As the U.K. economy begins to return to modest growth, a new report finds manufacturers that incorporate useful services with their existing products are realising business growth of 5 to 10 per cent a year. This is the chief finding from a 12-month research project carried out with nearly 30 British manufacturers and their customers.

Early adopter advantage

The study by Xerox and Aston University reveals early adopters of ‘servitization’ can drive annual growth rate of 10 per cent, but market awareness remains low.  Dubbed a “services goldmine” the study explains ‘servitization’, the concept of adding technology-led services to manufacturing, and its potential to represent 50 per cent of a company’s revenues.

The ‘Servitization Impact Study’ finds that servitization also reduces costs of up to 30 per cent for manufacturing customers by helping them to simplify business operations and streamline labour-intensive processes. Despite the cost savings displayed by participants in the report, the study finds that servitization has failed to generate widespread awareness in the U.K. market.

Executives interviewed for the study see potential for both regional and macro-economic benefits in the future. But with only 30 per cent² of UK companies offering services on top of products, the report concludes that manufacturing and service are still largely thought of as separate, self-contained sectors, and that a huge opportunity exists to promote more manufacturers to compete through services.

Manufacture & service coming together

“The distinctions drawn between manufacturing and services are artificial and unhelpful, when in truth the two are already coming together in a way that is re-shaping the future of U.K. manufacturing,”  says Professor Tim Baines, Operations Strategy, Aston University

Examples of servitization range from the provision of spare parts to product maintenance repair and overhaul. Rolls-Royce’s TotalCare, for example, offers total maintenance and repair of the engines it sells to airline operators, while monitoring performance and suggesting improvements throughout the product life-cycle.

The report therefore calls for businesses and policy-makers to encourage the skills, contracting structures, risk management mechanisms and financing systems that will allow companies to deliver services while building their capabilities to innovate technology along the way.

Go here to download the full report; ‘Servitization Impact Study: How U.K. based manufacturing organisations are transforming themselves to compete through services’