First came smartphones, then came smart homes. Now, we’re on the cusp of smart farms.

Products across industries are becoming smarter. Everything from fully autonomous vehicles to home automation systems and virtual assistants are becoming commonplace.

At the core of all of these products is the Internet of Things (IoT), a network connecting the physical and digital worlds and reducing efforts from humans. While IoT has infiltrated many industries and verticals, it is now making an impact on agricultural equipment.

IoT is permeating virtually every industry with spending set to hit $1.2 trillion by 2020 according to IDC. And while the agricultural sector is typically slow to bring new technologies to consumers — McKinsey & Company research suggests roadblocks are due to long experimentation cycles, connectivity issues in rural areas, and complexities from weather, nutrition, soil composition and more — increased job effectiveness and financial incentives are driving farmers to implement changes and bring in more IoT-enabled technology.

To meet the needs of their customers, agricultural equipment manufacturers must accelerate the adoption of new technologies. In an industry ripe for transformation, manufacturers should consider the following strategies:

  • Embrace emerging technologies and new approaches to digitization. Investments in IoT, Artificial Intelligence (AI), machine learning and predictive analytics will be instrumental in agricultural equipment manufacturers’ future success. The organizations that win will be the ones to examine their business processes and adopt the right technologies to meet their needs. With more data available than ever — especially from sensor-equipped products in the field — manufacturers must have the infrastructure in place to analyze the data and act on it. As customer demands continue to evolve and increase, the proactive nature of manufacturers’ service organizations will require the integration of these emerging technologies.
  • Optimize the service parts supply chain. Currently, the reactive, break-fix service model many manufacturers use today leads to long customer wait times due to poor part availability, excess stock, and part obsolescence. This “just-in-case” way of doing business creates unnecessary equipment downtime, negatively impacting both the customer experience and the manufacturer’s bottom line. Cloud-based service parts management solutions allow manufacturers to track service parts, eliminate excess and obsolete stock, and forecast when new parts are needed. These practices are critical for meeting customer delivery expectations and maintaining an edge over both direct competitors and third-party e-commerce sites.
    And while it may seem obvious that selling a service part for the optimal price is a way to create competitive differentiation, many manufacturers are still using outdated methods like cost-plus or simple spreadsheets. With e-commerce players becoming more focused on the aftermarket parts space, competitively priced service parts will become more important than ever. Modern service parts pricing technologies ensure the end customer has a great experience, while the manufacturer is simultaneously maximizing revenue and margins.
  • Shift to a subscription-based service model focused on maximizing product uptime. As an increasing number of products are equipped with smart sensors, it is more important than ever to shift from a reactive, break-fix service model to one focused on maximizing product uptime, or leveraging IoT data to preemptively repair equipment before it ever fails. An after-sales service organization truly focused on maximizing product uptime will help build momentum on the service side of the house when it comes to finding new sources of revenue and profit.

As the world becomes “smarter,” agricultural equipment manufacturers will not be immune from the change — and could actually benefit them. According to McKinsey, American agricultural equipment manufacturers can generate value from emerging technologies that is four to six times more than current profits.

Smart farms are the way of the future, and manufacturers must take the necessary steps — investing in the appropriate technologies and processes — to ensure farmers’ needs and expectations are met for years to come.