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

 

Share

6 areas manufacturing companies should focus on to deliver Service Value

by NIck Frank on November 18, 2011

Manufacturing companies are increasingly seeing services as a way to differentiate themselves from the competition. But is there a recipe for success?

Probably the first step is to realize that it is a fundamental paradigm change in leadership thinking.  Business  leaders who have developed their ideas in manufacturing and technology, have to move away from seeing Service as necessary evil or purely as a cost center. They must change their paradigm to seeing their value as an ‘output or capability’ that supports their customers own business goals. This does not at all diminish the importance of manufacturing & technology, which are critical to delivering these capabilities profitably.

Having made this paradigm shift and engaged in what is sometimes known as servitization, are there common themes in companies that do this well, such as BAE, Alsthom, Rolls Royce and GE.

In a recent interview on blogtalkradio, Professor Tim Baines from Aston University in the UK, highlighted 6 areas, which resonated with my own experiences.

 

  1. Manufacturing Facilities located close to the customer, so as to offer faster and more flexible services.
  2. Increase Manufacturing Vertical Integration:  For complex products such as rolling stock or engines, this allows greater scope for developing product systems that support the services profitably.
  3. Information and Communication technologies: become key in collecting data on product performance which enables:
    a) Lower cost delivery of the service
    b) Collection of data that allows the value offered to the customer to be truly understood
  4. People, need to change from a manufacturing perspective that focuses product delivery to a customer centric approach that focuses on the impact on the customer
  5. Performance measures that develop beyond the SLA’s which monitor adherence to a specification, but to metrics that are linked to the customers own measures of success.
  6. Processes: that move from being reactive around service, to being pro-active

But the key as often is to make that shift in mind-set. To move  away product & technology benefits and think more about the CAPABILITY your business is delivering.

Share

PSi invited to Luxembourg Services Innovation conference 5th October

by NIck Frank on October 11, 2011

PSi was invited to participate in a working seminar held at Henri Tudor aiming to understand how the government can help facilitate service innovation within Luxembourg. In his address to the working group the Minister for the Economy Jean Krecké clearly recognised the need for Luxembourg to make, ‘a radical change in its approach to innovation and added value’. He cited his own recent experiences in India and China as clearly showing that the nature of global competition has clearly changed.

With this introduction, the working part of the meeting began with an academic overview of the processes that companies can adopt to drive innovation. Where as there was agreement that the economies of Western Europe were now service dominated, there was disagreement on whether Service Innovation required a fundamentally different approach to Product Innovation, or whether the basic steps required to manage product innovation such as stagegate and portfolio management processes were intrinsically the same and what was required was an understanding of how to customize the steps in the process to meet the particular innovation environment.  A good example being the need within service innovation of a greater emphasis on prototyping and feedback into the services design. Our experience is that the latter is true, which it is why a deep understanding of how to use development processes is so important to successful innovation.

We then heard from Eric Dubois about the work Henri-Tudor has being doing in understanding the challenges of innovation within service systems. In particular the importance of managing the Service System Lifecycle through managing the services ecosystem, that contains the value proposition, technology, information/knowledge, people, processes & partnerships.

When looking at how other countries manage service innovation, Alan Mayo of the UK Services Policy Unit told us about the UK’s very market orientated approach, where there was not a Service Innovation programme as such. Instead the British government works with business to clear their barriers to innovation. A good example being the out-sourcing of many services in the National Health system could be argued to be the largest ever service innovation project in the world at £40bn.

TEKES from Finland run a programme where state aid for service innovation is available, but that the horizon’s of the receiving companies is challenged by TEKES innovation consultants to ensure money is spend on pushing innovations that can be taken across Europe.

We then heard about the Luxembourg State aid programme that is similar to Finland, but probably less aggressive on the consulting.

The outcome from the seminar was that it was felt that Luxembourg needs to do more to pull the different actors within the innovation process together, so that there is a coherent strategy for Luxembourg. Key is to continue to find ways to encourage the mind-set of Luxembourg’s business to be more innovative and dynamic.

 

Share

Nick Speaking at Innovation for Financial Service Summit

by NIck Frank on August 25, 2011

 

 

 

 

Nick will be co-presenting with Mark Notschaele from Cetrel at the Innovation in Financial Services Summit in Luxembourg on the 23rd September 2011 which has been organised by the Public Research Centre Henri Tudor

The topic is on Creating focus and clarity, before starting the journey to results and relates Cetrel’s recent experiences in formalising an innovation process for their business.

CETREL had a history of technology & service innovation within the Luxembourg Financial sector, but realised that to retain its position as a centre of excellence  for Issuing Processor services, it needed to invest in its technology and particularly innovative/step changing technology

However CETREL identified there was no clear definition of innovation in the business, which led to the mixing of research projects with standard development projects, which slowed the innovation process. That not only did they need to look internally for ideas,, but that collaboration with leading researchers would be an effective way to remain on the leading edge of technology.

The presentation / workshop shows how a pragmatic working definition of innovation created a common language, the launch of a dedicated R&D team brought focus and a Product Service Innovation roadmap brought direction.

Share

Nick presenting at SMe 2011 UK Conference

by NIck Frank on August 25, 2011

Nick will be presenting at the Service Management Expo 2011 on the 21st September with a former colleague Stefan Berger from Husky on the topic the Field Engineer of the future.

Societies concern with the environment, mixed with an increasingly competitive world, will challenge service organisations to provide the Support Engineers with an environment to last longer in the business, support their customers sustainability challenge, and to work leaner & cleaner. The presentation will explore trends in society and introduce real practical examples of how companies are meeting this challenge

 

Share

The ‘Blue’ Service Support Engineer

25 June 2011 Read the full article →

Technology businesses give insight into the future of services

26 March 2011 Read the full article →

Improving Services Transformation decision making

21 February 2011 Read the full article →

Turning Technical Experts into Trusted Advisors

13 February 2011 Read the full article →

Caught between two stools going nowhere…a lesson from the fastener industry

1 December 2010 Read the full article →

← Previous Entries