In our blog last week ‘Innovation the name of the game following Brexit‘ we discussed some of the reasons why a National Strategy for Engineering Services is important for economic growth. Having been so closely involved in its development, we wanted to give you an opportunity to understand the potential impact on your industry.
Launched the 5th July the strategy aims enable growth through business model innovation. Underpinned by a piece of economic analysis undertaken by a leading UK economist, Dr Alan Hughes and supported by the Government Department of Business, Innovation and Skills, it was concluded that potentially 16.8% of the UK’s economy can be influenced by Servitization orientated business models. If exploited to the full, this mind-set change could release an additional 1.9% of new value(£31.6Bn) into the economy. This is a very real business case for change. Down load the report by clicking on the icon.
The goal is to achieve a 20% reduction in cost with a 20% improvement in asset availability across more than £20bn of UK economic output: a 20:20 vision.
This would be a significant transformation of national productivity and global competitiveness
But of real importance is what industry thinks. Here are a few quotes from the National Strategy, which tell the story from a management and leadership perspective. (Overview can be downloaded with this icon)
“At Rolls-Royce we have consistently delivered shareholder value through being market leaders in engineering services: ensuring that our engines are designed, manufactured and supported in-service to deliver power for our customer whenever required throughout their lifetime.” Dave Benbow Global Head of Engineering for Services Rolls-Royce plc
“In numerous engineering and technology domains, we have found that by taking responsibility for ‘outputs’ – asset performance – we have been able to give our customers more value than the simple delivery of discrete products or programmes.” Jon Hall, Managing Director – Marine & Technology, Babcock International Group
”Through-life Engineering Services is going to be one of the key levers to address the Productivity Puzzle” Steve Foxely, Managing Director – Building technologies, Siemens
“Working closely with our UK MoD customer, we have pioneered ‘availability contracting’ for high-performance military aircraft, reducing the effective cost per ying hour by some 50%. This has transformed our business, but no-one contemplating the opportunities of servitized engineering should underestimate the scale of the business transformation challenge.” Steve Worsnip – Vice President F35 Sustainment, BAE Systems PLC
These leaders acknowledge they do not have all the answers, indeed they are asking themselves the key question:
“Technology is driving a profound shift towards services. What will manufacturers do?” Titos Anastassocos – Managing Partner, Si2 Partners
They recognise the need for industry to lead the development of a strategy, with government and academia to drive a change of mind-set in UK manufacturing. Hence the key plank of this strategy is to create a TES Council, where industry can learn from each other and inspire the SME’s within their supply chain to innovate their business models. As Dave Benbow who has co-chaired the initiative says;
We’re at the threshold of something amazing in manufacturing with amazing technologies coming to fruition. Imagine every machine is connected, measuring performance in real time, adapting to make things right 1st time, always, whilst linking design, make and operational support across the product life-cycle.
“Tomorrow is about developing technology solutions, playing to the UK’s strength in knowledge and innovation.”
And it is about inspiring a new generation and re-inventing manufacturing so that we innovate our way forward through the tough headwinds generated by the political turmoil of the past 2-3weeks.
So what does the future look like? Here are some more quotes from industry as to how they see it
“Within ten years a lot of the required technology for remote services may be ubiquitous – and offering Through-life Engineering Services is increasingly a great way for equipment providers to get their equipment out to customers and build market share. Capital equipment manufacturers will have more opportunities to sell equipment as part of a ‘service’ rather than a one-off capital sale.” Martin Walder VP Industry UK Ireland, Schneider Electric
“With the digitisation of products and manufacturing we are seeing a re-invention of UK manufacturing and engineering. If we do not grasp this opportunity of a generation to get the very best creative minds engineering customer experiences and outcomes, then we will have let down the future of our children” Nick Frank, Si2 Partners
“At Bombardier, the service sector is a mainstay of our revenue growth targets and is critical to our future pro tability, ever more so now that 35 year maintenance contracts are becoming the norm. Whilst the application of a TES approach and the associated tools and technologies have underpinned our current lead not just within the UK but globally, we can and must do more both horizontally and vertically within the supply chain and with support from academia and other industry sectors, in order to ensure we exploit the huge potential that TES offers. So for us, whether to apply a TES approach is no longer a question we debate, instead the question is about the pace of change and the rate of exploitation.” Matt Byrne, Head of Service Execution WMA Region, Bombardier Transportation
The full UK National Strategy for Engineering Services can be downloaded using this link. Engineering Services Strategy
More information on getting involved in the initiative can be found at http://www.through-life-engineering-services.org/strategy