Industry 4.0 & logistics: prioritizing the customer experience
More and more companies are focusing on customer needs, recognizing that product and service performance is intimately linked to the overall customer experience. This holds true for B2C companies as we all can experience as consumers. However, we do see this strong focus on the customer and the customer experience gaining importance also in the B2B world.
Digitalization, automation, and advanced connectivity are becoming standard features in engineering, manufacturing, and energy products, with onboard sensors providing a wealth of data on machine health and performance. But this information is valuable only if it can inform operations and decision making. And what if companies fail to engage with the more advanced features of industrial products? A 2019 survey of the global construction industry found that an overwhelming majority of users accessed only the most basic features of their telematics systems – they used information on asset location but missed out on monitoring fuel use, driver behavior, and adherence to maintenance schedules, all of which could lead to significant cost savings, productivity improvements, and ultimately customer satisfaction.
Engagement with the advanced product features is as much a human problem as a technological one. Working practices must change to take advantage of new equipment capabilities. Data needs to be accessible and easy to interpret. Creating products and services that do those things well requires companies to understand how their customers work in real-world conditions.
Aircraft-maker Airbus seized this opportunity by partnering with US data analytics specialist Palantir Technologies to develop its Skywise data platform. The system collects up to 24,000 data parameters from participating aircraft – more than 5,000 from over 60 airlines by March 2019 – along with relevant maintenance and operational data added by airlines, and uses Palantir’s data analytics technology to provide users with new insights into fleet performance and reliability.
Unlike consumer-facing businesses, industrial companies face special customer-centricty challenges. As an engineered product is likely to touch multiple customers and different types of user, it must meet all of their different needs and preferences not just those of the person who bought it. Smart products and digital links bridge the gap between industrial equipment manufacturers and many end users, offering richer data on product performance and operating conditions, and digital collaboration platforms can help to collect and disseminate customer insights.
In engineering-heavy markets, sales and product support activities can be complex. Many industrial companies still rely on dealer networks to handle end customer relationships. To strengthen relationships between customer and brand, the agricultural equipment-maker John Deere is equipping its dealers with technology and skills to conduct remote diagnostics and troubleshooting of customer machines. If a dealer identifies an issue beyond remote resolution, the system ensures they can travel to the customer’s location with the right parts and tools to fix the problem in one visit.
Meanwhile, Rolls-Royce became more customer-centric by realizing customers were less interested in the product than the function – they wanted thrust not jet engines. This helped the manufacturer develop its extremely successful “power-by-the-hour” leasing model, an idea gaining traction across the industrial sector. German air-compressor manufacturer BOGE, for example, uses Industry 4.0 technologies to monitor and analyze its product performance at customer sites, using that data to optimize configurations for specific user needs.
Customer-centricity is evident even in markets where there is limited opportunity to customize products. Suppliers of bulk chemicals and energy increasing realize that some customers are more profitable than others so they adopt a collaborative approach to things like shipment planning to benefit both sides of the agreement. According to consultancy Bain, when chemical companies pick the right customers and serve them in the right way this can deliver double-digit profit increases.
The new focus on customers profoundly impacts the supply chain, particularly the downstream logistics processes of delivering products to end users. Companies can use logistics to differentiate from the competition through superior service or greater flexibility. From a logistics perspective, delivering large, complex, and delicate industrial products is challenging and leaves plenty of room for companies to make a good – or poor – impression. From the type of packaging used to the information shared, customers can see very clearly whether the delivery experience has been prioritized or is an afterthought.
Companies can also use logistics as a way to provide significant added value to customers. Take the example of an elevator, a product with multiple components that must be installed in a specific sequence. If the manufacturer can deliver each component at precisely the right time, it keeps the customer’s project on track without the cost and risk of storing high-value parts on site.
Beyond the initial delivery of a product, logistics continues to have huge potential to impact the customer experience. Aftermarket supply of parts is a significant source of revenue for many companies in engineering, manufacturing and energy and a key element of their overall customer satisfaction. In addition, low-carbon logistics solutions make a significant contribution to the environmental promises made to customers and other stakeholders.
Dr. Klaus Dohrmann is the Vice President of Sector Development, Engineering, Manufacturing & Energy at DHL Customer Solutions & Innovation