Jan Unander * UNIC AB. UBICOM Tampere All slides UNIC AB

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1 Jan Unander * UNIC AB

2 Trucks From products to services * Can others learn from the truck business?

3 Changing business environment Removal of block exemption - Europe Changed customer behavior Periodical inspections more demanding Environmental requirements

4 Changing business environment Removal of block exemption - Europe Changed customer behavior Periodical inspections more demanding Environmental requirements

5 Block Exemption EC Motor Vehicle Block Exemption Regulation The EC Motor Vehicle Block Exemption Regulation (MVBER) or European Commission Regulation EC No. 1400/2002 has been in place since 2002 and was introduced to open up the after-sales car service and repair market. A key feature of the MVBER is to ensure that all service and repair work can be undertaken by any garage whether an authorised or independent dealership. It is essential therefore that independent garages and roadside assistance organisations should have access to spare parts, technical information, specifications and codes including diagnostic equipment and software to carry out this work.

6 Stronger competition Independent workshops more competitive Warranty on repair Can fit genuine or corresponding parts lower price Will have same tools Will get access to all documentation Have to comply with dealer standards Truck manufacturer s core business under pressure Parts and labour income (70-80% of profit) Customer loyalty threatened 2:nd owner loyalty important

7 Changed customer behavior Larger fleets Want predictable cost Contracts Lease Hire Require performance Up time Cost for service and repair in contracts Fuel management is requested Environmental pressure declare foot print

8 New challenges Managing contracts not products, parts and labour Truck manufacturer and dealers must reduce cost for warranty and contracts (parts and labour) Difficult today to price these contracts especially 2:nd owner Development of new services to increase customers competiveness The key to meet all these challenges is access to information from the vehicles

9 Access to information? Telematics to collect and transmit information A system developed to identify and present right data/information to the right people A process and organisation to handle information Integration of the information into business processes

10 Existing systems to capture data Scania Fleet Management MAN TeleMatics FleetBoard Blue&Me Dynafleet

11 Fleet operator Satellite GPSposition Wireless network Operator (GSM/Sat) GSM network DynafleetOnline Telematics + integration Service Server with other systems Driver Truck Electrical System (TEA2) Dealer VECU Driver VAS / TS ECS Transmission ECU Other ECU s 3rd party software & service providers VFS

12 Information is needed to reduce cost and increase revenues

13 Proactive Maintenance New strategic process to reduce cost

14 Maintenance/ Repair 1.Reactive at workshop visit 2.Predictive statistical prediction 3.Proactive before the problem has showed up

15 Proactive Maintenance Proactive on individual vehicles diagnostics On line to detect errors and wear before they create problems to avoid breakdowns/ expensive repairs (warranty/ contracts) Require reliable Early warning system

16 Often 80/ 20 rule? Alternators Unit injectors Fuel pumps Air Driers Compressors 5 most frequent warranty actions on a truck

17 Proactive Maintenance Key to profitability Early warning System Reduced warranty cost More satisfied customers More efficient workshops Supports reduced cost and Dare offer S&M Contracts To 2:nd owner increased revenues! * Improved profitability In Leasing and S&M Contracts Higher perceived service level through larger virtual garage penetration

18 Think big but take small steps Clear vision see the final goal Strong support from top management vizualise Start up in a limited scale Country Product type Highly motivated customers

19 The Volvo Case

20 The service ladder? $ Action Responsibility -Can we -Do we want to Information Advise Responsible for correct advise Responsible for performance Data Responsibility with user Almost all services Enough information Complexity

21 SKF an example of possible service development

22 MD s strategic vision SKF will be a service company using state of the art IT solutions. Sune Carlsson MD

23 Why? The bearing is now a commodity, margins drop due to minor perceived product differences. Investors value a service company higher then a product company.

24 Development 8 From 38% to 51% of profit 7 6 MSEK Tjänst Produkt

25 CMS Service development tool * A wireless surveillance system

26 Service ladder $ Action Advise Information Data Complexity

27 Actors Wireless transmitter Paper machine SKF SKF-Service at paper mill Mill control room and/ or mill serviceorganization External service provider ABB, Metso

28 Service 1 Data Paper machine SKF Action Advise Mill control room and/ or mill serviceorganization Data Information

29 Service 1 Paper machine SKF Action Advise Information External service provider ABB, Metso Data

30 Service 1 Paper machine SKF SKF-Service at paper mill Action Advise Information Data

31 Service 2 Paper machine SKF Action Advise Mill control room and/ or mill serviceorganization Data Information

32 Service 2 Paper machine SKF Action Advise Information External service provider ABB, Metso Data

33 Service 2 Paper machine SKF SKF-Service at paper mill Action Advise Information Data

34 Service 3 Paper machine SKF Action Advise Mill control room and/ or mill serviceorganization Data Information

35 Service 3 Paper machine SKF Action Advise Information External service provider ABB, Metso Data

36 Service 3 Paper machine SKF SKF-Service at paper mill Action Advise Information Data

37 Service 4 Paper machine SKF SKF-Service at paper mill Action Advise Information Data

38 14 opportunities to create or support sales via a wireless surveillance system. Product Information More own Service Wireless sensor/ from wireless revenue through transmitter transmitters wireless transmitters 1 Extra unit to existing 7 To SKF Services 13 Mobile info. via SKF WAP CMS customers 8 T0 MRO s 14 New SKF customer 2 To new SKF CMS 9 T0 OEM Process community members customers 10 To OEM Machinery 3 Extra unit on hard to reach 11 To SKF community or critical machines members not SKF customers 12 To other Service 4 To other Service- organisations eg. AB organisations eg. ABB 5 To OEM Process 6 To OEM Machinery

39 Business case comparisons (theoretical examples) 3000 Service engineers (100%) 50EUR/tim = 300MEUR/year Information services (5% penetration in Europa) Basic information services MSEK Surveillance services 900 1,100 MSEK Up time guarantee 1,500-2,000 MSEK Additional Create more work for own service engineers Increase loyalty Increase stock market value for shares Is an infrastructure for further servie development.

40 New rules $ Guaranted paper production (tons) to agreed quality ABB service Service provider Early warning Break down Guaranteed up-time rotating machines Agreed stop time Service and maintenance Minimized maintenance SKF Products Metso Processes Product Complexity

41 What can we learn? Products are often under pressure on margins After market revenues are vital to survival Creating services will keep customers loyal To create services it is essential to get information from my product There are internal and external services Internal services needs diagnostics Proactive Maintenance External services need to be high up on the service ladder to give revenue otherwise they are supporting functions Technology + own unique competence + service organisation take you up on top of the ladder Information services to new segments can give high revenues When moving to services from products you compete with customers When going for services your organisation has to change THE CUSTOMERS HAVE TO BE PREPARED TO BUY SERVICES INSTEAD OF PRODUCTS

42 Thank you!

43 Tankar Från produkt till tjänst Konvergerande marknader ändrar förutsättningarna Att komplettera produkter med tjänster är lönsamt Tjänster över informationsnivå har högt värde men innebär stort ansvar Skilj på funktioner och tjänster Produkter driver ofta tjänsteutbudet inom Infotainment Skapa flexibelt sätt att leverera tjänster till mottagaren Lojalitetsstödjande tjänster ger mycket tillbaka i eftermarknadsintäkter och nyköp

44 Tack!

45 What a machine manufacturer can learn from the trucks!

46 Similarities Margins on products under pressure Competition increases Customer loyalty extremely important After market income cruical Customer up-time very important Complementing with new services would increase revenues Converting into a service company is a possiblity for many

47 Enabler - Proactive Maintenance Proactive Maintenance system generated information a source to reduce cost Information from

48 Service development ladder Customer value Proactive Maintenance Guided diagnostics Åtgärd Information level Råd Information Data Complexity

49 Var börja? Exempel på de 5 mest frekventa garantiåtgärderna EUD North, South, Central Alternator Unit injectors Fuel pumps Air Driers Compress

50 Vad krävs? Förståelse för VTCs affär och hur nya tjänster kan introduceras Telematik för att samla in information Ett Proactive Maintenance-system utvecklat för att identifiera och presentera rätt saker för rätt personer En process och organisation för att hantera övervakning All slides UNIC och AB åtgärdande av fordon på kontrakt och/eller under

51 Tänk stort men ta kloka steg Tydlig vision våga ta höjd för helheten Stark support från ledning synliggjord Prioritera akuta/ betydelsefulla användningsområden Starta i begränsad skala (land, fordonstyp, högriskkomponenter) Stand alone pilot på befintliga fordon

52 Avgörande frågor Får inte skapa informationsöverskott - fokusera endast på information som krävs för att göra den specifika diagnosen Får inte skapa högre kostnader än idag Erfarenhetsstyrd inställning till beslut om ersättning av komponenter - riskbedömning Får inte skapa UBICOM för stora - Tampere förändringar i processer utan organiseras utifrån ett

53 Genomförande Två parallella processer Verksamhetsutveckling Affärsanalys Tjänstedefinition Organisation Implementering Teknikutveckling

54 Proactive Maintenance Knowledge discovery Good examples

55 Proactive maintenance Definition All activities that decreases the need to repair or replace a component or a system in the GM vehicles.

56 Guided Diagnostics* - Syfte Korta ner tiden för att hitta och åtgärda rätt fel direkt när fordonet är på verkstad * Drivs idag som ett projekt inom 3P

57 Proactive Maintenance - Syfte Trådlöst övervaka och sätta in rätt åtgärder innan felet uppstår och inte vid nästa planerade verkstadsbesök eller efter haveri

58 Kompletterar varandra men olika fokus Guided diagnostics Proactive Maintenance

59 Vårt förslag Vi föreslår att Volvo påbörjar processen med att utveckla tjänsten Proactive Maintenance Det har redan genomförts flera pilotprojekt med teknisk inriktning Syftet med vårt förslag är att skapa en kommersiell Proactive Maintenance tjänst Teleca har kommersiell och teknisk kompetens samt teknisk infrastruktur för

60 The legal case Periodical Inspection Geographical co-ordination Regulations Tools Improve efficiency On site PDA Remote Areas Emissions Breaks Driver behavior

61 Commercial and legal actors Related issues Both need early warning systems Joint ambition to support truck operators needs Improved up time Road safety Co-operation legal/ operator up and running Co-operation legal/ manufacturers under discussion Development delayed - different manufacturers attitudes and technical pre-requisites

62 Conclusion Changed environment makes a new business model inevitable Proactive Maintenance is a necessary driver to enable this change Vehicle information on-line is required Both manufacturers and authorities benefit from access to the information First vehicle manufacturer to implement Proactive Maintenance achieves strong competitive advantage 5 10 years Volvo have implemented a Proactive system

63 Actions to meet changes Reduce Warranty/ Service and Maintenance cost In development phase (design and choice of components) Better feedback from rolling stock to act proactively Improved tools and guidance in fault tracing and repair (mechanics) Improved technical support in difficult cases Tie up customers in contracts Take on more responsibility Service&Maintenance even Up Time Move towards being a service supplier company not product relation

64 Most services $ Action Advise Information Data Complexity

65 Commercial Telematics Industry Development Today 201x Supplier specific solution System integration Open service delivery Supplier specific solutions, each supplier developing own on-board devices its SW & portals (revenue from hardware is large). Few standards exists in Europe, ex. FMS standard. Integration of existing solutions (HW/SW) using supplier specific interfaces, OEM s & aftermarket, aftermarket & aftermarket player. Business by networking Open service platforms for delivery and management of services. The HW (device) will be standard on all trucks. Services can be developed by 3rd parties and is operated by service providers (OEM s or other service providers). Standardized service delivery standards exist. ex. OSGI The B2C telecom industry is a few years ahead in the service development

66 INTEGRATION Customer systems 3rd services & software Authorities (Road charging etc). Financial companies On-board Integration of on-board HW/SW via API Application software Operating system Wireless network Off-board (portal/ API) Integration with 3 rd software & service providers via API Applications / Services Application server Device hardware Operating system Server hardware

67 System Content and services Call-centre and dispatch Communication Customer specific applications Provisioning procedures Billing services

68 Nya spelregler lastbilar Marknads pris Garanterad drift till överenskommen kostnad? Complete vehicle Component/system Service and repair Early warning Break down Proactive maintenance Truck manufacturer Guaranteed up-time Independ. workshop Bosch Complexity 60 80% Of profit

69 Connected truck Fleet operators Improved transport efficiency and cost optimization, driver time management, cargo management & security/safety Authorities Road charging, emission control, dangerous goods monitoring, e-call (e-safety) etc. Drivers & families Keeping touch with messaging Cargo owner Monitoring of location, & status etc. Finance/insurance companies Focus on minimizing risk by monitoring & control 3rd party service & software companies Integration of 3rd party solutions Truck manufactures/dealer In order to manage up-time, increase parts & service sales and improve customer relationship management

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