New and emerging technology has always played a key role in manufacturing. But, the adoption of that technology is where true industry revolution takes place. It determines who will rise to the top, and who will fall to the wayside – because, it’s the companies who select technology that streamlines processes, optimizes budget and improves overall workforce performance that are predicted to outlast their competition.
And, as emerging technologies are bringing more and more brick-and-mortar sales into a digital, web-based sales models, manufacturers should expect an even greater transition toward online presence in part sales. Because, despite the fact that the service parts industry remains somewhat conservative, this digital change is already happening on the consumer side, making it crucial for manufacturers to embrace technology adoption.
Recently, we sat down with academics, customers and industry leaders to talk about that digital change for our newest Orange Paper, 2019 After-sales Service Predictions: Powering The Journey To Servitization Through Maximized Product Uptime, where we learned why adopting the right technology is crucial to making servitization a reality.
As we continue on the road toward servitization, the shift to selling service instead of products, the extensive scope of technology disruption associated with the journey will impede some manufacturers’ ability to endure the journey and further separate the leaders from the laggards. “With technological evolutions in IoT, machine learning and AI, manufacturers will be able to predict and prevent failures,” says Gary Brooks, CMO at Syncron, “and, ultimately, modern and effective after-sales service can only succeed in making servitization a reality by adopting these technological innovations.”
Below are more of the technology investments and implementations our respondents believe need to occur in the next year to prompt success in today’s changing climate of customer demands:
- Data analysis technology. “Manufacturers need to get the install base under control. Sensor organizations need to be in place – and managerial processes set – so that that flow of data is correctly interpreted and analyzed. Collecting data and analyzing data are the key processes – without data it’s just a claim – but with data we can do so much more.” – Professor Carlo Alberto Carnevale Maffè
- Customer service technology. “It’s all about understanding what the customer needs first. Do they need [customer service] answers? Do they need problems resolved? Spartan Motors has a program called Project Horizon where we laid out the different parts of the organization and realized that technology is what we needed to scale our model. We realized we needed to listen to what our customers were saying to us, and ultimately learn how to become customer-focused – without incurring the cost, which can be a very expensive business model. We needed products that create a more efficient way to decipher where the help is needed most.” – Jon Dickinson of Spartan Motors
- Evolving sensor technology. “You have to invest in technology, but you can’t just invest in the proven ones. Sensor data has been around a long time, and reliability is better than it ever has been – but it wasn’t always that way. During a recent benchmarking study, Honeywell said their integration of sensor-data points for vibration on a jet took twenty years to get where it is today, but they’ve written algorithms to correlate the vibrations with the actions over time.” – Jay Johnson of DTNA
Disruption Is Not Limited to The Service Side of Business
Ultimately, the disruption associated with servitization is not limited to the service side of organizations, but heavily on the technology and development side, as well. “Manufacturers’ journey to servitization and maximized product uptime will not only disrupt the after-sales service side of their business,” says Brooks, “but it will require radical transformation and evolution in other parts of the business, especially product development, in particular.”
In fact, manufacturers’ historic dependence on service and parts revenue alone hasn’t inspired product development with servitization and maximized product uptime in mind. “Traditional, break-fix service business models were intentionally designed to inevitably fail at some time during their lifecycle,” continues Brooks. “This model created opportunities for manufacturers to sell high-margin parts and service, which worked initially because the responsibility of the repair (i.e. maintenance and uptime) fell on the customer. But, in today’s connected world, where customers are not only acknowledging the imbalance, but demanding a change – that model won’t cut it anymore.”
As the responsibility for ensuring product uptime will shift from the end-user to the OEM, meaning the manufacturer will be responsible for all technology aspects that guarantees the uptime of the product – including the costs associated with ensuring a product’s expected outcome. “This shift in responsibility will drive the OEM design products that not only maximize uptime from the start,” says Brooks, “but it will prevent them from profiting from expensive spare parts – which will completely change the game.”
Tech Trends Are Carrying Over Into 2019
Past tech trends like predictive analytics, IoT and other emerging technologies are also carrying over into 2019. “Each has a very disruptive impact on business models,” says Ranka. “Manufacturers are using information that they didn’t have before – and that can be a big change. So, how can they leverage all of this information and make sense of it? This starts another trend, which is the need for heavy duty analytics for the data coming from machinery. Say you have a tractor in the field; today, you can read out metrics on how it’s performing through metrics like temperature, pressure, etc. and start to understand in advance where problems develop. In the past, [customers] may have had to drive a tractor until it broke down – but, in today’s age of technology, systems can be either automated (or lightly human run) where the machine is smarter and can solve those problems autonomously.”
So, with after-sales service uncovering hidden profits, organizations are re-investing this newfound financial lever. “We know that there are tech investments that need to be made,” says Nate Chenenko of Carlisle. “Sensor data needs to be collected, and that data needs to flow somehow; somebody or something needs to aggregate it to use it.” His top two suggestions? First: Spend money on establishing a data pipeline. Second, partner with another company who focuses just on specific areas that can lighten the technology investment on the front-end, with easier pivots than building something in-house. “Servitization is appealing because it allows people to really focus on what they’re good at – it’s hyper-specialization at its best.”
It can be difficult to determine which emerging technologies are mostly hype – and which are here to stay – but, 2019 will be the year that manufacturers take a hard look at their technology investments and recognize the gap between where they are and where they need to be.
Download our new Orange Paper to learn more about what these thought leaders predict will be major manufacturing trends in 2019 and beyond, and what resources and technologies will be needed to win.