If you're headed global...

The dilemma of globalization will be a key issue for truck OEMs over the course of the next decade.  While some have certainly moved substantially toward establishing a global footprint, other OEMs at still considering their next steps.  While the pros and cons of which way to focus on is a post in and of itself, I wanted to share a study we published that speak to the ROI of Globally Integrated Operations.

In our interviews I've heard some OEMs speak to the establishment of a brand in each part of the world, that isn't quite the goal.  One European executive hit the nail on the head when he said:

“Globalization is not an external driver but an internal one – to improve operation excellence”


The embedded study below is a great primer on achieving the results from the operation that the enormous investment in globalization demands...

The R-O-I of Globally Integrated Operations

Hydraulic hybrids developing,...

This post is not going be too long as I'm mainly going to point you to a couple of websites that have great information on Hydraulic Hybrids.

From our perspective, we got a chance to drive a couple at HTUF when we released the study.  I drove a large refuse truck and a colleague got to drive the UPS Hydraulic Hybrid.  The UPS truck was really interesting as it was so quiet when it went by that it seemed like a passenger vehicle, not a truck.  

See an explanation of the system from the Bosch representative on the video, I took at HTUF.




For further information, check out these sites:

http://epa.gov/otaq/technology/
http://auto.howstuffworks.com/hydraulic-hybrid.htm


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...what does a transition to solutons look like?

Brand is not dead,... for those who redefine it around a portfolio of solutions. We talked about four things,... advanced vehicles, integrated telematics, comprehensive serviceability and other bundled services.

We're not saying that the vehicle won't still be important; regulatory compliance, hybridization and alternative fuels, aerodynamics and removing weight along with bring as much cost out as possible all remain areas of investment and innovation. Our point is that there has to be more based on the needs of the customer.

In the study we discuss 5 components of integrated telematics; driver assistance, safety, service, regulatory compliance and sustainability. Today's solutions primarily address driver assistance in the form of routing, B2B transactions and basic navigation. The other areas are still developing and are not working together in an integrated manner.

Comprehensive serviceability will also be an important component to future solutions. Serviceabilty must consider both the physical repair of the vehicle and its virtual diagnosis. Today we deal with this primarily through service contracts. Maybe future service deals will be priced based on uptime of the fleet?

As more of the customer base is larger fleets, dealers and OEMs will have to keep parts at more remote locations and be able to optimize the inventory across a more complex service network. As vehicles become more complex, OEMs may have to own some of the service capability and deploy it in a distributed environment to assist dealers and others. As telematics becomes more sophisticated, OEMs will not just be able to read engine fault codes and call for service but also remotely diagnose the entire vehicle, predict failures, proactively order service and optimize the performance and uptime of fleets.

Finally other aligned, bundled services that make sense to package into a solution. This could include consulting such as carbon management, driver education and business efficiency for small vocational customers. It might include retrofitting solutions to assist older vehicles. As telematics data builds across customers it can be repackaged into performance monitoring and fleet health analysis solutions. As fleets eventually move toward plug-in hybrid vehicles they will become capable of distributed energy storage, so alternative energy installations may make sense in those cases. Security services for the vehicle and driver may also help over the road fleets... OEMs should look to extend the sale of the vehicle to a solution in any variety of ways that make sense for its application.


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Presentation from the webinar

Several people have e-mailed that they had difficulty downloading the presentation from the webinar. It is embedded in this message and can be downloaded...

AutoNews IBM Truck 2020 Webinar Presentation 11-13-2009


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Commoditization of the Brand,...

The issues of brand commoditization sparked the most questions from the Webinar, so we should probably start there...

What are the key drivers of this commoditization?  First is the significant increases in truck prices due to the added cost of regulatory compliance.  In the US, 2010 regulations are pushing up truck prices in the neighborhood 10-20%.  Similar cost increases were seen in EuroV and then would be expected with subsequent regulation.  The escalating price of the vehicle is making a further differentiation (premium) on brand very difficult for most buyers.

Secondly, the growing role of ever more consolidated fleets.  Many of the smaller or small-to-medium sized fleets are being consolidated and that will continue into the future.  As this develops, there will likely be two kinds of fleets; very small ones who can be highly flexible to varying needs and very large ones who can achieve the economies of scale.  The small fleets will not be able to afford to differentiate on brand and large ones are buying their vehicles as a B2B decision, not based on brand.

We know at IBM, when we have a differentiated solution that nobody else can touch, we do great.  When we're in the procurement office, responding to an RFP, then we'll end up competing on price and everything invested in  our brand, won't mean a thing.

Finally, we interviewed 9 fleets formally and another 3 informally (large and small).  They overwhelmingly told us that they don't care about brand of the vehicle when buying.  Look at the brand related metrics in the breakouts on the embedded screencast.  This was the responses from our interviews from the industry itself,... US, Europe, suppliers, developed market OEMs and fleets all told us it would be less important in the future.



Our response is that Brand will remain important to the degree that truck makers transition it around an integrated solution made up of four components.  Of course Advanced Vehicles will keep developing, but these must be coupled with Comprehensive Serviceability that goes far beyond today’s service contracts.  Vehicles will also have to have Integrated Telematics that support every aspect of how they are used.  Finally, solutions must also include other complementary, bundled services… 

... We'll add some specific examples in the next post

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Webinar replay and file download...

Several have inquired about a replay or other version of the webinar.  The replay link below can be accessed by anyone who wants to see it:

http://bit.ly/1YjqoL

The slide deck download should also now work once you've logged in.  If anyone has an issue with downloading the deck, I'll be happy to post it to this site.


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Automotive News Webinar Questions

Thanks to those that attended our webinar with Automotive News on the 12th. As we received so many questions it was impossible to answer them on the call itself. We want to engage with you and respond to all the questions, so we set up this temporary blog that will exist as long as there's more to discuss.

We had over 30 questions, so I'll begin consolidating them on Monday and putting the responses out there... thx for you patience.

In the meantime here is the study:

IBM Truck 2020 Transcending Turbulence Executive Brief


...and see the following videos







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