2014 october ibm on digital transformation in white goods electronics public

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Digital Customer Experience

Digital Transformation in the Consumer Electronics Industry

A strategic Point of View

© 2014 IBM CorporationOctober 8th., 2014

Thorsten SchroeerDirector Electronics Industry [email protected]


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This presentation covers 3 topics

2Digital by…

Industry Examples

3Digital…

How to get Started

1Digital

Transformation What & Why

© 2014 IBM Corporation


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The emergence of Big Data, Social, Mobile and Cloud are fundamentally

changing how we live, work and interact – and the market place

Ignoring the changing market can Transforming the world’s biggest

appliance-maker into a nimble

internet-age firm – changing from

within.

Ignoring the changing market can

even take down a dominant industry

player – the power is shifting to

consumers.

?


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Between 2008 and 2013 online shops of manufacturers grew 4 times faster than before and this trend will continue as

Consumers drive Digital Transformation in white goods … and so

Manufacturers have to handle retail consumer expectations


before and this trend will continue as brands stand for trust, orientation and security.

*Source: IFH Institut für Handelsforschung: „Die Zukunft hat begonnen – Handel 2020“, Internet World Business 15/14; ECC Köln

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Understanding the wants and needs of the consumers during their consumer journey is essential to be relevant for the consumer and to generate profitable growth


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Electronics Retailers are friends and enemies at the same time....what is

the future of the classical retail/wholesale value chain?


85%of transactions trackable by retailer to an individual name.


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2Digital by…

Industry Examples

3Digital…

How to get Started

1Digital




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Industry Example

Digital in


Digital in

Multi Channel


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IBV found five top omni-channel requirements

1 Price consistency across channels

2 In-store, locate out-of-stock item and get it shipped home

3 Track order status

4 Consistent assortment across channels

5 Return in store of online purchases

The IBM IBV* found that the way a consumer behaves has to be

addressed

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� The consumer segments request omni-channel technologies

� 81% of todays‘ shoppers consist of trailblazers, transitioning & tech-intrigued shoppers; the traditional segment is expected to decline in the future.

� Each OEM has to build up their Actionable Consumer Insight to approach their target groups, their consumer-Personas

*IBM IBV = IBM Institute for Business Value, business research organization from IBM


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Washing machineRefrigerator# Keywords Monthly Searches

#1 kühlschrank 568.991

#2 siemens kühlschrank 7.272

#3 bosch kühlschrank 5.267

#4 samsung kühlschrank 5.251

# Keywords Monthly Searches

#1 waschmaschine 450.409

#2 miele waschmaschine 13.809

#3 aeg waschmaschine 4.043

#4 siemens waschmaschine 3.264

>90% >90%

Google is the mainstream starting point. Low brand awareness (10%).

Open search by product category (90%).

Google worldwide market share


Vacuum cleanerToasterDishwasher

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#4 samsung kühlschrank 5.251

#5 lg kühlschrank 4.475

...

#8 bosch waschmaschine 2.868


#1 geschirrspüler 450.646

#2 siemens Geschirrspüler 6.103

#3 miele geschirrspüler 1.658

#4 aeg geschirrspüler 1.634

#5 bosch geschirrspüler 1.254

#6 bauknecht geschirrspüler 1.228


#1 toaster 496.173

#2 kitchen aid toaster 2.472

#3 siemens toaster 1.621

#5 serverin toaster 851

...

#7 bosch toaster 458


#1 staubsauger 559.826

#2 vorwerk staubsauger 33.152

#3 miele staubsauger 7.700

#4 dyson staubsauger 6.521

#5 aeg staubsauger 4.061

...

#11 siemens staubsauger 2.437

>90% >90% >90%

99


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Exchange about Cooking, Baking, Washing

7%

General Exchange about Brands and Products

4%

Feedback on Brand and Product Campaigns

3%

Exchange about discounts and good deals

1%

Other Topics7%

� The conversation focuses on after-sales topics (77%), which delivers the Input for new consumers

� Review and price comparison sitesdominate the share of voice in most

Analysis of 300.000 insights on a white goods OEM consumers to get

an impression of consumers wants and needs


Aftersales: Product Reviews and Feedback

45%

Aftersales: Product Problems

12%

Presales: Request for help during active

evaluation11%

After Sales: Repair and DIY Instructions

10%

10

Source: IBM SMA / Analyzed time frame: 01/2013 - 05/2014, n=291.400 analyzed entries

dominate the share of voice in most countries with 45% and are more trusted than corporate communications

� Detailed instructions on troubleshooting and repair are provided by non-official sources, yet highly visible (> 30.000 view per video)

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Industry Example

Digital in Manufacturing

© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential

Digital in Manufacturing

Software Defined Supply Chain


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3 New Technologies

3D PRINTING OPEN SOURCEINTELLIGENT ROBOTICS


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STANDARDIZATION

3D PRINTING

NO ECONOMIES OF SCALE

ON DEMAND

COST PER UNIT VOLUME PRINTED$/CUBIC CM - BLENDED AVERAGE

-ON DEMAND MANUFACTURING

LOCATION ELASTIC

-79% -

92%


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MODULARIZATION

ROBOTICSHARD

AUTOMATION

FLEXIBLE

TYPICAL COST PER ROBOTIC ASSEMBLY STATION

FLEXIBLE ROBOTICS

INTELLIGENT ROBOTICS

-90%


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HARDWARE CONSTRAINED

BUILD A MOLD OR

CAST

HARDWIRE PRODUCTION

LINE

DEVELOP EMBEDDED

CHIP

SOFTWARE DEFINED

PRINT PARTS DIRECTLY BY SOFTWARE

RECONFIGURE ASSEMBLY THROUGH

SOFTWARE

DIGITAL CONTROLS USING SOFTWARE


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4 DIFFERENT PRODUCTSCOSTVOLUMESIZECOMPLEXITYPERSONALIZATION

WASHING MACHINE

INDUSTRIAL DISPLAY

MOBILE PHONE

HEARING AID


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LOWER COST 23%CHEAPER

AGGREGATE NORMALIZED UNIT COST

Source: Sourcemap, Econolyst, Mike Watson and Alex Scott, IBM Research, IBM Institute for Business Value


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The washing machine has highly automated assembly with many mechanical parts sourced and sub-contracted globally

The carbon footprint of the washing machine was calculated as 313 kg CO2e(manufacturing) and 39kg CO2e (shipping) for a total of 352 kg CO2e (delivered to USconsumer).

© 2014 IBM Corporation19



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Washing Machine Unit Manufacturing Cost Curve

Improvements in printer technology and cost will enable a large amount of 3D Printing in the appliance industry in ten years

$250

$300

$350

$400$368 $368

$336

$243


58% of the total product value of a washing machine will be 3D Printable in ten years

Assembly is a smaller fraction of total cost and already significantly automatedSource: Sourcemap, Econolyst, Mike Watson and Alex Scott, IBM Research, IBM Institute for Business Value

T0 Traditional T0 Digital T1 Digital T2 Digital$0

$50

$100

$150

$200


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LOWER SCALE

90%LESS VOLUME

REQUIRED

AGGREGATE NORMALIZEDMINIMUM ECONOMIC SCALE

REQUIRED



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58% of the total product value

of a washing machine will be 3D Printable in ten

years – the service business impact will be

disruptive.


FULL REPORT & MODEL NOW AVAILABLE ONLINE AND ON YOUR MOBILE DEVICE

disruptive.

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Industry Example

Digital in


Digital in

Mobile


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Why Mobile? Mobile is at the epicenter of the digital forces and a

catalyst for reinventing experiences and businesses



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The Next Generation of Enterprise Mobility: IBM strategic investment in IBM Mobile First, IBM Interactive Experience and Security



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„there is one more thing“


„there is one more thing“


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© 2014 IBM CorporationIBM Confidential © 2014 IBM CorporationIBM Internal Use Only

Apple and IBM combine their strengths to make enterprise mobility more powerful, secure, and easy for any business.


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Digital Customer Experience Industry ExampleDigital by Analytics

“Analytics helps organizations make better decisions by getting

new insights from the volume and variety of big data “


Source: Analytics: The New Path to Value, a joint MIT Sloan Management Review and IBM Institute of Business Value study. Copyright © Massachusetts Institute of Technology 2010.

Top Performers are more likely to use an analytic approach over intuition within business processes

Organizations that lead in analytics outperform those who are just beginning to adopt analytics

3x 5.4x


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Industry Example

Digital by


Digital by

Analytics inManufacturing & Supply Chain


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Analytics and Optimization provides value across the key supply chain processes.

Plan Source Make Deliver

Demand ForecastingMulti-echelon Inventory

Optimization2-5% manufacturingcosts saving

10-30% inventory costreduction

Return


Supply Chain Visibility

Procurement Spend Optimization

Reverse Logistics Optimization

25% procurement spendreduction

5-15% supply chain cost reduction~30% channel inventory reduction

10-15% Improved warranty and repair order fulfillment, reduced spares inventory, and warranty costs

Supply Chain NetworkOptimization 5-15% supply chain costs saving


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IBM Manufacturing uses analytics tools across its operation



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Industry Example

Digital by Analytics

Sales & Marketing


Sales & MarketingCustomer Service

HRR&D

Finance...


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Industry Example

Digital in


Digital in

Software & Service Transformation


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Case Study IBM: Segment shift from hardware to services and

software builds foundation for IBM’s business success since late 1990s.


Source: IBM annual report 2013

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Case Study Philips: Software and Managed Services gain share and

margin

MRI hardware vs imaging software

Repeat sale in 7-10 years

Sell light bumps vs sell light

One time product only

sell -


Repeat sale1-2 times per year

Sell hours of light in a stadium

sell -competitive

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Case study Google/Nest – Programmable thermostat


$249 $25

10x price differentiation driven by software on the device and in the cloud.

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From Product to Services/Software - final considerations

Talk to your end customers – they want to talk to you

Understand value of software/services and sell it

Own data and generate new value


Own data and generate new value

Be bold

Be disruptive

As premium brand go first

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2Digital by…

Industry Examples

3Digital

How to get Started

1Digital




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How to get Started


Digital inSocial / Multi Channel


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Creating a “system of engagement” that maximizes value creation at

every touch. Client Journey Map

Retailer

Service/warranty

Call Center

Integration of

Consumer Data

Web

Home Connect

Social Media

Direct Mail

Data

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How to get Started


Digital in

Mobile


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What‘s your best app?



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How to get Started


AnalyticsExample Supply Chain


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Phase 2: PilotPhase 1: Assessment

AssessAssessDesign and Design and

SpecifySpecifyBuild and Build and AnalyzeAnalyze

Conduct Conduct

Recommend Recommend Next StepsNext Steps

Phase 2: Pilot

The Supply Chain Analytics journey can start with a Business Value

Accelerator followed by a recommended pilot strategy and deployment.

Focus


Conduct Conduct

Solution Solution

Impact Impact

AssessmentAssessment

Design and Design and

Build PilotsBuild Pilots

Phase 3: Deploy

Prepare Prepare

rollout plansrollout plansTraining and Training and

DeploymentDeployment

Inventory Optimization

Demand Forecasting

Procurement Spend Optimization

Reverse Logistics Optimization

Supply Chain Visibility

Supply Chain Network Optimization

Focus


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How to get Started

AnalyticsSales & Marketing


Sales & MarketingCustomer Service

HRR&D

Finance...


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Summary


Summary


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Digital Transformation – 5 Key take aways

1. Engage the end customer

2. Focus on smarter home user experience

3. Develop robust systems engineering (remote


3. Develop robust systems engineering (remote diagnostics, updates and control of appliances through

“smart devices” in the cloud)

4. Ensure security to protect your brand

5. Select proven partners with IoT breadth and depth.


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The role of IBM in Digital Transformation

1. Strategic Advisor

2. From strategy to execution


3. Design – Build - Run

4. Cloud-Analytics–Mobile–Social – Security

5. Software

6. Global rollouts

[email protected]

www.linkedin.com/in/thorstenschroeer

Let‘s engage


www.xing.com/profile/Thorsten_Schroeer

IBM Electronics www.ibm.com/electronics

2014 october ibm on digital transformation in white goods electronics public

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