Manufacturing – is this service innovation?

Why Service innovation for manufacturers?
By Roger La Salle

What is a service?
A good definition, detailed in my latest book, “Innovate or Perish” is as follows:

“The provision of labour, information, facilities or products to meet a need.”

This covers all service as follows:
• Labour, like a hairdresser or Gardener
• Information, such as ABS or perhaps google
• Facilities, such as venues and hotels
• Products such as supermarkets. These people don’t actually make products they simply provide a venue for purchase.

What about Manufacturers?
Manufacturers generally “turn off” when we speak of service innovation. Service is something that for some reason seems not to be on the innovation agenda. It would seem too many that innovation really only applies to real tangible products.

However, if we look at almost any manufacturing operation the task of actually bolting things together to make a product in fact represents possibly just 10% or less of their business activities. Indeed the other 90% is service.

Is this really the case?
The customer interface and the sales effort is in fact a service. The person who answers the phone is delivering a service, so too the stores clerk, the person who packs the goods and those who deliver them are all services. For this reason service innovation should be just as high the agenda as the innovation of the tangible products we make.

Poor Service can be a shop stopper!
I am sure we have all had bad experiences in dealing with businesses that are making things we wish to purchase. Experiences such as rude sales people, delayed delivery, off-hand treatment, sales people talking phone calls whilst you are waiting at a counter or maybe even overcharging for items not specified, such as packaging and postage etc.

All of these components form a part of your overall offering and to fail in just one can spell the death of your business.

Can Services be “Innovated”?
The intangibles of service are no different from the tangibles of physical products. In fact services can be mapped and measured just like process. Indeed service efficiency can also be measures by the following equation:

Service Efficiency = Service Level*/Costs

*Service Level Metrics: The key to innovating services is to develop some metrics around what you are delivering as a service for a particular part of the business and assign a dollar value to the importance of this. Changes can then be made to improve service level and the costs associated with that delivery.

In this way, service level can not only be innovated, but much like process innovation, mathematically tracked.

What now?
It is suggested you pay attention to the service aspects of your business and work with your management team to develop some service level metrics with associated costs. Once such metrics are in place, not only do you then have a means to measure and track service delivery, you also have quantifiable ways to measure the effects of implementing innovative change.

**** ENDS ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms.

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