INNOVATIONDAY 2011
WHO SAYS MECHATRONIC
INDUSTRY IS DEAD?
CONFIDENTI
AL
Frederik Wouters
Sales coordinator
Frederik.wouter...
INNOVATIONDAY 2011
How to break out of traditional
competitive strategic thinking Blue Ocean
INNOVATIONDAY 2011
How can new technologies lead to major
innovations
Clear need for new machine features, but which ones ...
INNOVATIONDAY 2011
When market drivers become market needs
INNOVATIONDAY 2011
it is about the right mix of asset efficiency, performance,
productivity and sustainability
… preparing...
INNOVATIONDAY 2011
INNOVATIONDAY 2011
INNOVATIONDAY 2011
INNOVATIONDAY 2011
INNOVATIONDAY 2011
Failure identification
Failure prediction
Performance monitoring
Failure healing
Open standards/platfor...
INNOVATIONDAY 2011
Current supply chain
FMTC, 2010
INNOVATIONDAY 2011
Machine total cost of Ownership
INNOVATIONDAY 2011
Value paths
INNOVATIONDAY 2011
Ericsson, Nokia Siemens Networks,
Alcatel-Lucent, and Huawei may
end up
running three-quarters of the
n...
INNOVATIONDAY 2011
How to deal with today`s business complexity?
Today`s business environment – highly
complex, uncertain ...
INNOVATIONDAY 2011
Many alternatives…
offer a better base for choice
Osterwalder, 2009
INNOVATIONDAY 2011
Evaluate other business model strategies for
machine industry
Your traditional business model
versus
12...
INNOVATIONDAY 2011
Traditional machine industry business models
product
innovation
customer
relationship
management
infras...
INNOVATIONDAY 2011
Creating a new value proposition
The value of the product from the customer`s perspective
Functionality...
INNOVATIONDAY 2011
Perspective of customers
INNOVATIONDAY 2011
Value proposition:
Infrastructure services
Resources: large scale of
infrastructure units
Activities: i...
INNOVATIONDAY 2011
A Mexican customer, running more than 100 OMNI and OMNIplus machines,
weaving denim at 700 rpm. In clos...
INNOVATIONDAY 2011
HILTI : Fleet management
INNOVATIONDAY 2011
Value proposition
Product & service innovation
Resources:
strong talent pool
Osterwalder, 2009
Activiti...
INNOVATIONDAY 2011
INNOVATIONDAY 2011
Value proposition
Highly service oriented
Partnerships: product and
service innovation,
infrastructure ...
INNOVATIONDAY 2011
Freemium business model
Value proposition:
1) Free basic
2) Premium with
additional benefits
Customers:...
INNOVATIONDAY 2011
POM: Free library of predictive modeling
algorithms
- Free basic library of standard set of tools
- Sen...
INNOVATIONDAY 2011
Free library of predictive modeling algorithms
Value proposition:
1) Free library
2) Remote maintenance...
INNOVATIONDAY 2011
Emerging market business model
Value proposition:
a) for low income
countries:
fundamental (basic)
valu...
INNOVATIONDAY 2011
INNOVATIONDAY 2011
New business models
New technologies
New major market changes / drivers
Create new market spaces
INNOVATIONDAY 2011
Thanks to SBO -consortium
POM : Prognostics for Optimal Maintenance, IWT-SBO-090045
INNOVATIONDAY 2011
Hogenakkerhoekstraat 21
9150 Kruibeke (B)
tel +32 (0)3 250 19 00
fax +32 (0)3 254 10 08
info@verhaert.c...
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Verhaert Innovation Day 2011 – Frederik Wouters (VERHAERT) - Who says mechatronic industry is dead

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Speaker of Verhaert at the 8th edition of our Innovation Day on October 21st 2011.

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  • The industry stays under enormous pressure to reduce production costs, lifecycle costs of the machines
    predictive maintenance solutions can offer a need added functionality;
    Industries that are sensitive to maximizing equipment utilization, increasing safety, avoid pollution will see a much more significant added value in asset management products compared to industries that only look to decrease maintenance costs;

    Sell uptime, not machines ? Only one example in changing existing business models
    depending on the quality that could be a good model,
    depending on the cost of the maintenance
    But more capital intensive as investments are higher, pre-financing
    And only if maintenance is at lower cost, higher efficient
    To safeguard higher uptime ?
  • The industry stays under enormous pressure to reduce production costs, lifecycle costs of the machines being one of its components.
    Better quality parts, higher performances do increase the purchase price for the users
    The maintenance departments and maintenance companies are sitting under high pressure to cut costs. They will not readily invest in new, risky technologies. A strategy will have to be developed for overcoming the fear and manage the risks associated with this new approach.

    On the other hand highly specialized features such as condition monitoring solutions can be applicable to a very small number of buyers. (e.g. monitoring of wind meals). This makes that sellers must either build experience in maintenance themselves or distribute their products through companies that offer maintenance services and therefore have already experience and a good network of contacts in the industry.

    who pays for new features & functionalities ? And Why should they ?
    - The new machine owner – to have a faster car ?
    - The dealer – he can make more maintenance or more efficient through the added inteligence, remote diagnostics & maintenance tools
    - The service provider with better onsite assistance – emergency intervention , at lower costs ?
    Total responsibility is expected and found evident as buying power is high.
    What with Pirate parts ? Allow to not, that is the question, but effect on total maintenance costs ? Guarantees, servicability ?
  • Advanced software tools
    - Pressure to develop more sophisticated methods for accurate estimation of time to failure (conditions, type of component and other factors)
    Considering underlying process conditions, component`s design and capability and economic options of component`s failure (costs, lost production, environmental safety)

    Expert software
    Software that will have “expert” diagnosis capabilities. Less need for internal or external analysis; Can be easily used, interpreted and understood internally. Reduced effort of users/customers.
    Smart sensors
    Smart sensors will offer a cheaper solution to do it continuously.
    More signal processing and analysis capabilities
    Online systems (automated & real time)
    Low cost online monitoring systems that will permit the cost effective continuous monitoring of key equipment items.
    Less hands on data collection.
    Automated solutions will replace manual activities (e.g. entry of asset, sensor, data processing information, establishing of baseline levels, configuration of baselines and alarms for range of speeds, loads and operational conidtions)

    Integration with other systems (one platform)
    - There are many software packages – condition monitoring+visual inspection (manually recorded checksheets)+preventive maitenance actions (CMMS;fixed interval)+plant/equipment performance measurements (process control system)
    One platform + common standards for interfaces of these different information systems
    Could be some company mergers, buy-ins…Rockwell automation bought a company busy with condition/predictive maintenance solutions (ENTEK IRD) and has as alliance with CMMS suppliers…

    Total solution
    Not only integration with other systems, but also on the solution level. Market is fragmented with diversity of condition monitoring components (sensors, cabling, data acquisition, processing equipment, software). It is complex for users to collect all the necessary components from different suppliers and compose a necessary solution. Total solutions will be more appreciated by customers.

    Built-in sensors as standard features
    Build-in sensors as standard features in certain machinery parts and large equipment items.
    Solution set up and use
    Acceptance to level that will be normal and part day to day activities of machinery users
    In future market development will be lead by solutions that will reduce complexity of implementation process – sensor installation, cabiling efforts, long cable runs, integration with data processing systems, set up of software system.
    Wireless solutions
    Long cabling as a problem? continuous condition monitoring is currently only carried out on a very small percentage of installed machinery worldwide, due to the cost and reliability limitations of wired or battery-powered technologies. Powering wireless sensor systems using vibration energy-harvesting enables low cost installation and maintenance of continuous on-line condition monitoring of plant and machinery.
    Wireless condition monitoring is a natural application niche for WSNs and related technologies.
    Remote control and management as an external service

    Cheaper sensors & technologies
    Cost of change is important especially to SMEs. Cheaper solutions will generate greater acceptance. It will be economically reasonable and strategically important to have in in-house. It will also increase demand and number of items to be monitored.

    software – the main added value
    The focus until now in condition monitoring market has been much bigger on hardware development particularly smart sensors. In Future focus will be more on software and services. The new added can be generated by offering specialists or possibilities to prepare and execute complex and unique analysis. Additional analysis to standard options.
    Costs of HR (monitoring, maintenance, skills)
    No need for expensive specialists; possbily no need for external contractors. Easy and fast by own people.


  • Holistic asset management is a critical concern. Continuous monitoring of plant and machinery is seen as a viable alternative for improving site productivity / efficiency: optimise the operation and availability of plant, improve cost efficiency of maintenance work, prevent accidents and make significant savings in energy costs.

    In certain industrial installations redundancy is mandatory for safety. For these installations there is a tendency to apply a corrective maintenance policy. Still even in these installations new functions such as condition monitoring can make sense to help avoid dangerous safety and environmental issues or increasing quality of the output product.

    Preventive maintenance cost is strongly dependant on the location of the machinery. If that is a remote installation (e.g. windmills on see) manual inspections are extremely costly
  • Aging machine base in the industry requires more maintenance
    Tighter maintenance budgets require better maintenance strategies
    Wider penetration of automation in the industry
    Cheaper condition monitoring becoming available due to new technologies that allow mass production of sensors
    Ecological trend in society : Energy efficiency over the entire machine lifetime requirements imposed by the legislation
    Strong competition especially from emerging economies increases the interest for maintenance automation
    Changing business models – companies selling services have to manage performance of their machines distributed at different client sites and therefore in order to keep maintenance costs low they have to remotely monitoring of machinery
    Increasing machine disposal costs makes it more attractive to keep machines longer in production and therefore maintain them better
    Remote production facilities like windmills have to be monitored remotely and maintenance has to be well planned since interventions are very expensive
  • Total solution approach:
    currently market is fragmented by a diversity of condition monitoring components (sensors, cabling, data acquisition and processing equipment, software). It is complex for users to collect all the necessary components from different suppliers and compose necessary solutions. In the future it can be expected that companies providing “total solutions” to customers will be in the winning position.
     
    Ease of use:
    market will be lead by solutions that will reduce complex implementation process - sensor installation (also transducer mounting points in portable systems), cabling efforts & long cable runs, integration of data processing systems, set up of software system.
  • Article on the situation in the market
    http://www.eiu.com/index.asp?layout=ib3PrintArticle&article_id=837278268&printer=printer&rf=0

    Report highlights:
    - By the end of 2010, telecom service providers worldwide will have outsourced about $53.5 billion worth of networking tasks to equipment vendors, 8% more than they outsourced in 2009
    - Mobile network outsourcing is growing much faster than fixed (wireline) outsourcing: in 2008 revenue from mobile and fixed network outsourcing was roughly the same; by 2014, mobile network outsourcing will grow to account for 61% of all network outsourcing
    - The major growth areas for telecom network outsourcing include network maintenance, planning, design, and operations
  • Globally instead of 78% it is 57%
  • Rather than sketching out 4-6 potential business model alternatives in 60 minutes, most people feel more comfortable merely discussing ideas or one single business model. Big mistake. It’s more valuable to have several business model alternatives on the table so you can discuss their strengths and weaknesses.

    Compare alternatives, use criteria

    Selection criteria can be growth potential, risk, impact, etc.
  • Learning from successful business model innovation patterns from other industries
  • 3 diverse businesses- with very diverse economics, skill-sets and cultures-tied together within a company . E.g. customer relationship business would thrive on ‘economies of scope’ whereas infrastructure business’s key financial KPI would be driven by ‘economies of scale’, ‘time to market’ would be the critical performance parameter for a product innovation business. When the margins come under pressure, CEOs would be faced with a tough choice of cutting the flab and sustaining the margins. In past, situations like this forced CEOs to do some soul searching and ask questions such as ‘what business are we really in?’ E.g. If the company was in the business of selling communication services/products, what business did it have to have in-house call centre or a software development or a product development department, thereby adding to opex and putting pressure on already strained margins.
  • Communities (open source, data mining) standards
    CBM based on available dual use hardware
    Condition based maintenance with cheap dual use sensors (Machines have more and more sensors that should be used for diagnostics as well )
    Open source software
    Do maintenance only when necessary (save trees)
    No unplanned interruption of production process
    Grease according to need and only then
    Sensor builders
    Automatic suppliers
    Build Expert systems (self diagnosis) & Expert knowledge database
    Remote monitoring can be bought– the interpretation can be outsourced
  • CBM based on available dual use hardware
    Condition based maintenance with cheap dual use sensors (Machines have more and more sensors that should be used for diagnostics as well )
    Do maintenance only when necessary (save trees)
    No unplanned interruption of production process
    Grease according to need and only then
    Sensor builders
    Automatic suppliers
    Build Expert systems (self diagnosis) & Expert knowledge database
    Remote monitoring can be bought– the interpretation can be outsourced
  • Verhaert Innovation Day 2011 – Frederik Wouters (VERHAERT) - Who says mechatronic industry is dead

    1. 1. INNOVATIONDAY 2011 WHO SAYS MECHATRONIC INDUSTRY IS DEAD? CONFIDENTI AL Frederik Wouters Sales coordinator Frederik.wouters@verhaert.com
    2. 2. INNOVATIONDAY 2011 How to break out of traditional competitive strategic thinking Blue Ocean
    3. 3. INNOVATIONDAY 2011 How can new technologies lead to major innovations Clear need for new machine features, but which ones ? Smarter, self aware or even self healing machines Higher performances & yields • But addressing what market needs and industry trends ? New specialized high value niche markets New added value propositions …
    4. 4. INNOVATIONDAY 2011 When market drivers become market needs
    5. 5. INNOVATIONDAY 2011 it is about the right mix of asset efficiency, performance, productivity and sustainability … preparing for major trends
    6. 6. INNOVATIONDAY 2011
    7. 7. INNOVATIONDAY 2011
    8. 8. INNOVATIONDAY 2011
    9. 9. INNOVATIONDAY 2011
    10. 10. INNOVATIONDAY 2011 Failure identification Failure prediction Performance monitoring Failure healing Open standards/platforms Operational solutions Remote access Intelligence Holistic asset management Smart sensors Technologies ROI Yield Machine cost Maintenance cost Monitoring cost Isolated solutions Current issues High reliability & perf. Lower T.C.O Higher yield Knowledge management Simplified maintenance tasks Strategic Company goals Better repair planning Max. component life Max. component performance Lower prediction cost Less maintenance ‘hands-on’ Tactical possibilities Shift to emerging Greener production Lack of skilled personel Global manufacturing trends Economic Slowdown
    11. 11. INNOVATIONDAY 2011 Current supply chain FMTC, 2010
    12. 12. INNOVATIONDAY 2011 Machine total cost of Ownership
    13. 13. INNOVATIONDAY 2011 Value paths
    14. 14. INNOVATIONDAY 2011 Ericsson, Nokia Siemens Networks, Alcatel-Lucent, and Huawei may end up running three-quarters of the networks on this planet Success of business model innovation Telecom outsourcing
    15. 15. INNOVATIONDAY 2011 How to deal with today`s business complexity? Today`s business environment – highly complex, uncertain and volatile “78% of Benelux CEO`s anticipate even greater complexity in the next 5 years; only 57% believe they have ability to manage it” /IBM, research, 2010/ Incremental changes are no longer sufficient Operating margin growth in excess of competitive peers (compound annual growth rate over five years)
    16. 16. INNOVATIONDAY 2011 Many alternatives… offer a better base for choice Osterwalder, 2009
    17. 17. INNOVATIONDAY 2011 Evaluate other business model strategies for machine industry Your traditional business model versus 12 Pathways to different business models concepts
    18. 18. INNOVATIONDAY 2011 Traditional machine industry business models product innovation customer relationship management infrastructure management 1. customer relationship business economies of scope, battle of scope (big players), service and customer oriented business culture 2. product innovation business time to market, battle of talent (small players), employee centered culture 3. infrastructure management business economies of scale, battle of scale (big players), cost control, standardization and efficiency oriented culture “ Scope, speed and scale can not be optimized simultaneously; trade off`s …” three different types of businesses to manage
    19. 19. INNOVATIONDAY 2011 Creating a new value proposition The value of the product from the customer`s perspective Functionality (usefulness) Usability Desirability Osterwalder, 2009
    20. 20. INNOVATIONDAY 2011 Perspective of customers
    21. 21. INNOVATIONDAY 2011 Value proposition: Infrastructure services Resources: large scale of infrastructure units Activities: infrastructure development and maintenance Unbundled business model Infrastructure management based model Cost structure: high fixed costs (leveraged through scale and volume) Customers: Usually delivered to B2B Revenue structure: Monthly rental fee Usually commodity pricing Low margins + high volume Osterwalder, 2009
    22. 22. INNOVATIONDAY 2011 A Mexican customer, running more than 100 OMNI and OMNIplus machines, weaving denim at 700 rpm. In close cooperation with the customer, we were able to raise the efficiency by 5% and the amount of A-grade by 22%.
    23. 23. INNOVATIONDAY 2011 HILTI : Fleet management
    24. 24. INNOVATIONDAY 2011 Value proposition Product & service innovation Resources: strong talent pool Osterwalder, 2009 Activities: research & development, bringing new products to market Unbundled business model Product innovation based model Cost structure: high employee costs Customers: Usually delivered through B2B intermediaries focused on customer relationships Revenue structure: High premium because of novelty factor
    25. 25. INNOVATIONDAY 2011
    26. 26. INNOVATIONDAY 2011 Value proposition Highly service oriented Partnerships: product and service innovation, infrastructure acquired from third parties Resources: customer base and subscriber trust acquired over time Unbundled business model Customer relationship based model Cost structure: customer acquisition and retention, including branding, marketing Osterwalder, 2009
    27. 27. INNOVATIONDAY 2011 Freemium business model Value proposition: 1) Free basic 2) Premium with additional benefits Customers: Large group of free service users Small group of paying customersResources: platform Customer relationship management: automated and low cost Osterwalder, 2009
    28. 28. INNOVATIONDAY 2011 POM: Free library of predictive modeling algorithms - Free basic library of standard set of tools - Sensor knowledge offering - Customization of algorithms - Delivering datasets for neural net learning - Services for support
    29. 29. INNOVATIONDAY 2011 Free library of predictive modeling algorithms Value proposition: 1) Free library 2) Remote maintenance management on existing processors & sensors Customers: Large group of free service users Small group of paying customersResources: Web based platform CRM: 1) Agoria community 2) Brand 3) Image through Expertise Osterwalder, 2009 Partners: Research community open source comm. Sensor builders Automate suppliers, … Customers: Internet direct Community indirect Cost Structure: PR Expertise – people Web-platform
    30. 30. INNOVATIONDAY 2011 Emerging market business model Value proposition: a) for low income countries: fundamental (basic) value for affordable price, minimum service b) for non-users: specialized value Customers: a) low-income countries b) currently non-users Partners: a) for low income countries – locals as suppliers, distributors etc.. Activities: a) for low income countries - localized low cost activities b) for non-users: specialized and adapted according to needs Revenue sources: a) Pay per use b) No frills c) Paraskilling d) Shared channels e) Donations (subsidized by other segments) f) Pay with tweats g) Barter deals, etc Osterwalder, 2009
    31. 31. INNOVATIONDAY 2011
    32. 32. INNOVATIONDAY 2011 New business models New technologies New major market changes / drivers Create new market spaces
    33. 33. INNOVATIONDAY 2011 Thanks to SBO -consortium POM : Prognostics for Optimal Maintenance, IWT-SBO-090045
    34. 34. INNOVATIONDAY 2011 Hogenakkerhoekstraat 21 9150 Kruibeke (B) tel +32 (0)3 250 19 00 fax +32 (0)3 254 10 08 info@verhaert.com More at www.verhaert.com helps companies and governments to innovate. We design products and systems for organizations looking for new ways to provide value for their customers. We are a leading integrated product innovation center; creating technology platforms, developing new products and business in parallel, hence facilitating new- growth strategies for our clients.

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