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Enlisting the Channel in Service Transformation

Posted By Jeff Moad, May 17, 2011 at 2:01 PM, in Category: The Innovative Enterprise

As we learned at last week's Manufacturing Leadership Summit, many manufacturers are seeking to vastly expand the range of value-added services they offer as a way to grow revenues, solidify customer relationships, and differentiate themselves from commodity-oriented competitors. Clifton Vann, president of hydraulic industrial equipment manufacturer Livingston & Haven, for example, told the Summit audience that his company is bundling information services and process best-practice knowledge with its products, increasing the value of its products to end customers.

But Livingston & Haven and many other manufacturers face a challenge as they attempt to pursue such a services-based value added approach: They reach end customers primarily through distributors and other types of channel partners. This means that, before they can shift to a bundled product+service solution approach, they have to change the relationship they have with their channel partners. "They have to shift this relationship from one that is based on transactions to one that is based on understanding and selling a solution," said Joe Barkai, an IDC Manufacturing Insights analyst and a member of the ME Council, speaking on today's Manufacturing Leadership Council Webcast call focusing on service innovation.

Livingston & Haven is going so far as to train key channel partner personnel so they can bundle best practice processes with L&H products and ofter them to end customers as a solution. And the company is contemplating a certification program that would help end customers recognize which channel partners are equipped to provide solutions that include L&H products and recommended processes.

Similarly, Johnson & Johnson Global Process Architecture Director and ME Board member George Nickel said his company is rolling out information services such as trade promotion analytics to its distributors so that they, in turn, can help end customers more effectively market and merchandise J&J products.

Other manufacturers on the Council call said they will need to look for new channel partners who have the skill sets that will be necessary to combine information- and process-based services with products.

Do you agree that a shift to a product+service solution approach will require new relationships with your channel partners? If so, what are you doing to transform the relationship? Will you need to replace some of your current channel partners?

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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