Aftermarket2012 cargotec malcolmyoull

This presentation will cover

• Why parts & service are not enough for the changing marketplace and why

companies must focus on customer solutions

• Why thinking about a complete customer solution will secure improved

customer satisfaction and protect and grow future revenues and profits for

your business

2

How to make this presentation a success

• The presentation is intended to create triggers for the audience

• Its not going to answer all of your questions, however it is an honest view of

what we think of the future direction of Aftermarket

• Ask the difficult questions, challenge our thinking

• Success for me will be if companies want to collaborate with us to find new

ways of improving the end to end solution for our customers

3

Malcolm Youll Bio.

• Malcolm is an experienced international executive who has successfully

operated within leading manufacturing and engineering companies to deliver

increased revenues and profits across a variety of industries. Pragmatic in

approach, he delivers results ahead of targets; using best in class

methodologies, processes and systems to deliver unrivalled financial returns

and customer service.

• Malcolm earned an MSc in Manufacturing, Management & Technology and

has attended MIT Driving Strategic Innovation and the Lausanne

Leadership Program at IMD (International Institute for Management

Development) - Business Programs

4

• Cargotec improves the efficiency of cargo flows by offering handling

systems and related services for the loading and unloading of goods.

• Cargotec’s Hiab, Kalmar and MacGregor solutions serve customers

wherever cargo is on the move

• Sales 2011: EUR 3,1 billion

• Approximately 10,500 employees

• Class B shares are quoted on the NASDAQ OMX Helsinki

Cargotec in brief

SERVICES

AMER

APAC

EMEA

MARINE TERMINALS

President and CEO

LOAD

HANDLING

CFO

CTO HR &

Communications

COO

Cargotec Organisation

Services organisation

Services

Finance HR

HCO

CRA

ROR

OFS

BLK

Parts &

Logistics

Services

Development

M. Youll*

Projects &

Contracts

Marine Service

Operations

Communications Executive

Assistance

Merchant

Ships Service

Offshore

Service

Terminal

Service

Load Handling

Service

Regions

EMEA

APAC

AMER

How our journey began?

Timeline

Today

Level of

sophistication

Invoiced

business

Benefits of solution

04UK0360X008_r&dworkshopfindings.pptx

Source:

- 8 -

Judge Business School

© 2012 Cambridge Service Alliance

www.cambridgeservicealliance.org

Background Data:

The Global Shift to Services

The shift to services is happening globally



Reasons for the shift to services

Strategic

rationale

Environmental

rationale

Economic

rationale

1. Manufacturing firms in developed economies cannot

compete on the basis of cost (technological developments

are enabling them to add innovative services)…

2. The installed base argument (e.g. for every new car sold

there are already 13 in operation, 15 to 1 for civil aircraft

and 22 to 1 for trains)…

3. Stability of revenues – services vs. products…

1. Environmental rationale (change notions of ownership and

resource use – e.g. Mobility cars)…

1. Lock in customers (sell the original equipment at cost,

make money on spares & suppliers - razor, printers)…

2. Lock out competitors…

3. Increase the level of differentiation (e.g. equipment provider

offers to take customer’s risk and give predictable

maintenance costs)…

4. Customers demand it (e.g. contracting for capability)…



The shift to services involves change and

business model innovation

How do firms innovate

their business models in

this world of service?



Making the business model innovation

requires nine capabilities…

ECOSYSTEM

VALUE PROPOSITION

Understand client’s

BM

Demonstrate

delivery skills

ACCOUNTABILITY SPREAD

Collect data to

quantify risk

(data resources)

Price risk to client and

manage risk with

partners

PERFORMANCE

(PROFITS &

GROWTH)

SUSTAINABILITY

Demonstrate value

VALUE DELIVERY

Identify partners

and design

governance

Coordinate multi-

party value

delivery

Design value

content and

structure

Understand sources

of risk associated

with BMI



Cargotec has built a strong foundation

Advisory

focused

Aftermarket

focused

Product

focused

Product & parts Solution

At p

oin

t o

f sa

le

Th

rou

gh

life

Wh

en

is

va

lue

re

alis

ed

?

Where does the value lie?

Outcome

focused

Cargotec Insight is an

Advisory Service that

allows you to create and

capture value through

consultancy, while

identifying opportunities

for…

CMI, Uptime and

Training and

Development

Servitization within Cargotec - Asset Management

Excellence

The move to servitization

Timeline

Today

Level of

sophistication

Invoiced

business



Source: Neely, The Servitization of Manufacturing: An Analysis of Global Trends, Cambridge, 2009

- 16 -

We agree where we want to go

Timeline

Today

Servitization Level of

sophistication

Invoiced

business

"Need based

neutralisation"

Value creation

through

lower risk



Source:

- 17 -

Asset management excellence is the first step

Approval point for todays meeting

Timeline

Today

Asset

management

excellence

Servitization Level of

sophistication

Invoiced

business

"Cost

reduction"

"Need based

neutralisation"

Cost

savings

Value creation

through

lower risk


Source:


- 18 -

Two further strategic projects will be required to fulfil Value creation in respect of Servitization, within Cargotec

Assets means Cargotec equipment in this context

The management of assets essentially means Cargotec type of equipment

(i.e. Cargotec & competitors).

Asset Lifecycle

Traditional

Asset Classes

Asset

Strategy Plan

Evaluate

and Design

Create /

Procure Operate Maintain Modify Dispose

Real Estate and

Facilities

Land, Offices, Warehouses, Retail Space, Schools, Hospitals,

Airports Machines and

equipment of

Cargotec Plant and Production

Mining, Textile, Chemical, Petroleum, Electronics, Food, Life

Sciences

Transportation

and Fleet

Military, Airlines, Trucking, Shipping,

Railroad, Public Transportation

Infrastructure Railways, Electric / Gas Distribution, Highways, Telecom, Water

IT Equipment and

Network

PCs, Networks, Routers, Applications, Auto Discovery, Service

Desk

- 19 -

The direction we are following….

“Offer solutions which add value to customers processes“

Servitization is the innovation of organisation's capabilities and

processes to better create mutual value through a shift from

selling product to selling Product-Service Systems.

A Product-Service System is an integrated product and service

offering that delivers value in use.

A Servitized Organisation designs, builds and delivers an integrated

product and service offering that delivers value in use.

What is servitization?


Source: Neely, The Servitization of Manufacturing: An Analysis of Global Trends, Cambridge, 2009

- 20 -

Market landscape: there is an accelerating trend towards predictive/preventative maintenance New and Emerging EAM (Enterprise Asset Management) Functions

Question: What are your plans for new EAM functions?

Source: “Survey Results for EAM Systems: Current practices and future plans”, Ralph Rio, ARC Advisory Group, April 2011, n=117 (respondents with manufacturing, technology, engineering and corporate

executive roles)

Based on planned EAM

functions, customers are

moving towards predictive

maintenance. In 3 years

time 84% will have

predictive maintenance as

an EAM function

Additional Market

Survey Results

Predictive Maintenance

Asset Info Master Data

Management

Warranty Management

Training & Certification

Tracking

Mobility Software

Analytics or Data Mining

RFID Asset Serialization

Cloud Computing

36%

35%

34%

21%

14%

14%

14%

8%

17%

12%

15%

15%

17%

8%

6%

6%

31%

30%

20%

21%

44%

32%

29%

18%

84%

77%

68%

56%

74%

53%

49%

32%

Have Now 2011 Budget In 3 years

EAM Functions – Existing and Planned

- 21 -

UPTIME: a unifying theme and solution…

…not "new" but an umbrella to bring together

internal and external best practices to meet our

customers' service needs in a systematic and

profitable manner.

- 22 -

Predictive Maintenance and Condition Monitoring

Optimised Maintenance Strategy

Integrated Systems providing real time

Information

Control

Predictive Maintenance

Intelligence

Advanced Data Mining

Command

Global View

Communicate

Advanced Planning

Cargotec UPTIME.wmv

Concluding thoughts

• Aftermarket “Solutions” is the future. Invest time in understanding

Servitization; I am happy to facilitate this workshop if there are 4-6

companies interested

• Recognise the value you provide within your own organisation and start to

build support to have a solutions based company rather than a product

based company

• Understand your starting point and what you already have an “Umbrella

approach” is often the safest way to make progress within an established

business

• Be realistic over time and investment

25

Malcolm Youll – Vice President Services Development

Q&A’s

26

Malcolm Youll

Aftermarket2012 cargotec malcolmyoull

Business

customer service

cambridge service alliance

advisory service

world of service

customers risk

coverwhy parts service

risk data resourcesprice

related services