The digital transformation at the heart of the Fourth Industrial Revolution (or, Industry 4.0) has introduced sweeping changes to the way manufacturing and business are done in the United States. It’s simply no longer enough for OEMs to offer products. They must think beyond standard one-off transactions to providing product-service integrations that deliver value in use.
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It’s a concept called servitization, and it redefines the traditional business model as well as customer expectations. Instead of functioning in fairly data-poor, highly transactional environments, manufacturers are now able to leverage data and technology to maximize overall equipment effectiveness (OEE) and foster dynamic, customer-centric OEM partnerships.
Technology’s role in servitization
Servitization is a product of technology. The entire strategy hinges on the Internet of Things (IoT) connectivity. It encompasses everything from satellites to smart home appliances — any application that collects and shares large quantities of relevant usage data with its manufacturer. This inclusivity is a hallmark of Industry 4.0.
On a larger scale, servitization empowers communication between and to production line machinery in order to improve use, maintenance, and repair actions. In this OEM scenario, having technology-enabled equipment translates to better, faster service.
Why? The product-service integration allows smart equipment to:
- Monitor and transmit system fault code information.
- Store and analyze data to understand failure root causes and predict future behaviors/usage.
- Give technicians real-time information upon which to base their next steps — without the need for physical inspection.
Operational efficiencies are maximized. Time and money are saved.
Servitization and tissue converting
The paper industry, like so many others, is reinventing itself in light of the Fourth Industrial Revolution. Digitalization is the touchstone of change in tissue converting, and Fabio Perini is once again at the forefront.
Our new servitization business models are designed to emphasize the integration of technologies and technical expertise to add value without adding capital expenditures or operating expenses. Each servitization business model is packaged to address our customers’ best interests based on their specific needs. Two of these models are in active pilots:
As the name suggests, pay-per-use servitization provides converters with unlimited access to Fabio Perini equipment, but they are only responsible to pay for what is produced. They receive the maximum benefit of the converting technology and digital capabilities along with a guarantee of our helping them maintain optimum OEE and a predefined production level.
- Completely eliminates up-front capital expenses, requiring converters to operational costs only.
- Facilitates access to and use of state-of-the-art technology, service, and tools.
- Aligns converters and Fabio Perini in terms of production goals, as payment is dependent
on achieving OEE and operational targets.
- Creates ongoing short-term engagements and successes that are mutually beneficial.
Pay-for-performance servitization is based on operational efficiency, and it’s structured as a long-term agreement instead of a short-term production improvement. Customers maximize the benefits of the technology and digital capabilities, and pay based on the economic value gained.
- Focuses on raising and maintaining OEE and other KPIs to a predefined level.
- Allows converters to expand production beyond their current maximum capacity.
- Provides opportunities for the converter to oversell incremental capacity.
- Generates additional profits the converter could not achieve on their own, which translates to a percentage payment for Fabio Perini.
- Strengthens a long-term, value-added symbiotic relationship.
Like its predecessors, the Fourth Industrial Revolution continues to reinvent how tissue converters work, compete, and remain in the market — now and in the future. Technologies and servitization are keys to a full digital transformation.
Written by Claudio J Muñoz
An experienced executive in the Tissue and Pulp & Paper Industry, with wide-ranging global experience in brand management, marketing, engineering, product and process development initiatives, Claudio Muñoz brings a unique blend of innovation and strategic insight to his role as Senior Global Director of Strategic Marketing and Head of Marketing - Americas for Körber Business Area Tissue. He holds a bachelor's in Chemical Engineering from Universidad de Concepcion, Chile, and master's degrees from the University of Guadalajara, Mexico, and the University of Wisconsin - Madison.