Industrial Internet Enabling More Strategic Maintenance Service Business
Condition-based maintenance and related service business is a potential domain for industrial internet applications. By using sensors to monitor their equipment and processes, companies can collect asset-related data and utilize information technology and analytics to predict maintenance needs.
Condition-based maintenance can increase resource efficiency and optimize manufacturing processes. With real-time monitoring, industrial internet can promote high-quality maintenance services and related customer benefits.
However, focusing merely on single pieces of equipment and their maintenance is insufficient, if we think about companies’ needs to improve the use and efficiency of their (or their customers’) entire installed base of equipment. The most significant benefits of the industrial internet lie in maintenance service business, when the use of the entire installed base of equipment is optimized. What if you could receive and use real-time data and analytics about the state, performance, and problems of all equipment at a factory site or at all sites in a certain business region? At its best, industrial internet can make maintenance services very strategic: they can be a vehicle for implementing a company strategy, through ensuring the achievement of goals regarding production volumes, quality and service levels. While many companies are experimenting with the use of industrial internet applications at the level of the installed base of equipment, the strategic nature of such applications is not yet, thoroughly understood.
Connecting Strategic Objectives with Data from the Installed Base of Equipment
Industrial data may deal with the condition, use, state and errors of a certain piece of equipment. At the level of a production facility, this data can and should be brought to the level of entire processes and converted to inform about the condition, use, state and errors of those processes. Such information can be very useful for assessing the capacity, utilization, volumes and lead times of the processes. This information, in fact, is very strategic, because it deals directly with the efficiency and effectiveness of the processes. Companies set measurable objectives for these issues and follow up their performance regularly. In this way, industrial internet could be perceived as an excellent mechanism for follow-up and control, as well as a means to drive strategic development in a manufacturing facility.
One challenge with the early-phase experiments of the industrial internet deals with the non-strategic position of maintenance in the operations of manufacturing firms. Another challenge is the sensitivity and confidentiality of the industrial data. If a manufacturing firm conducts its own maintenance operations, managers may find it difficult to justify the investments into industrial internet applications, because maintenance is mistakenly considered as non-strategic. Should a firm experiment with industrial internet at all, if they know that the full-scale implementation will require significant investments? Should millions be invested, if maintenance is “only” a support function and can operate quite well even without those investments? If, on the other hand, the manufacturing firm has outsourced or sources maintenance operations from a partner firm because such services are considered as non-strategic, they face the risks dealing with contractually governed boundaries between firms, also in the industrial internet applications. Can the maintenance partners be given access to equipment data that can basically reveal production volumes and other performance information, directly associated with strategy? Can the partners be trusted?
Toward More Strategic Maintenance Services in the Industrial Internet
When designing and experimenting with industrial internet applications, manufacturing firms need to face and respond to questions about the position of maintenance in their business. How strategic is maintenance for us? How should we invest in developing maintenance operations? Shall we do maintenance ourselves, or procure it from external suppliers? How can we develop and enhance trust in the supplier relationships? It is very possible that industrial internet will enable a more central position for maintenance in the strategies of manufacturing firms, if the firms realize the connections between equipment data, related maintenance services, and the strategic production objectives. This understanding can create various new possibilities to sharpen the strategic profile of the firm and to initiate new start-up firms to offer maintenance services.
It is possible that IoT will enable a more central position for maintenance in the strategies of manufacturing firms.
In-House Strategic Maintenance as an Option. If maintenance is perceived as a strategic function of a manufacturing firm, it can no longer be treated as merely repair, maintenance, spare parts and installation operations. Offering predictive, condition-based maintenance based on actual process-level use and status data will imply better readiness for using the installed base of equipment. This can mean practically even higher capacity or utilization rates in the manufacturing processes. With better capacity or utilization rates, a firm can avoid or delay new equipment investments. With higher efficiency, the firm can expand their customer base and increase their volume goals, or redirect their resource use. Furthermore, the firm may consider expanding the customer base for their maintenance services, outside of their own facilities. The capabilities for industrial internet applications can even create new service business with new customers, open up new business areas, and enable strategic reorientation for the firm. With the move towards services, the firm may need new business models, new pricing logics and customer relationships and, possibly, withdrawal from some old businesses.
Sourced Maintenance as an Option. If the firm adopts a partnership approach, the manufacturing firm can delegate its maintenance to external suppliers. It can either outsource the maintenance operations and industrial internet solution development to these suppliers, or establish strong relationships with such partners to co-develop the solutions together. It is possible that extant maintenance service supplier firms are not yet, fully equipped with all the competences concerning industrial internet, information systems, analytics, and maintenance services, or that they are not yet, operating on a global scale. Therefore, manufacturing firms may need to support the suppliers’ capability development or encourage the creation of new start-up firms to offer such services. Activating joint research may be useful in promoting both actors’ strategic development and growth. With external suppliers, the manufacturing firms can also redirect their strategies and establish such reward mechanisms that link maintenance costs to service performance or other mutual benefits. Besides technical investments, there will be a need to develop new business logics, ways of operating, and even a new collaboration culture in the partnership, so that mutual benefits can be achieved. The issues concerning trust and sensitivity in data sharing can be solved through contractual mechanisms and tight cooperation.
The commercial use of industrial internet applications in manufacturing firms’ maintenance operations will require much more than just technical development. Adopting industrial internet into maintenance services must be seen as a strategic development task where changes take place in the firm’s market position, business model, and business relationships. Achieving the expected benefits will require comprehensive understanding about the connections between equipment data and a firm’s strategic objectives. As characterized above, industrial data can in fact communicate strategic information about production performance and, thereby, guide production control and development. On the other hand, it may require re-organizing a firm’s own operations and setting up new business relationships.
Progress in implementing industrial internet applications in maintenance has been fairly slow. This may reflect the complexity and large scope of the maintenance system as well as companies’ risk awareness and caution when facing the new information-centric world. While modern information technology evolves fast, its system-wide implementation would require continuity, complete reliability and broad diffusion across the industry. Only time will tell if firms will perceive maintenance in a more strategic light in the future. It is possible that some first-movers in implementing industrial internet applications and making maintenance more strategic can gain competitive advantage in the digitally-enhanced business environment. This bravery will, however, demand proactive risk management.
Text: Miia Martinsuo, Tampere University
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