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by Jeff Moad, MA Editorial Staff
Posted on Saturday, April 01, 2006 12:15:00 AM Sign Up to receive Daily News Alerts in your E-mail Inbox    | Abstract: | As competition from low-cost, offshore manufacturers drives down profit margins on manufactured goods, it is becoming increasingly critical for manufacturing companies to capture more post-sales service and spare parts business. |
By failing to take steps to improve the strategies, operational design, and information systems underlying the services and spare parts aspects of their businesses, many manufacturing companies are missing a prime opportunity to grow revenues and dramatically increase profitability, according to a research report recently released by Deloitte Services LP. As a result of this failure, manufacturing companies "are effectively putting their entire business models at risk," says the study, entitled "The Service Revolution in Global Manufacturing Industries." The study, based on interviews with representatives from 80 large manufacturing companies with combined revenues of $1.5 trillion, notes that as competition from low-cost, offshore manufacturers drives down profit margins on manufactured goods, it is becoming increasingly critical for manufacturing companies to capture more post-sales service and spare parts business. In fact, the study finds, the profitability of service operations is, on average, 75% higher than overall manufacturing operations. Services now account for 46% of manufacturing companies' profits, the study says. [Click to continue] |
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