Manufacturing firms are interweaving new services with product offerings to more effectively differentiate themselves, according to a new report from Oxford Economics, in cooperation with PTC. These researchers conducted a survey of more than 300 manufacturing executives during the first quarter of 2013, and found that those services focused on reducing time to market (52%), accelerating product innovation (43%) and reducing product development costs (40%) were most important. The researchers also determined, however, that in three years, accelerating product innovation will move from the second-most important value driver to the most important (50%), followed closely by reducing time to market (47%) and increasing service revenue (39%).
Over 40% of survey respondents were C-level executives, with the rest being direct reports to C-level executives. The top five job functions were supply chain/manufacturing, product/engineering, IT, strategy/corporate development, and service. Annual revenue for surveyed organizations, which were split into almost four equal parts, ranged on the low end at $250 million to over $5 billion.
Geographically, more firms in Europe (74%) are expected to overhaul their basic operating models than those in North America (64%) and Asia (67%).
Among the steps being taken is heightened coordination of strategy and planning between engineering and service functions, which will rise from 54% today to 73% in three years according to the survey.
Better coordination between engineering and service divisions dovetails with greater intent by executives to use feedback from service execution (52% today) to drive decisions and enable improvements to product development and quality (65% in three years).
“Smart” products—software-intensive, networked products that have sensors and connections back to the original manufacturer—are key to creating product-as-a-service offerings, the report states. For example, because smart products are connected, they can report service needs before failure.
Greater emphasis on smart products indicates that a solutions- and systems-level focus is gaining traction among manufacturers, according to Paul Camuti, Senior Vice President and Chief Technology Officer at Ingersoll Rand. “What we’re trying to do as a company is to systematically apply information and communication capabilities across the whole product portfolio in order to move from being a supplier of hardware to a supplier of lifecycle customer experience.”
