What is the concept of "manufacturing servitization" encouraged by the state?

In July 2016, the Ministry of Industry and Information Technology, the National Development and Reform Commission and the Chinese Academy of Engineering pointed out in the "Special Action Guide for the Development of Service-Oriented Manufacturing" that it is necessary to promote the transformation of the manufacturing industry from production-oriented manufacturing to service-oriented manufacturing. In 2017-2018 alone, the Ministry of Industry and Information Technology released two batches of service-oriented manufacturing demonstration lists. After that, local governments at the provincial and municipal levels also released their own regional lists, giving substantial economic incentives to companies that meet this concept.

So what is the concept of service-oriented manufacturing?

In 1966, the American economist Greenfield proposed the concept of Producer Services when he studied the classification of service industries, which at that time referred to the further production of goods and services. , non-final consumption services.

In the following decades, two concepts have been derived from the integration of manufacturing and service industries, service-oriented manufacturing and manufacturing servitization.

Service-based manufacturing refers to manufacturing-based services and service-oriented manufacturing, a fusion of production-based product economy and consumption-based service economy, and a new manufacturing model. The servitization of manufacturing industry is the evolution path of the manufacturing industry, that is, in order to gain a competitive advantage, manufacturing enterprises move from the lower-value assembly and manufacturing links in the smile curve to the higher-value design, R&D and service links. The two concepts are the same.

The next part of this article will mainly discuss the concept of servitization of manufacturing. From selling products, to selling the combination of "product + service", to providing integrated services to customers, manufacturing enterprises are constantly changing in this process, in order to create higher value for both themselves and their customers.

Take growth as the driving force, shift to service centralization

The motivation of manufacturing enterprises to service-oriented is divided into two categories by consulting firm Accenture. The first category is economic drivers, including revitalizing idle resources and optimizing cost structures; pursuing higher profit margins; and enhancing revenue/profit sustainability and certainty. The purpose of this type of motivation is to improve the financial position of the company. The second category is strategic motivation, including sniping at competitors; promoting business model and value chain optimization; getting close to customers, quickly and flexibly meeting customer needs; strengthening "locking" customers and enhancing cooperative relationships. The purpose of such motivation is to enhance the status and competitiveness of the enterprise itself. In addition, expanding growth points and promoting business growth constitute an intersection between the two.

Accenture further divides the manufacturing service into three stages:

In the first stage, the service is only a "supplement and extension of the product", and the service provided is mainly used to support Product sales are reflected in installation, after-sales and spare parts services;

In the second stage, the company begins to provide customers with "one-stop solutions" to better solve problems for customers and increase customer stickiness. At this time, the services provided by enterprises began to cover design, operation, maintenance and supply chain. In the 2019 annual top ten management practice selection activities of "CEConline", Yibo Technology, one of the candidate companies, won a number of " Favored by Fortune 500 companies.

In the third stage, the company has achieved more than expected benefits in the service business, and gradually transformed into a service-centric organization that drives business development with services. At this stage, the innovative value of the services provided by the enterprise is relatively high, and even the entire business model of the enterprise will be subverted.

During this transition, the service revenue of manufacturing enterprises at various stages has gradually increased, and the importance of the service business has gradually deepened. Therefore, Accenture also recommends that manufacturing enterprises take the core functions of the service chain of "service development, service delivery, and service marketing" as the starting point, and analyze in detail the four elements of the enterprise's "vision, business model, operation model, and resources" to determine the company's service strategy.

Main Modes and Policy Directions

The concepts related to manufacturing servitization are explained above, and some practices in practice will be introduced next. There are three main modes in practice:

First, the service mode to improve product efficiency. By increasing the extension services of products, enterprises can meet customer needs and enhance product competitiveness. It mainly includes personalization and online support services. Among them, the online support services are most obvious in equipment manufacturing enterprises. For example, construction machinery manufacturer Sany Heavy Industry has built a "root cloud" industrial Internet platform, which connects 300,000 devices distributed around the world to the platform, collects operating parameters in real time, and uses cloud computing and big data to remotely manage large equipment groups. health. Through the "Root Cloud" platform, Sany Heavy Industry achieved fault maintenance within 2 hours and completed within 24 hours. At the same time, the sluggish inventory of wearing parts and spare parts was more than 40% lower than that of the same industry, and it directly reduced spare parts for downstream dealers every year. The inventory exceeds 300 million yuan, which greatly reduces the inventory pressure of spare parts.

Second, a mode to improve the convenience of product transactions. It mainly includes two kinds of financing services and full life cycle management. For example, the price of large-scale equipment produced by equipment manufacturing enterprises is relatively high, and downstream enterprises often prefer the method of financial leasing. Rolls-Royce, the world's largest aero-engine maker, has replaced the sale of engines with "rented service time", in which the company is responsible for maintenance in the event of an engine failure. Customers don't have to pay large sums to keep an engine maintenance team, and the engine maker is happy to bind customers with service contracts to increase service revenue. In 2018, its after-sales service revenue accounted for about half of the company's total revenue.

The whole life cycle management is the management of the whole process of R&D, production, maintenance, recycling, etc. for manufacturing enterprises to expand the upstream and downstream industrial chain. For example, Shaanxi Blower Group has transformed into a supplier and service provider of turbo machinery systems since 2001. Through "turnkey" projects, from system design to integrated installation and commissioning of equipment, to system maintenance and upgrades (recycling ) to provide full life cycle management services.

Three, the integration mode of products and services. There are mainly two modes of integrated installation and general contracting. In addition to selling products, the former also provides customers with integrated installation and complete solutions. The latter can cooperate with qualified general contractors to develop market research, product design, engineering construction, engineering control and other businesses. For example, Yaskawa Electric, one of Japan's four major robot manufacturers, and Midea Group jointly established Guangdong Yaskawa Midea Industrial Robot Co., Ltd. The company focuses on the robot system integration in the 3C industry and the research and development of the robot body suitable for the 3C industry, and has accepted the transformation task of the RN08 remote control automatic assembly line. After dismantling, inspecting and designing the project, the Yaskawa six-axis robot - MH5F, conveyor belt, various special equipment, indexing plate, master control, etc. was selected to form a system, and the process was formulated and finally assembled. After a series of technical transformations by Yaskawami, the remote control automatic assembly production line now only needs 3 workers, which greatly reduces labor costs and increases output. At the same time, it can meet the production needs of different products, and the production conversion time only takes about 10 minutes.

Different from the research direction of western research institutions that take individual enterprises as samples, the official transformation policy of manufacturing service-oriented manufacturing given by China pays more attention to the overall synergy effect. "Made in China 2025" points out four transformation directions for the servitization of the manufacturing industry:

(1) Improve the policy system for the coordinated development of manufacturing and services. This part specifically proposes to encourage "advantage manufacturing enterprises to 'fission' their professional advantages, and to provide socialized and professional services to the industry through business process reengineering." This also shows that in addition to enterprises shaping their own advantages, China's policies in this regard pay more attention to encouraging the exploration of service models and the use of the professional advantages of leading enterprises to play a leading role in a wider range.

(2) Improve innovative design capabilities.

(3) Strengthen the supporting role of information technology and producer services. This part mentions that it is necessary to speed up R&D, design, technology transfer and other technological service industries, develop third-party logistics, energy conservation and environmental protection, inspection, testing and certification and other productive service industries, and improve the ability to support the transformation and upgrading of the manufacturing industry.

(4) Establish and improve service functional areas and public service platforms. In this last part, it is specially mentioned that, in view of the current situation of unbalanced development between the east and the west, enterprises in the eastern region are encouraged to speed up the transformation of manufacturing into services, accelerate the development of production service bases, and support the development of productive service industries in the central and western regions. This also shows that the servitization of manufacturing enterprises is regarded as a measure to balance the geographical distribution of national industries and reallocate resources.