BehrTech Blog

IoT for OEMs: 3 Applications to Fuel Innovation

As the Internet of Things (IoT) creates a new influx of machine and process data, Original Equipment Manufacturers (OEM) of industrial assets are finding themselves at a crossroads between disrupting or being disrupted. Pervasive interconnection powered by IoT technology opens the door to new avenues for value creation not achievable before. For OEMs, this means they need to rethink their operational models or risk losing ground as digital businesses quickly encroach.

The opportunities of IoT for OEMs are bountiful as they encompass everything from improved maintenance services and aftermarket opportunities to innovative revenue generation and enhanced machine design. All of these are achieved through a new host of machine telemetry data delivered by embedded IoT sensors. By capitalizing on massive data collection and deep analytics, OEMs can transform the way they operate while activating new product and service offerings to better serve industrial customers.

1. Redefine Aftermarket Opportunities

Aftermarket services – whether selling and replacing spare parts, performing repair and maintenance or installing upgrades on the machine not only represent a significant revenue source, but also contribute to an optimal customer experience. Yet, managing these services has been anything but easy. Once a piece of equipment is sold, OEMs have hardly any insight into how it is performing on the customer’s premises. Machine failures only come to knowledge after the damage is tangible and/or serious. But even so, time-consuming manual inspection of individual components could still be required to trace the root cause of the breakdown.

Not knowing exactly when products need servicing after commissioning also makes inventory management of spare parts challenging for OEMs. It could result in obsolete assets due to overstocking or worse, delayed responses due to out-of-stock items. The latter would then mean added downtime and astronomical costs on the customer side.

IoT can combat these challenges by helping OEMs and their customers transition from reactive to proactive asset management. Using wireless IoT sensors that continuously capture and communicate critical asset datapoints to a cloud-based analytics platform, an OEM can easily monitor commissioned equipment from afar. Anomalies and inconsistencies can thus be quickly detected, and point of failures can be accurately located. This, in turn, facilitates spare part order and troubleshooting workflows to minimize production disruption and asset downtime. Condition-based or predictive maintenance indeed serves as an innovative value-added service that sets the OEM’s offering apart from any third-party aftermarket vendors. At the same time, digital data reporting of asset operations further elevates customer experience through improved quality controls and consultation services. For example, OEMs can use machine data for drill-down analysis of global breakdown causes to provide recommendations on how users could mitigate the risk moving forward.

Also recommended for you: How Manufacturers Can Optimize Overall Equipment Effectiveness with IoT

2. Innovate the Business Model – Equipment-as-a-Service

Besides bringing greater margin through enhanced aftermarket services, IoT also allows OEMs to capture an entirely new business model with data-driven product offerings. Rather than selling a piece of equipment one-off, an OEM can provide an option where the customer could rent it and is recurrently charged based on equipment use time and/or output. This model is called Equipment-as-a-Service (EaaS).

With a subscription-based pricing strategy, EaaS brings distinct advantages to both OEMs and industrial clients. On one hand, customers can enjoy greater flexibility, reduced risks, and easier equipment access by replacing the high upfront capital costs with a much lower amount of monthly pay-per-use. Concurrently, maintenance and overhaul activities are fully covered in the Service Level Agreement (SLA) and better guaranteed thanks to real-time data on machine operations. On the other hand, OEMs can benefit from stable, recurring revenue streams that span the asset lifetime, better customer engagement and more upselling opportunities.

While the shift to EaaS isn’t without challenges, its enormous potential is well recognized and the global EaaS market is expected to grow to US$131 billion by 2025. Early adopters of this new flexible payment model are poised to gain a major competitive advantage over other equipment sellers.

3. Optimize Future Machine Design

Sensor data on equipment operations also reveals a wealth of insights for improvements and refinements in the future product design. While machine engineers might develop simulation models to assess how an asset should perform on the field, its actual performance and output are highly subject to deviate due to various unpredictable factors. By monitoring how the same piece of equipment is functioning at different customers’ premises, OEMs can detect common part failures or bottlenecks like minor stops, long start up cycles or high energy consumption, so relevant adjustments can be incorporated in future design specs to mitigate them. With well-designed and efficient machines that bring significant cost-saving opportunities for customers, OEMs can attain a unique stand in the market while enhancing customer loyalty and retention.

The potential of IoT for OEMs is enormous as it enables the shift from a product-driven to a service-driven business model for greater value delivery. In this context, advanced sensor and networking technologies allow OEMs to unlock new floods of field data that empower creative digital offerings and future innovation.

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