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How Industrial Equipment Companies are Mining Fuel for Growth
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Industrial equipment companies are struggling to compete as demand drops, commodity prices rise, labor costs skyrocket and margins tighten.
Our research explores how these companies can increase speed to market and free up funds that can be reinvested to develop the innovative, digitally enabled products and services that customers demand.
Copyright © 2016 Accenture. All rights reserved. Copyright © 2016 Accenture All rights reserved. 2
Copyright © 2016 Accenture All rights reserved. 3
Industrial equipment companies are ‘working lean’ to be more agile and increase competitiveness
are focused on cost reduction to improve margins
are focused on cost reduction and innovation to drive value
strongly agree that their business ‘identifies and eliminates overlapping cost reduction exercises’
82%
41% 41%
Copyright © 2016 Accenture All rights reserved. 44
Optimizing digital opportunities across the entire value chain is a top priority
A majority say increased technology would enable their operating model to operate at half it’s base cost
Optimizing digital will help industrial equipment companies drive process excellence, gain agility and reduce COGS
Industrial Equipment
18%
37% 43%
All Industries
41%
41%
15%
2 – Somewhat agree
1 – Strongly agree
4 – Somewhat disagree
3 – Neither agree nor disagree
5 – Strongly disagree
73%
61%
All IndustriesIndustrial Equipment
Copyright © 2016 Accenture All rights reserved. 55
To fuel growth, industrial equipment companies are focusing on innovation, offering digitally enabled services and maximizing the Industrial Internet of Things
78% plan to funnel cost savings into growth and have enterprise-wide strategies in place
New products/services and digital are primary areas for reinvestment of cost savings
Nearly all industrial equipment companies (96%) see new business models as a way to initiate and drive out new capabilities
Analytic insights to make more informed decisions is cited as one of the top challenges to funnelling cost savings into growth
78% 96%
Copyright © 2016 Accenture All rights reserved. 66
Four Ways to Fuel Profitable Growth
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1. Rethink the operating model
Pursuing advanced operating models that are digitally enabled will allow industrial equipment companies to operate more leanly to increase agility and competitiveness while reducing costs.
Only 31% of respondents strongly believe that their company’s operating model is aligned to fuel strategic growth initiatives and can support these activities across the enterprise.
Copyright © 2016 Accenture All rights reserved. 8
2. Embrace process excellence
Simplifying and optimizing engineering, manufacturing and supply chain processes across the value chain will drive process excellence, improve total cost management and increase speed to market.
More than half (55%) cite “increase logistics effectiveness” as a strategic priority.
Copyright © 2016 Accenture All rights reserved. 9
3. Explore new business models powered by digital
New business models and digitally enabled capabilities allow for more aggressive growth. Industrial equipment companies must accelerate time to market from ideation through incubation, industrialization and offering deployment—all with the right end-to-end accountability. This can happen through digitization.
Copyright © 2016 Accenture All rights reserved. 10
4. Get everyone on board
To shape an operating model and optimize a value chain that can fuel growth, industrial equipment leaders must be aligned. Then they should reconsider the talent required to operate in the future and ensure they have the right skills on board.
Change management can help executives to gain buy in across all levels of the organization.
51% say change management is the most common barrier to advancing the company’s operating model.