4 Challenges for Industrial Service Businesses in 2019

5 June 2019 Admin Leave a comment Blog

Industrial service businesses provide the aftermarket component of the industrial sector. These businesses took off after the Great Recession began in 2008. Contracting markets, skittish purchasers, and keen competition from production firms in developing countries forced industrial enterprises to explore revenue generating activities beyond producing and selling goods.

Many businesses refocused on aftermarket services, including maintaining and repairing the products they sold. This strategy often resulted in higher profit margins than selling new products.

Today, the industrial service sector is facing new challenges. The economy has rebounded, and digitization has changed both business and daily life in the past 10 years.

According to research at McKinsey & Company, “When exploring aftermarket value pools, industrial [businesses] are often tempted to prioritize data-driven advanced services enabled by digital innovation and the Internet of Things (IoT). For instance, many hope to gain a competitive edge through e-commerce platforms and increased automation.”

Four Challenges Industrial Service Businesses Face in 2019

Manufacturing and industry are thriving, but this rapid growth is creating new challenges for industrial service businesses.

Labor Shortage

In the mid-20th century, most Americans held manufacturing jobs in high regard, and many breadwinners provided for their families at a comfortable middle-class level by working in the sector.

In 1979, however, the number of manufacturing jobs in the U.S. peaked, according to The Economist. During the 1980s and 1990s, not only were there fewer factory slots for employees to fill, but these jobs came with lower and lower wages relative to increasing living standards. Consequently, many parents pushed their children to attend college in hopes of securing a better future.

Today, however, the world looks different.  As Forbes explained in 2018, “Manufacturing jobs are great jobs. In 2011, the average factory worker in the United States earned $77,060 annually, including pay and benefits. That’s 28% higher than the average U.S. employee.”

But few people qualify for these “great jobs.” About a quarter of skilled manufacturing workers will retire in the next ten years, with almost no one in line to replace them. Few applicants for factory jobs possess the necessary technical skills. Experts expect this to lead to over two million unfilled manufacturing jobs in the coming decade.

Since aftermarket services require significant skill in testing, diagnosing, and repairing products, these jobs may suffer from an especially acute shortage of labor.


These days, the most serious threats to national and corporate security are online. U.S. National Director of Intelligence Daniel Coats told the Select Senate Committee on Intelligence, “We face a complex, volatile and challenging threat environment. Our adversaries, as well as the other malign actors, are using cyber and other instruments of power to shape societies and markets, international rules and institutions, and international hotspots to their advantage.”

While everyone is at some risk from cybercrime, from neighborhood businesses to Fortune 500 companies, the manufacturing industry is particularly vulnerable. Pharmaceutical giant Merck, for instance, reported lost $260 million in 2017 and $200 million in 2018 due to cyber attacks.

Manufacturing companies are so vulnerable because operational technology amplifies cyber risks. Additionally, worldwide companies can find it difficult to establish truly global cyber defense strategies given their diversified campuses and broad arrays of legacy systems. 

Managing cybersecurity is key to effective business practice in the 21st century. Despite the challenges, it’s also far from impossible. Since most cyber attacks still come through basic emails opened by uninformed or inattentive employees, crafting and implementing a comprehensive cyber resilience plan can go a long way to stave off the majority of hostile actors.  

Global Competition

The U.S. does not enjoy global dominance in the manufacturing sector. For many years, China has held the top spot. But researchers at Deloitte predict the U.S. will nudge China aside and assume leadership of the industry in 2020. Other countries such as Germany, the UK, Singapore, South Korea, Taiwan, and Mexico also hold strong positions in the manufacturing lineup.

“Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape,” says Craig Giffi, a leader in Deloitte US Consumer & Industrial Products Industry group and co-author of the report

Deloitte’s research suggests that talent and collaboration drive competition. But talent remains in short supply all over the world. While every advanced manufacturing job creates 16 other jobs, nearly six in ten unfilled manufacturing positions remain so due to a lack of skilled workers. 

Identifying and Forecasting Aftermarket Revenue

Manufacturers often fail to predict future maintenance and its associated revenues, according to Ganeshmurthy Bhat, Assistant Vice President, Analytics, IoT and IIoT Services and Solutions at GenPact. Consequently, companies neglect to have parts on hand and technicians available, leading to a long maintenance cycle, extended downtime, and dissatisfied customers.

It’s hard to identify aftermarket opportunities and forecast attendant revenue without real-time data. Bhat lists three ways that smart technology can manage these issues: it can improve data quality for aftermarket service forecasting, increase the accuracy of aftermarket service revenue forecast, and reduce aftermarket service lead time for asset maintenance.

For example, Sensa Networks offers IIoT solutions that track equipment and system performance and indicate whether your assets are working correctly and efficiently in real time. Tracking your equipment performance allows you to schedule service calls before breakdowns occur, and identify patterns and trends among networks of machines.  

Sensa Networks’ IIoT products are intuitive and easy to integrate with existing technology. They also include customized programming to accommodate your unique needs, and they can deploy at scale.

Sensa supports its products with 24-hour customer service and a dedicated account management team. That’s why the company is trusted by its clients, which include universities, hotels, retailers, governments, property managers, and manufacturers. How can Sensa’s products help your company? 


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