Current challenges require an update of the business model in mechanical engineering
The industry is facing a number of challenges. The four megatrends of deglobalization, demographics, decarbonization and digitalization are already having a tangible impact on business today. In addition, there are further and increasing requirements from regulation (Supply Chain Act), compliance (EU Data Act) and sustainability (CO2 footprint).
What strategy can be used to counter this situation in the coming years?
We see a product lifecycle services strategy as a very valid and promising option in the capital goods industry. By this we mean the expansion of the service business and the further development of traditional products into hybrid “cyber-physical” products. This is already common practice in some sectors, such as the automotive industry, where a digital connection to the product and data-driven additional services are already being marketed.
Driving business forward with Product Lifetime Services
However, building such a business and implementing this strategy requires new skills in some cases: the development and provision of cyber-physical (networked) products. The marketing and management of services for customers and – because this forms the basis of many such offerings – digitalization skills. This includes the design, development, provision and overall orchestration of digital platforms as an interface and offering to customers.
In the market, we can see that some of these skills are certainly available and that projects are being launched or implemented. However, just as often we see that an overarching vision for this business, a corporate strategy, a digitalization strategy derived from this and, above all, the appropriate organization for this are insufficient.
With Product Lifecycle Services, you can achieve the transformation from manufacturer to trusted advisor - with new added value beyond the pure product.
With services towards becoming a solution provider and trusted advisor
Properly understood, this is ultimately a major transformation towards becoming a trusted advisor and solution provider for customers, with new added value beyond the pure (physical) product. Such a transformation must be managed in a targeted manner.
Such a strategy and the defined offerings will be company-specific – otherwise they would not be able to differentiate themselves from the competition. And yet we see that many tasks and sub-problems are repetitive and can therefore be solved in a standardized way. This includes best practices in product development and portfolio definition. And many modules of digital platforms that are fundamental and do not necessarily have to differentiate.
Turn the installed base into a business model. Offer new services for connected products and become a trusted advisor to your customers!
