Changing the Game in Industrial Goods Through Digital Services

Changing the Game in Industrial Goods Through Digital Services

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Changing the Game in Industrial Goods Through Digital Services

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    New Digital Offerings

    Customers may resist paying higher prices for digital versions of existing offerings, but a package of new digital services can offer a provider a clean slate and new pricing opportunities. More important, new services give providers the opportunity to change their relationship with their customers. Rather than offering services on a one-off or as-needed basis, providers can introduce services that are performed on a continual basis, improving customers’ operations and becoming an integral part of customers’ businesses. (See Exhibit 3.)


    Condition Monitoring and Predictive Maintenance. Repairing machines quickly is one thing, but it is even better to prevent a breakdown in the first place. By using sensors and a monitoring system to continually track a machine’s performance, a service company can learn how equipment functions in a customer’s operation. Sophisticated analytics can isolate the main operating variables and find correlating events that lead to deteriorating performance or a breakdown. Armed with these insights, the monitoring system can anticipate when failures are likely to occur and schedule maintenance, assign technicians, and ensure that the workers will have the needed tools and spare parts in time.

    Monitoring systems are now reliable and cost-effective enough to become a common part of a new offering of digital services. Customers may pay more in fees for continual attention, but service companies can draw on data previously accumulated to show how the higher level of service reduces unplanned downtime and therefore the total cost of ownership of the equipment. Additionally, predictive maintenance tends to be less expensive than outright fixes, since equipment failures often damage components that were working normally.

    Not surprisingly, the airline industry has been among the first to adopt predictive maintenance. Sensors installed on jet engines continuously measure the temperature of and the pressure and vibration on various engine components, often sending more than 20 terabytes of data per hour to a service provider. If the data indicates that there is an issue, a specialized crew with the necessary tools and parts will be ready to repair the engine when the plane lands at its destination. The result is safer airlines as well as higher utilization of this extremely expensive equipment.

    Performance Improvement. Service companies can perform analytics on equipment not only to watch for breakdowns but also to optimize its use. By combining this analysis with a deep knowledge of the equipment, service providers can propose improvements in customer practices that reduce the operating costs or maximize the output for both current machines and future purchases.

    A leading wind-turbine manufacturer analyzes the power production of its installed base in real time and relates the data to current weather and geographic data. It uses the results to optimize operations at customers’ sites and to identify the most effective locations for future wind farms. By applying technology in these ways, the OEM has increased the annual energy production of its turbines by as much as 20%. Manufacturers of gas-powered turbines are doing the same: using real-time data to adjust power output, optimizing the generation of electricity. Even if these power- output adjustments reduce fuel consumption by only 1%, the boost to a customer’s profitability can be substantial.

    Sometimes a customer can do such analysis itself using benchmarking information that is sold by OEMs and based on sanitized customer data. The information helps equipment owners to better calibrate their productivity against industry norms and adjust accordingly.

    The following manufacturers have developed digital services that optimize customers’ operations:

    • A large mining-equipment manufacturer can track the material excavated during most of the mining process. The manufacturer is now helping customers to optimize their processing operations for each type of ore and to better assess the performance of each mining site.
    • An OEM for industrial processes has designed a software platform that integrates its equipment and that of other manufacturers into a single-line management system. Managers can use the system to better control the production batches and even make product changes on the fly. Customers are finding savings of up to two hours of production time daily.
    • A leading machine manufacturer uses its data to offer customers immersive virtual-reality simulators to train plant operators and help them maintain their skills, just as flight simulators are used to train airline pilots and keep them on top of their game.