Products and services integration - Executive comment
13 October 2015
Hartmut Pütz, president of Mitsubishi Electric’s Factory Automation - European Business Group, discusses the companies experience of the increasing demand for services alongside products.
Simple selling of hardware products is happening less often as components become more interconnected and automation manufacturers provide increasing levels of system design, development and software support to end users, machine builders and system integrators. There is no doubt that demand for services to be provided alongside an automation vendors’ product portfolio is increasing.
The sale of individual products in process industries is already being subsumed by the need to supply a service.
Companies that have traditionally supplied only products are increasingly looking at strategies to provide complementary services. For example, in 2013 Mitsubishi Electric acquired KH-Automation Projects GmbH. Specialising in automating process plants, it has since been renamed ME-Automation Projects GmbH and has become a fully integrated part of the Mitsubishi Electric Group.
This move enabled the company to step-up its capabilities as a turnkey provider and address projects that were previously closed to it. Further, it has strengthened the Mitsubishi Electric offering by providing greater control of risk and by reducing the probability of unexpected extra costs for the end users during the project.
The trend of adding services to hardware provision will also continue to gain importance within the manufacturing industries over the coming years. As end users start to implement connected manufacturing projects, they will increasingly need an automation supplier providing project management, system integration and engineering. But in many cases - probably the majority of cases - the variety of automation products and services needed for such projects goes far beyond the portfolio of one single supplier.
Mitsubishi Electric itself has a comprehensive range of factory automation equipment. It also has a long history in the field, so the products have been developed over many generations of technology and represent the state-of-the-art in the automation of production and processes.
To use these powerful products as productively as possible, manufacturing companies need to have them integrated into bespoke systems that precisely meet their needs. The expertise required for this stage alone is considerable because identifying the needs and developing appropriate solutions requires considerable co-operation between the end user and the supplier.
There is also an increasing requirement to connect the shopfloor control system with the company’s IT and enterprise management systems. Further there is a growing trend to connect with the IT systems of customers, distributors and suppliers, so that there is a seamless connection between all elements of the supply/value chain.
This change does have some clear potential benefits for the customer. It gives them increased business performance. For example it maximises organisation transparency, which delivers an improved base for decision making, makes the purchase and operation model more predictable so margins can be calculated more effectively allowing the business to increase its competitiveness. This results in reduced cost of production, increased productivity and reduced time-to-market.
There are many indicators to suggest that products and services are becoming more integrated. These include: the advance of Smart Manufacturing, the Internet of Things and Industry 4.0; the rise of big data and cloud computing; increasingly stringent control of emissions to reduce climate change; end users expecting guaranteed performance levels from their plant for long periods of time; and reduced time to market expectations.
Therefore, expecting to rely on one single partner will become impractical. What will be needed is an approach that combines expertise from several suppliers, but with one partner taking the lead and being responsible for co-ordinating all aspects of both equipment and service.
This is the approach chosen by Mitsubishi Electric, which has been implemented through its e-F@ctory partners. The project started in 2003 and there are now over 3,000 e-F@ctory partners. Each is an expert in their market sector with products, engineering, systems integration, maintenance or management expertise. The goal of the e-F@ctory concept is to offer customers the best-in-class solution and does clearly illustrate a move towards ‘the age of service’ for automation companies.
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