The Industrial Equipment Industry Now Focuses on Services, Not Products. Here’s Why...

October 31, 2018

Even if you’ve never been on a London bus, you’d recognise one if you saw one. The bright red double-deckers have evolved since the days of the original Routemasters, but they’re still an iconic part of the London cityscape.

There are also loads of them: 8000 buses operating 700 routes, in fact. Requiring 32,000 tires in perennially tip-top shape.

Now, you might think that’s a great contract for the vendor that supplies those tires, which in this case is Michelin. But what if I told you that Michelin provides those tires for free?

Yep. That’s right. For free.

Why? Because Michelin makes far more money from monitoring that fleet of buses than they ever could from selling tires.

They provide a comprehensive service to London Buses which includes replacing tires whenever necessary for no extra cost - and they find that billing for that service is more lucrative enough to take a hit on the actual product that made them famous.

Michelin isn’t alone. Today, more and more companies are willing to sell products on a loss in order to make more money with services.

Industrial Equipment Industry michelin tires

What Does This Mean for the Industrial Equipment Sector?

All of this means that industrial equipment (IE) companies now need to think seriously about how to create an excellent customer experience.

They have to design a process for design, manufacture and delivery that meets every requirement, moving from an Engineered to Order (ETO) model to a Configured to Order (CTO) model.

What’s more, to compete seriously in this area, they need standardized tools and easy-to-use platforms that encourage communication and improve transparency - both for their clients and within the teams that are working hard to meet these demands.

Customization

Complete Customization

IE customers are increasingly dissatisfied with off-the-rack options. They want things done to spec and they want it done fast.

First of all, IE manufacturers need flexible, responsive production lines that allow them to tweak things at any stage without slowing down time to market.

In practice, this means using a PLM platform that lets them adopt a modular approach - one they can use to identify easily the systems and subsystems that need modularization in the first place, and to swiftly and simply configure the system to meet all their re-engineering requirements.

Again, time is of the essence. No company can afford to fall behind its competitors.

Keeping On Top of the Product Portfolio

Of course, when you’re trying to streamline your workflows, it helps if you know what products and customizations your organization already creates or has developed. It sounds obvious, but when you’re running a global enterprise with hundreds or thousands of products, things can easily slip through the net!

It’s imperative to have a complete, centralized, easily accessible system that collects data at all stages of product development and stores this systematically. This system needs to be robust enough to keep up with an ever-growing, ever-more complex product portfolio, with all kinds of modular designs and product lines.

That way, when a customer needs something specific, you can draw on your past work and collective knowledge to make it happen, fast. Make sure the PLM you choose supports that.

plm system multiple locations

Staying Connected

Typically, a team at an IE company will be scattered across multiple locations.

Their requirement teams, responsible for collecting specifications to enhance the customer experience, are likely to be spread around the world. Their design teams, which then use these specifications, may also be working out of different spots. Their manufacturing processes are likely to be in a completely different place again.

This makes it crucial that your PLM includes a straightforward system for communicating and collaborating efficiently.

Final Thoughts...

Providing services is a lucrative business and one your customers increasingly demand, but it also means cleaning up your act from design to delivery.

When your main business is selling products, you obviously want to keep things efficient enough to stay ahead of your competitors - but at the same time, if things do get a bit messy and chaotic under the hood, it’s only you that knows about it.

When you’re selling your whole manufacturing process as a service, on the other hand, you need to make sure it’s executed as smoothly as can be. It’s good business sense to rise to that challenge… just make sure you have the right technology to support it.

Want to find out about our industry-leading 3DEXPERIENCE platform and how it’s helping IE companies to embrace the service economy, provide fully customized solutions, and get their products to market first? Click here to learn more!

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