The publication of the productivity figures in mechanical engineering at the end of 2018 and the outcry that went through the industry as a result have highlighted a fundamental problem that mechanical engineering has in terms of digitalization. Despite billions in investment and numerous technological innovations from the still pioneering art of German engineering, the spirit of digitalization does not yet seem to have arrived in the industry in many places. The right approach is missing.

Productivity is just one aspect of the digital transformation

One of the reasons why, despite all efforts and initiatives, results have fallen short of expectations is the one-sided interpretation of the concept of digitalization. Too often, it is understood to mean the supposed optimization of internal processes - with the aim of increasing productivity and efficiency. This includes, for example, organizational processes, document storage and resource allocation. These areas are then transferred to the digital realm without being put to the test as a process. However, digitalization is not just the mapping of manual processes in the digital world. Measures to increase efficiency are therefore important, but by no means sufficient.

If you digitize internal processes in a quiet room, you are wasting nerves, time and resources. You always need to look outwards, ideally right from the start. This includes examining the current and prospective market situation, but above all the customers and their needs. What are their needs? How can I satisfy my customers so that they remain customers for longer and ultimately increase my turnover? The findings can be used to determine whether internal processes are still fit for the future or whether they need to be adapted before they can be digitalized. In our digitalized world, innovations only emerge when the external perspective is put in the spotlight - and the customer is placed at the center of the stage.

The focus is on value creation, not a product

This goes hand in hand with a move away from thinking in terms of products that need to be improved and that will then find their customers. People don't want products, they want solutions to their problems. The product-centric approach of the 1950s and 1960s is not compatible with the demands of customers in the age of digitalization. Mechanical engineering in particular, as a traditional, product-centered industry, is not exempt from this - on the contrary.

Admittedly, unlike in sectors such as consumer electronics, the pressure of suffering in mechanical engineering is not yet too great. The industry is characterized by long investment cycles and a high level of technical know-how and expertise on the customer side. In addition, the possibilities of digitalization are not yet transparent enough, and the few pioneers are not yet showing their cards. If you want to stay ahead in the long term, you should not shy away from an honest examination of the possibilities of digitalization - and your own business model - and get started. Ultimately, the aim is to increase added value through innovation and optimization. Companies that try to question and innovate their offering with an open mind and beyond traditional business structures will therefore be successful in the long term.

An example scenario

Printing presses are expensive and represent an investment of several hundred thousand euros for print shops with an expected service life of around 20 years. In addition, there are costs for in-house maintenance and customer service consultation. However, print shops are not concerned with the product. Their aim is not to own a printing press, but simply to be able to print. A printing press manufacturer's offer is therefore not limited to selling the machines. This is where digitalization can come in by simplifying printing for print shops. This is where new technological concepts such as blockchain and AI come into play. The classic business or sales model of the traditional printing press manufacturer will ultimately only work until, for example, a provider of smart printing presses enters the market and enables usage-based billing.

Based on AI technology, its machine independently detects faults, reports them automatically or directly triggers an order for spare parts. Based on data analysis, the equipment required for maintenance can be provided more quickly and accurately and the problem can be resolved quickly.

In this way, the print shop also achieves its goal of being able to print, but at much better conditions and much more flexibly: the print shop no longer pays a one-off fee for the purchase of the machine, but a commission per print run, thus avoiding a high one-off investment. The machine is fully serviced by the provider, which also eliminates the cost of maintenance by the print shop's own engineers. The provider uses AI technology to reduce maintenance costs. In addition, he now has a greater interest in ensuring that the printing press works and also has a long service life. Their functionality earns them their commission, while a new repair incurs high costs. Planned obsolescence is therefore a thing of the past.

Usage-based billing makes previous internal processes on the part of the provider superfluous. For example, they no longer need accounting for sales, but for usage billing. They have to produce less and can reduce their expenditure on materials and logistics.

Christopher Möhle, CEO at Turbine Kreuzberg © Turbine Kreuzberg

Christopher Möhle, CEO at Turbine Kreuzberg / ag