Why servitisation could be key to post-pandemic recovery

Manufacturers, such as Rolls Royce, which took a reported £4bn hit in 2020, have long been big advocates of servitisation, a process that focusses on selling preferred outcomes, as opposed to individual products. It’s a model that has been around for a while but has only really taken off in the last few years. Technologies such as sensors, data collection and analytics have been the catalyst for that increased adoption, with predictive maintenance through machine learning enabling service providers to set outcome targets and meet those goals, delivering in the case of Rolls Royce, engine up-time hours and not just engines.

However, for aerospace firms the COVID-19 pandemic has been particularly difficult. Recent financial results from the likes of Rolls Royce, Pratt & Whitney and GE Aviation paint a grim picture but as Sumair Dutta, industry analyst and director of digital transformation at ServiceMax points out, the pandemic has also proved to be a stress-test for servitisation models.

“When demand for travel and engine hours was high, this worked well,” says Dutta. “With COVID-driven travel restrictions, those models have seen the opposite impact. While the risk transfer has helped the customers, it hasn’t necessarily helped the aircraft engine manufacturers. Therefore, there is greater visibility into the risk associated with outcome-based models and safeguards that need to be put in place to allow for the management of that risk.”


ERP Today


Read on

Click me