As new product sales continue to slip across industries world wide, it’s clear that OEMs need to start shifting their focus from solely selling products to selling the usage of those products to stay competitive. This shift is known as servitization, or Product as a Service (PaaS) and it’s completely revolutionizing the way we buy and consume everything from clothing to cars to construction equipment.
But, the future success of this new way of doing business lies in the dual focus on two sides of the same coin: the optimization of today’s current business model and the servitization of a new one focused on maximized product uptime. And, striking the right balance between the two will be crucial for the survival of modern OEMs.
Optimization of the Current Service Model
On one hand, a need for the optimization of OEMs current service models is placing after-sales service in the spotlight, as this function is critical to OEMs’ ability to deliver maximized product uptime as a service to customers. But, optimizing after-sales performance means more than just optimizing individual service processes. True optimization addresses the synchronicity throughout the entire after-sales service process, resulting in improved end-to-end customer service and increased financial performance.
And, to enable this transformation, OEMs must have a strong technology foundation in place – one that allows them to mature from today’s reactive model of service to the more proactive state of the future. By simultaneously optimizing inventory, price and product uptime, OEMs can reach a point of maturity where they can connect to products to proactively stock parts, price by use and predict failures.
The Shift Toward Servitization
That’s where the servitization side of the coin comes in: A business transformation of this magnitude, where OEMs start to shift priorities away from the model of simply selling new products and servicing them and toward a PaaS model requires a staged approach. Manufacturers need to identify where they are on this journey toward selling the outcomes of products and what they need to do today to start making quantum leaps toward the next stage of uptime maturity.
And, ultimately, uptime maturity exists on a continuum; from least to most connected, and from the most reactive – where the customer doesn’t know there’s a problem until a breakdown – to the most proactive – where the customer is notified to bring the vehicle in for service as soon as a potential issue is detected, minimizing overall downtime.
But OEMs who want to ensure they strike the right balance between both the optimization of their current business as well as the servitization of their future business need to make sure that they don’t tilt too far in either direction, putting their current performance at risk for the future (or vice versa).
Leveraging Service Optimization to Fuel Servitization
As with any major industry transformation, there will be significant challenges to overcome, but also tremendous opportunities. And as OEMs rush to solve the puzzle of how to provide the most value through business models like subscription services and PaaS while still turning a profit on new business, consumers will look to the brands with exceptional after-sales service experiences.
With the momentum behind this overall shift toward servitization, it’s clear that the tides could be turning any day – the question is no longer if it will happen, but when. That’s why it’s crucial for manufacturers to start getting their house in order today to prepare for a major change to the foundation of their existing business models. A service revolution is coming, and those who fail to prepare will be the laggards, while the ones who embrace innovation will be leading the pack.
Download our new research report to learn more about how customer expectations and their rising interest in the subscription economy is revolutionizing the way OEMs do business.
SHARE THIS POST