this perfectly in the latest ‘Aston means business’ podcast.
“This is exactly how we want our podcasts to work, introducing Aston Business School’s academic expertise in a way that can be understood by everyone from potential students to funders such as companies in the industrial world.
“The interview with Dr Bigdeli provides great insight into not only our teaching but also into the benefits our academics can provide to businesses wishing to compete in the modern world.”
Professor Feiger said future podcasts will continue exploring the latest expertise from Aston Business School’s finance, industry, legal and economic experts to provide entrepreneurs and growing businesses with a real competitive edge.
The ‘Aston means business’ podcast can be listened to on Aston’s website at http://www.aston.ac.uk/podcasts and will also be downloadable from Apple Podcasts, Spotify, Deezer, Google Play Music and a number of other services.
About The Advanced Services Group (part of Aston Business School)
More information can be found here
About the World Servitization Convention
More information on the event can be found here
Photos (click links to download)
About Aston University
Founded in 1895 and a University since 1966, Aston is a long established university led by its three main beneficiaries – students, business and the professions, and our region and society. Aston University is located in Birmingham and at the heart of a vibrant city and the campus houses all the university’s academic, social and accommodation facilities for our students. Professor Alec Cameron is the Vice-Chancellor & Chief Executive.
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