Aerospace Manufacturers Lead the Shift to Servitization

The aerospace industry has led the charge in moving from thinking about products to considering products and support as a service combination offering.

The world’s leading manufacturers are embarking on a journey to servitization, one that will reshape entire industries and transform the relationship between the customer and the manufacturer. In short, servitization is the transition from selling products to selling the output or value that products deliver. This shift is putting a strain on many manufacturers’ often sub-optimized after-sales service organizations. For decades, manufacturers have been focused on repair execution – repairing a product after it has already broken down. Today’s customers, however, want products that work all the time. This is driving aerospace manufacturers to shift their focus from repair execution to dynamic repair prevention – or maximizing product uptime.

While most manufacturers are in the early stages of their journey to servitization, it is already the standard way of doing business in the aerospace industry – one that was first championed by Rolls Royce nearly six decades ago.

According to Dirk Geisinger, business aviation director at Rolls Royce, the company’s “commitment to leading the way in which engines are serviced” has been central to its success. Its Power-by-the-Hour service first introduced in 1962 revolutionized the “fixed-cost-per-flying-hour” concept.

“As innovators, we can’t stand still,” said Geisinger. “Whatever the future in business aviation might look like, be it supersonic flight, vertical takeoff and landing, electrically driven solutions or hybrid planes, we keep pioneering the power that matters, looking forward to the next 60 years as the leading force in business aviation.”

Manufacturers from other industries – namely agricultural equipment, automotive, high-tech, industrial equipment, medical equipment, and mining and construction equipment – need to take note and begin shifting to the way they do business, focusing more on subscription-based uptime models.

To put some hard data behind this significant trend, Syncron collaborated with Worldwide Business Research (WBR) to determine how prepared manufacturers are to meet this shift to servitization and maximized product uptime.

The research highlights the gap between customers’ increasing demand for maximized product uptime and manufacturers’ ability to deliver it, plus strategies for manufacturers to start meeting these new expectations today. Some key findings include:

•  98% of end users want to see more manufacturers provide service agreements that offer maximized product uptime
• However, only 33% of manufacturers currently offer service based on maximized product uptime today
• 51% of manufacturers indicated they have the infrastructure in place to support service models based on maximized product uptime, but still have more work to do to support this model, while only 25% of manufacturers indicated they can fully support service based on maximized product uptime today
• 58% of manufacturers believe customers would be willing to pay more for service agreements that guarantee maximized product uptime, while 57% of end users indicated an uptime guarantee would be worth the extra cost.

So, how should manufacturers plan to meet these new, evolving needs?

• Redefine the customer relationship

Customer relationships with a manufacturer no longer end after the point of sale. As new equipment will no longer always be the purchased good—instead it will be a service subscription—it is the responsibility of the manufacturer to make sure that their customers’ equipment is up and running at all times.

The shift to servitization means customers expect equipment to always be up and running, so providers must redefine their service models to focus on maximized product uptime. This requires IoT data, machine learning capabilities and predictive analytics to effectively manage data from equipment in the field and provide logical, automated next steps for maintenance and repairs.

• Automate & optimize the service supply chain

A service model focused on maximizing product uptime will only realize its full potential when paired with sophisticated service parts inventory and price management solutions. While IoT data can provide visibility into when and where problems may occur, a service parts inventory planning solution will ensure parts are delivered to the right place at the right time – ensuring a repair can be made before a breakdown occurs – while a pricing solution will ensure the part is sold at the optimal and most competitive price. A flexible, scalable solution will not only provide control at the manufacturer level, but also drive profits at the dealer level as well.

• Invest in data-driven technology 

As the role of the manufacturer changes to be more service-oriented, the integration of data-driven technology becomes increasingly important to success. For everything from predictive analytics solutions that help dealers know when service is needed, to sensors to help reduce energy consumption, sophisticated technology is needed to maintain a high level of service.

In very competitive markets, where there can be many different slow or fast moving, erratic and seasonal SKUs, manufacturers need to leverage these technologies to help them deliver a value-add that is unmatched by their competitors. Customers are becoming more and more service-oriented and technology is necessary to help manufacturers scale in real time.

Maximizing product uptime is a crucial enabler in a manufacturers’ journey to servitization. It’s an exciting time to be in this industry as we see a growing group of industry-leading manufacturers completely reexamine their after-sales service operations to meet these rapidly changing expectations.