Think Caterpillar with their “smart iron,” or Briggs & Stratton with their landscape-as-a-service. But while some logistics companies are still in the theory phase of IoT — putting sensors in place but then being stumped as to how to monetize this connectivity — others, like Konecranes, have successfully made the move from theory to practice, monetizing new connectivity to provide increasing value for their subscribers. What does this look like? For Finland-based Konecranes Group (Nasdaq Helsinki:KCR), a worldwide leader in the industrial lifting equipment sector, this means a shift from the manufacturing of equipment like cranes and hoists to a robust service business creating new revenue streams.
From Crane Manufacturer to Lifting-as-a-Service, Konecranes Rises with IoT
Connected devices are dramatically transforming industrial manufacturing, transportation, and logistics.
Since 2006, Konecranes has described itself as a group of “Lifting Businesses.”
This branding reflects the company’s strategic pivot to solution-based offerings, rather than focusing only on products.
As technology has progressed in the years since, the company has integrated new capabilities that have made the overall business more customer- and value-centric. Don’t misunderstand, Konecranes is still making and selling their cranes and hoists and designing and building ports and shipyards, but Konecranes’ business proposition has moved beyond these manufactured items to become a true “Lifting” solution. And the strategy is paying off: In 2019, sales totaled EUR 3.33 billion with 18,000 employees spread across 50 countries. So how did they do it? The simple answer is that they got out of the single transaction mindset and repositioned their business as a service business, looking behind the equipment to uncover valuable services. According to Raheel Farhat, Digitalization & Transformation lead at Konecranes: “The flexible subscription model helps us understand customer needs better so that we can create more appropriately targeted products for them.” And what does that look like? Here’s just a sample of successful use cases they’ve elevated:
“The flexible subscription model helps us understand customer needs better so that we can create more appropriately targeted products for them. ”
Efficiency Services
In terms of manufacturing, Konecranes products are embedded with Smart Features that give operators more control over the behavior of equipment. For example, the Snag Prevention system uses a sensor to stop all crane movement if the hook, sling, or load accidentally gets caught on something. Features like these reduce operator error, increase safety, and prevent damage to the equipment. Konecranes Port Solutions also relies heavily on IoT technology. Ports and shipyards have become heavily automated, making M2M communication critical for operations to run efficiently and safely. Ports also operate with many completely autonomous machines that need sensitization technology. Overall, ports generate a lot of data that needs to be managed for operations to be optimized.
Predictive Maintenance
The digitalization of equipment has a natural extension in Konecranes service business. TRUCONNECT is the Konecranes remote monitoring service that continuously gathers condition, usage, and operating data, and issues safety alerts. This service model not only predicts the need for repair, but can identify usage patterns that are actually contributing to unnecessary wear and tear.
Fast Innovation
The product development process has also been transformed by digital innovation. In 2018, Konecranes adopted a cloud-based IoT operating system that connected virtual processes, like engineering design, analysis, and simulation, with physical processes, like testing and reliability assessment. The result has been faster design and shorter prototyping.
Big Data Strategies
Konecranes’ Smart Features also capture data that can be used for Product Lifecycle Maintenance (PML), machine learning, machine-to-machine (M2M) communication, and other Big Data strategies. The cumulative effect of Konecranes IoT approach is that an enormous amount of data is being continuously generated. And while customers certainly benefit from the use of their own data, Konecranes customers also benefit in the aggregate from the ever-growing sophistication of the company’s data set which can be increasingly monetized. Notes Farhat: “We produce a whole spectrum of digitalized, connected equipment. The data they provide deliver tremendous value to our customers.”
“Konecranes produces a whole spectrum of digitalized, connected equipment. The data they provide deliver tremendous value to our customers. ”
As the world economy continues to show volatility, the increased revenue and profit margins that flow from the monetization of Konecranes’ vast pool of data will continue to place the company in a good position to grow.
In other words, by leading the global overhead crane industry with the largest service network, Konecranes isn’t just in the lifting business, it’s own business continues to rise.