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Servitization: Plain Sailing or Choppy Seas?

Oct 5 • Features, Management • 618 Views • No Comments on Servitization: Plain Sailing or Choppy Seas?

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Kris Oldland talks to Felix Keiderling, Global Service Business Development ABB’s Turbo Charger division shorty after his presentation at the Spring Servitization Conference in Lucerne, to find out more about how ABB are approaching the introduction of an outcome-based service offering in the merchant marine sector…

KO: Having just given a fantastic presentation a little earlier this morning one of the things you highlighted was that you have an install base of 200,000 assets and you know exactly what is going on with each and every one of those assets.

How do you achieve that because that is a pretty inspirational place to be!

FK: Basically it is at the core of our business to have a clear understanding of our install base, considering the long lifecycle of our assets.

In order to do this you basically need to cover from cradle to grave the whole process i.e. From day one being focussed on how we manufacture it, through to where it is installed, on which engines and then keeping track of the lifecycle of the asset – how we’ve serviced it, if there are any upgrades and so on – all this information is required so that we can be there when the customer needs us, with the right parts and the right people, very efficiently.

KO: The business model that you described today generated a significant chunk of the revenue from service, has that always been the case, i.e. has service always been a key element within your business model?

FK: Yes it has. From Day 1 on, if you look at the harsh operational environments these engines are operating in, of course our turbo chargers also face these environments – so wear and tear is always occurring and we have always had to do regular maintenance because of that.

Due to this, from the beginning service has been an important part of our business approach and our success.

KO: And has it also always been a driver for you strategically? Or was there a customer pull as well?

FK: In one sense, it was a clear strategic decision for us especially when we looked at how hull manufacturing was moving to the East and the big growth in logistics that was coming along with that. But then the merchant marine sector that we support is also driving this demand for regular maintenance for turbo chargers as well.

Whilst it was a strategic decision in that we saw this market developing and positioned ourselves accordingly, there was also the move to implement our service solution globally which was in part a reaction to the changing demands of the sector.

So whilst it was a strategic decision in that we saw this market developing and positioned ourselves accordingly, there was also the move to implement our service solution globally which was in part a reaction to the changing demands of the sector.

KO: When you were speaking earlier on today you alluded to such change and that the shift in market forces had allowed to put yourselves in the position where you can begin to explore the potential of an outcome based solutions model – what exactly does that look like for your division in ABB and what is that appeals to you in such a model?

FK: We see certain things happening in the market and one is that service agreements are picking up in pure numbers, customers are willing to outsource their service needs to service providers and OEMs.

We see that there is an interest in customers engaging in much longer term service agreements because they see the leverage of reducing their total cost of ownership the over asset lifecycle and also outsourcing the risk.

Secondly, we see that there is an interest in customers engaging in much longer term service agreements because they see the leverage of reducing their total cost of ownership the over asset lifecycle and also outsourcing the risk.

Then thirdly, there is the customisation possibility that you have in within the scope of these lifecycle agreements – customers are willing to engage if you can truly support their operations.

KO: Finally, one other area that was brought up in your presentation, was digital transformation, which is one of the buzz-terms of 2017 it seems, but what does digital transformation mean for ABB both company wide and in your division?

FK: From the top down, ABB has recently announced Ability as the IoT platform where we plan to connect all Internet of Things related services, products and people into this one common platform.

Then talking about our own specific unit, we are of course part of that process and we are looking into blending our system of excellence for service execution, with digital customer solutions that are yet to come to the market

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