Editor’s note: In his previous post, Chris Owen introduced research conducted by the Advanced Services Group at Aston Business School and Noventum Service Management on the five megatrends that are delivering opportunities for manufacturers to grow through advanced services, and explored the implications of the first: value change. In this article, Chris explores two more of the five megatrends: the environment and resource scarcity, and the aging population.

Megatrend #2: The environment and resource scarcity

Most scientists agree that man-made climate change is a reality and that governments and businesses must take action to reduce humans’ impact on the planet. At the same time, consumers are increasingly demanding environmentally friendly and sustainable products and services, such as locally-sourced food.

Meanwhile, resources of all kinds are becoming increasingly scarce and manufacturers are having to become more creative and innovative in the ways that they obtain and manage them.

For manufacturers, the opportunity lies in a proactive approach to these issues by finding new ways to service clients that help them compete by addressing their environmental and sustainability requirements – and those of their customers. The increase in demand for these types of products and services is driving new business strategies such as service innovation.

Participants in our research see a strong synergy between sustainability strategies and advanced services. For example, customer are increasingly looking to prolong the life of equipment and to remanufacture and refurbish.

Denis Bouteille of Fives said, “We have developed internally some ‘eco concept’ machines that consume less energy, that have lower pollution emissions and so on. And we continue to push the design process to make that happen.”

Another of our research participants specifically mentioned the circular economy, and how their company now assists customers to recycle and reuse packaging and pallets. This service is provided to customers such as IKEA, which requires companies in its supply chain to comply with its sustainability code of conduct, IWAY.

What does this mean for manufacturers and advanced services?

As manufacturers transform to deliver outcomes to customers, they need to understand how they can support customers in achieving their environmental and resource objectives. For example, Mann Trucks, by using driver behavior monitoring has significantly reduced fuel consumption for their customers – a key priority for them.

What you can do next

In order to deliver advanced services successfully, you need to understand your customer’s business goals: What are their environmental priorities and how can you assist them? How can your product and service combination be modified or enhanced to deliver the customer’s sustainability objectives?

Megatrend #3: Aging Population

The population in western developed economies is aging. This has several major implications. On the demand side, the older consumer represents a growing market for companies.

Meanwhile, due to improved healthcare and delayed pension ages, many people are working longer. This means that the workforce is also aging.

The increasing population of older consumers provides a potentially significant opportunity for growth for companies that can provide products and services targeted to this market. In addition, companies may need to adapt their own working environments in order to accommodate the increasing age of the workforce.

However, there are challenges: one of our respondents, Kevin Coleman from Alliantus, pointed out that the technology needed to address this market may not be usable by this less tech-savvy population.

“The aging thing is a paradox. We are living longer and so need more treatments as we age. However, you’ve got to reduce health services because you’ve got to get those [costs] down. So you’re going to have monitoring and to have that, you’ve got to have some services in place to do that, to make sure that all works together. But then you’ve got another paradox. How do people who missed the tech generation engage with this?”

On the supply side, companies will need to be able to manage an aging workforce. Several of the participants we spoke to mentioned the risk of losing ‘know-how’ as older workers retire.

Denis Bouteille from Fives weighed in: “people were used in industries to run the machine a certain way and they were very skilled, and it was working perfectly fine. And now those people are retiring, so there is a problem of the workforce getting older and all the people with technical skills leaving, and the complexity of the machine has changed.”

What You Can Do Next

Consider how your product and service offerings can be adapted to provide new capabilities focused on the needs of the older consumer. Historically, this has not been a particularly well served group, but increasingly firms will not be able to ignore this important market segment.

Read the whitepaper on the five megatrends conducted by the Advanced Services Group and Noventum Service Management, and stay tuned for part three where Chris will discuss the final two megatrends.


ABOUT Chris Owen

Avatar photoChris is a Teaching Fellow at Aston Business School. He trained originally as an aerospace manufacturing engineer and held a number of roles in operations and supply chain management, before joining PwC as a senior consultant in operations competency. During his seven years at PwC, he helped clients in Europe and North America with cost reduction, performance improvement, and procurement. Chris joined Aston University Business School in 2011. He has a particular interest in applying the principles of lean and servitization to improve business performance in a wide range of situations.