Nicolai Broby, manufacturing expert at PA Consulting Group discusses PA's new research on Servitization. He explains how many smaller and medium-sized companies could tackle growing global competition from low wage countries by making the change to a service-based business model. They should be forward-looking, move closer to the customer and offer them advice, maintenance and service, not just sell them physical products.
Nicolai says: "Large companies that have introduced more servitization into their business, for example Vestas and FLSmidth, are seeing higher earnings because more service is a profitable business. It represents a new way of selling and I see a huge potential for small and medium-sized companies for developing a more service focused business".
Embrace the benefits of servitization
Nicolai goes on to explain how many companies are now seeing the value in renting, not owning products since this offers them a higher degree of flexibility allowing them to resist changes and competition in the market place.