5 steps to Service Transformation for PET Converters

by NIck Frank on February 7, 2012

 

PSi & Noventum research has shown that as PET converters look at ways to avoid being squeezed out of the value chain by brand owner’s insourcing manufacturing, many are taking a services-led approach in order to survive. Increasingly the industry is offering services such as design consultancy or ‘hole-in-the-wall operations’to develop closer partnerships with key clients. However the challenge of this transition is not to be under-estimated. Many business leaders who have established their careers in a plastics industry orientated around technology and manufacturing, fail to appreciate that developing services requires a change in orientation of thinking from delivering something that can be held in the hand, to a customer experience. Those that do not appreciate nor understand this subtle difference are slowing down their business growth, or at worst endangering their business through not delivering value.

As a product/manufacturing company, it is not easy to transform to service led client centric approach. But with time patience and sometimes a little guidance, there are many examples where this transformation has been successful.

When working with best in class companies, we see 5 key steps to successful service transformation:

  1. Get closer to key customers
  2. Strengthen you service proposition
  3. Focus on high quality service delivery
  4. Use a service development process
  5. Establish more effective remote support

The first and most important step is to Get closer to key customers in order to be able to quantify the value your service brings to their business. This will reveal your true market position; your competitive advantage will become clearer, so enabling improved decision-making. Sounds rather obvious, but you would be surprised how many converters are pushing technologies and taking an ‘Inside out’ approach rather than ‘Outside in’!

The ‘Outside-in’ approach allows managers to gain a deeper understanding of customer value, so as to Strengthen their service propositions. Often this knowledge comes out of a structured review with their customers about the key drivers for their business. This opens up the opportunity for companies to offer new solutions, especially if they can reduce the Total Cost within their customer’s operations or minimize business risk. Understanding these needs has allowed PET converters to offer production outsourcing and consulting services.  The challenge within the PET market is how to stay ahead of this trend and develop profitability. A video on the ‘Outside-in’ approach can be viewed on OUTSIDE-IN

Profitable delivery of services is dependent on having a Focus on high quality service delivery.  Typically this involves identifying improvement issues through benchmarking and observation of the customer touch points using tools such as video & interviews. How effectively has the plastics industry taken up the services challenge?  There is probably still significant room for improvement and using a benchmarking tool such as the Best Practice and Service Industry Standards would allow the industry to compare its operations against world-class service organisations.

Successful businesses always use a service development process to implement new contracts & services, in the same way that products move through project plans and milestone decision points. Tools like this help businesses deliver on time, at the right cost and quality, yet we know they are not as widely used in the plastics industry as other sectors.

And finally we see more and more companies using technology to reduce costs through remote support from a central location. Remote production monitoring would be a good example of this trend, but again is not widely utilized. There is an undoubted opportunity to use this type of technology to standardise and centralise service operations, yet retain the flexibility that most customers require.

The opportunities within the PET industry to gain differentiation through the delivery of high quality services seem clear. Those PET converters who wish to transform to client centric, service orientated businesses, would be wise to follow these 5 principals of success. With this research, Noventum now brings its deep understanding of Service Transformation into the PET industry.

You can download an executive summary of this report based on recent senior executives experiences from a number of leading technology companies through visiting the Noventum website

As an Associate consultant with Noventum, Nick a specialist in the development and execution of service strategies that increase the value of manufacturing and technology businesses. He has a deep knowledge of the needs of the PET market having been responsible for After Market Sales at Husky EMEA.

 Noventum focuses on Strategic Service Management and has expanded internationally over the last 10 years to over 70 staff worldwide.  With expertise in all areas of Service Management, that is continually undertaking pragmatic research on industry trends, providing clients with regular insights and working with them to add value through Service. For more information on our programmes & events see www.noventum.eu

 

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