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What Manufacturing and Engineering Businesses Can Learn from the Service Sector

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What Manufacturing and Engineering Businesses Can Learn from the Service Sector

Tuesday, April 15th, 2014

The service sector has a lot to teach the manufacturing and engineering businesses

It’s been interesting for me over the last four years to see how my career has continuously intertwined with the service sector.

It’s surprising how often the deep divide is between manufacturing and service although I do see some companies bridging that divide.

Some enlightened manufacturers have realized that they can add value, and significant margin, by offering more services to their customers as opposed to just simply delivering the product.

Some have added through life support, some the ancillary supply of consumable materials. Others have cone the whole way and amortised the delivery and servicing of their products so that the customer pays for the product on a usage or “annuity” basis.

The key thing manufacturers can learn from service businesses is that most service companies deliver what is essentially a commodity service. Think of lawyers and accountants doing their daily work. The customer has a multitude of options and there’s little IP to differentiate anyone.

The service company frequently has to ask itself “why me?’ why would a customer choose me over my competitor? This creates an essential tension that makes a service company work harder to retain customers or to win new ones.

One often sees service companies looking at different delivery and pricing models, models that improve the customer experience.

I often see service companies attending events to learn from what’s going on in the real world and forge relationships that could benefit their business in the future, either by partnering or even acquisition. Service businesses seem more than happy to share business prospects and customers too if this adds value to their customer. The term “networking” is often overused and abused but many individuals in service companies have significant networks to hand which they can use to grow business or help their customers by referral. They realize that they must get out of the business as often as possible to be able to learn and to grow. This is often outside of “normal” working day.

In contrast some manufacturers seem unconcerned with what’s happening outside of their key relationships with customers or the daily machinations of producing products on time. I know from personal experience that life on the shop floor can be all consuming and it’s tough to find time to take opportunities outside.

In the end the businesses that are introspective will lose out to the enlightened ones that have embraced the approach used in the service sector and correspondingly have achieved greater and faster business growth.

 

What other industries do you think can learn from the service sector? Reply by commenting on this post below.

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David Seall - Chairmen of the Board of Practice for Ramsey Hall

David Seall is well known to many businesses across London and the South East as an Independent Director and Chartered Engineer specialising in the Manufacturing and Engineering sectors. David worked for many years in the Aerospace and Defence industry and was Chief Executive of the Engineering Employers Federation for London and the South East (EEF South) for over 10 years, working with hundreds of companies.

 

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