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The Transformative Shift in Manufacturing: IFS' State of Service 2025 Report

The landscape of manufacturing is undergoing a profound transformation, as outlined in IFS' latest global study, the State of Service 2025 Manufacturing Transformation Report. Produced in collaboration with Accenture, this report unveils how the integration of Industrial AI, changing customer expectations, and service-centric models are reshaping the industry's competitive dynamics.

Service as a Strategic Profit Engine

In a significant departure from traditional practices, IFS finds that service is now viewed not merely as a support function but as a vital component of profit generation. Approximately 39% of surveyed manufacturing leaders reported that shifting to servitization—turning products into service-based offerings—will be crucial for their long-term growth. The study highlights input from 800 senior leaders across the manufacturing sector, showcasing a unanimous recognition that embracing new service models is essential. Mark Moffat, CEO of IFS, remarked, “Manufacturing is undergoing a defining transformation. Service has evolved from a support function into a core profit engine.”

This forward-thinking perspective is complemented by the understanding that Industrial AI and sustainability have now become central to delivering enhanced, intelligent, and more personalized services to clients.

The Importance of Technological Adoption

The report makes it clear that embracing technological advancements is vital for ongoing success in manufacturing. 63% of manufacturers surveyed are directing their attention towards cloud infrastructures and innovative technologies such as AI, IoT, and AR to bolster future operations. Yet, the report reveals a concerning trend: while 96% of respondents are utilizing AI within their service delivery, nearly 75% have yet to implement it across their entire operational framework. For manufacturers, the critical challenge lies in effectively scaling up AI integrations and modernization efforts to remain competitive.

Workforce Evolution for a Service-Driven Paradigm

As the sector shifts from conventional service models to more outcome-based contracts and value-added service tiers, the need for workforce evolution is paramount. With 98% of manufacturers reporting labor shortages, the urgency to develop internal competencies has intensified. In response, innovative strategies are being adopted, including establishing internal training academies and leveraging e-learning platforms. These initiatives aim not only to fill position gaps but also to empower staff with the necessary skills required in a digitally-oriented, service-driven environment.

Sustainability as a Primary Concern

In recent years, sustainability has crystallized as a key strategic priority, with 97% of manufacturers emphasizing its importance. The study reports that 79% of companies are monitoring emissions generated from service activities, and 37% are doing so in real-time. Unifying sustainable practices such as optimizing routes, implementing predictive maintenance, and utilizing refurbished components into everyday operations epitomizes the shift towards a circular economy.

An Emerging Resilience Against Supply Chain Disruptions

Amid recent economic challenges, nearly 95% of the surveyed participants indicated that they had faced supply chain disruptions within the past year. Despite this, only 32% expressed being 'very confident' in their supply chain resilience. This disparity highlights a critical demand for strength in planning and scenario modeling, as organizations strive to develop robust local sourcing strategies and prepare more effectively for future uncertainties.

Conclusion: The Path Forward

The insights from IFS underscore that while the manufacturing industry is readily adapting to modernization, substantial growth opportunities still exist. Firms that successfully scale AI, integrate new service models, and tackle workforce as well as sustainability challenges will lead the way in the new era of industrial competitiveness. For a comprehensive understanding of how your organization can adapt, IFS encourages downloading the full findings of their report.