Digital Services in Machine Manufacturing: 6 Challenges and Solutions

Digitalization is not only reshaping production and sales but also having a significant influence on the parts business. Machine manufacturing companies face the challenge of making their customer service processes more efficient, faster, and more profitable. However, as with any transformation, the introduction of digital services comes with its own set of obstacles. This article explores the key challenges in the digital transformation of the aftermarket and offers practical solutions. 

Contents:

• 1. Integrating Legacy Systems
• 2. Data Security and Privacy
• 3. Lack of Transparency in Processes
• 4. High Implementation Costs
• 5. Lack of Customer Acceptance of Digital Tools
• 6. Introducing Service Business Models
• Conclusion

1. Integrating Legacy Systems

Many companies in the machine manufacturing industry have been using systems tailored to their production processes for decades. These legacy systems are often outdated and lack modern interfaces needed to connect with newer digital tools. Moreover, they may require significant customization, leading to high costs and lengthy implementation phases. Replacing these systems is typically expensive and risky due to them being deeply embedded in a company’s core processes. As a result, companies are often reluctant to replace them to avoid disrupting ongoing operations. 

Solution: 

A gradual modernization of IT infrastructure is key here. API-based integrations enable the transfer of data from legacy systems to modern platforms. For instance, connecting a CRM system with a legacy system allows for seamless integration of customer data. Cloud-based solutions also offer a flexible approach, allowing companies to gradually transition to new technologies. 

2. Data Security and Privacy

Digitalization leads to a significant increase in data, and this is also true for the parts business. Machines continuously send condition data to manufacturers, and customer data must be processed in real time. This vast amount of data carries significant risks. Cyberattacks, data theft, or accidental data leaks can result in serious consequences. Furthermore, companies must ensure they comply with legal requirements such as the GDPR (General Data Protection Regulation). Managing these various data protection standards becomes even more challenging in an international setting. 

Solution: 

To minimize these risks, comprehensive security measures must be implemented. This includes encryption and firewalls as well as regular security updates and audits. Employees should also be trained in data protection and cybersecurity to ensure they understand and properly handle sensitive data. Enlisting the help of data protection experts can also ensure compliance with legal requirements. 

3. Lack of Transparency in Processes

Many companies often struggle with clear and transparent processes in their parts business. Data is captured in isolated systems, lacking the real-time information necessary for quick and efficient handling of service requests. The lack of visibility into the condition of machines, the status of customer inquiries, or the inventory of spare parts leads to delays in processing and, in the worst case, increased costs and longer waiting times for customers. Moreover, this lack of transparency makes it difficult to identify bottlenecks and sources of errors in service processes, making it difficult to optimize these processes. 

Solution: 

Introducing real-time monitoring systems and dashboards can greatly enhance transparency. These tools provide service teams with a clear overview of machine conditions, ongoing service requests, and spare part availability. This enables bottlenecks to be immediately identified and addressed. Additionally, well-documented processes boost efficiency and ensure traceability throughout service operations. 

4. High Implementation Costs

The introduction of new digital technologies in the aftermarket is associated with significant costs. These costs go beyond just purchasing software and hardware; they also include system integration, employee training, and ongoing maintenance. For smaller businesses, this can pose a considerable financial strain. Additionally, there’s often uncertainty about the return on investment (ROI), as costs are incurred upfront while the benefits may take time to materialize. 

Solution: 

Companies should approach digitalization step by step, first implementing measures that promise the greatest ROI. SaaS (Software-as-a-Service) solutions offer a way to convert high upfront costs into manageable, monthly expenses. This allows companies to drive digitalization forward without heavily straining their cash flow. Furthermore, leasing models or pay-per-use options help distribute investment costs and reduce financial pressure. Companies should also take advantage of government support programs and subsidies for digitalization initiatives to further lower the burden of upfront expenses. 

5. Lack of Customer Acceptance of Digital Tools

Although digital tools and platforms can significantly improve the service experience, not all customers are ready to embrace these new technologies. Many still prefer direct contact and are skeptical of using digital tools such as apps or self-service platforms. This could be due to their uncertainty in using these tools or not seeing the value in using them. In the machine manufacturing sector, where intricate and costly equipment is used, customers may not be so quick to embrace the implementation of digital services. 

Solution: 

It is crucial to involve customers in the digitization process early on. Offering simple, intuitive interfaces and mobile apps can significantly boost acceptance. Regular training sessions and tutorials should be offered to help customers become more confident with the new tools. Furthermore, companies should actively gather feedback and make ongoing adjustments to continuously enhance the service. 

6. Introducing Service Business Models

Many machine manufacturing companies have traditionally prioritized products, making it challenging to develop profitable service-based models. Shifting to digital service offerings requires a fundamentally new approach. Instead of just selling machines, companies must provide ongoing services like maintenance, monitoring, and spare parts supply. This shift is complex, often demanding closer customer relationships, greater technical expertise, and continuous support. Additionally, navigating the transition from one-time sales to recurring service revenues is critical to meeting evolving customer demands. 

Solution: 

“Servitization” is an important step where products are no longer just sold but offered as a service. Product-as-a-Service models, where the maintenance and support of machines are included, offer machine manufacturing companies the opportunity to generate continuous revenue and secure long-term customer loyalty. In addition, maintenance contracts or managed services can be developed, providing real added value to customers. These models enhance customer retention, improve planning reliability, and ultimately increase the company’s profitability. 

Conclusion 

The digitalization the aftermarket offers machine manufacturing companies enormous opportunities to increase their efficiency, improve customer service, and open up new revenue streams. However, several challenges must also be taken into account. By gradually implementing changes, investing in modern technologies, and adopting new business models, companies can successfully navigate these challenges and fully capitalize on the benefits of digital transformation.

Curious to learn more about how modern pricing software can contribute to the digitalization of your parts business in machine manufacturing? Request your personalized demo with one of our experts and learn how to leverage the potential of market-based pricing strategies for your company.