Heidelberg, Honeywell & Eaton Case Analysis By Ashish Srivastava Amit Gupta Harpreet Singh Boparai Deepak Khare Mohit Naman Assignment being submitted as part of the Pre Work for Management Information System EPGDIB (VSAT) 2011-2012 Executive Summary: This case is about the benefits rendered upon the manufacturing industry with the evolution of the smart products. The case highlights the shift in consumer preferences of the products and services offered by various manufacturers and the evolution of Information Technology as a method to deliver these “Smart Products”.
As highlighted in the case of these three companies, the choice of customers is no longer restricted to a bundled offer of product and maintenance services. It has transitioned to a higher level of customer satisfaction which cannot be achieved without the effective and an efficient use of Information Technology Systems. Companies are fast deploying the various facets of Information Systems in their manufacturing processes to deliver these benefits and maintain or increase their competitive advantage.
Effective Implementation of Smart Products can help the companies achieve the following broad benefits ? Support of business processes and operations ? Support of decision making by employees and managers ? Support of strategies for competitive advantage The case revolves around the innovative solutions (referenced below) provided by the three companies and how they used the Information Technology in their product development process to deliver the smart service.
Heidelberg which developed a remote monitoring system which covered its entire footprint of printing presses deployed at client locations Honeywell which developed a control and automation system deployed in the refineries of its clients dealing with the Oil Industry Eaton which revolutionized the home security industry with its trade mark product, “Heart Beat “ Problem Statement 1. Why should manufacturing companies build smart products and provide smart services? What business benefits can they gain? Provide several examples beyond those discussed in this case.
Today’s Business environment is very complex and competitive. There is a huge competition among organizations and people have lots of options to go for. So in order to become the choice of its costumer products need to be smart than the rest and it should provide best services so that consumer can make the optimum utilization of product. Developing a new product is no longer a concern, developing a smart product which does something that rest of others of similar nature doesn’t is one of the most challenging task of organizations.
Some of the reasons why smart products are changing the business environment: • Faster implementation of new concepts in products; This is evident in the advent of the smart phones. With an effective use of technology, the manufacturers were able to innovate and deliver iPhones to customers which not only met the basic telephony requirement but also added the capability to bring social networking , photography , ecommerce as part of the smart package Faster delivery of products to customers; In the modern era , it is very important to cut down the time between shelf and end user for products.
FedEx ( Global Courier Giant ) uses an order tracking software ( and a hand held device ) which informs the customer ( through email and SMS ) the current location of their packet , estimated time of delivery , Delivery Wagon details and post delivery the recipient’s name. This ensures a timely delivery and reiterates the confidence level of the customers in the brand. This is an effective utilization of smart services which sets FedEx apart from its competitors • •
Fuller utilization of capital and human resources; In case of a Southern Electric in US , the automated system calculates the marginal cost of delivering additional kilowatts of electricity to Southern Company customers anywhere in the company’s service area; then, as electricity demand rises or falls at points throughout the system, Early Bird transmits “raise” or “lower” impulses to the company’s generating units and routes the correct amount of electricity along the most economical transmission path to the end user.
Elimination of unnecessary, redundant, or wasteful activities; IBM and HP offer their clients an automated catalogue management system. This allows a customer to build a price catalogue for all the orders it will be placing for various purchases it plans. The catalogue saves the customer’s purchase department the effort of going to suppliers and asking for quotes every time they have a requirement of purchasing equipment. All the buyer now needs to do is access the catalogue and obtain a price (based on contracted rates ) for these equipment.
The tool results in saving time and labor by not repeating a redundant activity. • For a manufacturer of the equipment the smart services and products bring the following broad benefits ? ? ? ? Consumer Satisfaction Enhanced perception of brand value Increase in Revenues Reduction of costs 2. What information technologies are used by the companies in this case to build smart products and provide smart services? What other IT components might be used? Give examples of the capabilities they would provide.
Heidelberg is involved in the business of manufacturing high-end printing press for print media producers. They are the market leader globally for this service. Heidelberg uses built-in sensors and networking microprocessors to monitor its equipment remotely with the aim to provide proactive support and repair services to its global customers. Through the use of internet they connect their users with their technical support experts making it more cost effective and convenient for both themselves and their customers.
This not only decreased the cost of maintenance personnel’s but also enhanced the reliability of its products among the users. One of the primary inputs into printing business is the toner and cartridge for the presses. The innovation that Heidelberg could have added to their services was the online proactive order placement of toner and cartridge. This could have been made possible by integrating their print servers with the ERP system. At a predefined level, the print server would have communicated with the ERP system and placed an order for new stock.
This would result in proactive inventory management thereby mitigating a risk of work getting delayed (possibly) due to low stock. Eaton Corporation, Working in manufacturing engineering components came up with the smart product concept called Home Heartbeat which monitors the status of various home systems and alerts the homeowners when something is amiss. Eaton use wireless alert systems in its products to make its users more secure regarding their home and workplace.
They used monitoring system through power sensors which alert homeowners via information technology like call/text and email. The consumers were now able to remotely control the various sensors installed without having to physically return to fix the issue. This smart product became so popular and effective that rising from a tough competition now Eaton Incorporation stands for total home awareness, as one of the most reputed brands. In the case of the home heart beat system the key fob can communicate with base station only within a limited distance.
This limiting capability could have been overcome by developing a software application that could be installed both on the base station and the consumers mobile phone. This way the consumer can communicate with the base station from anywhere in the globe (as long as there is a mobile network) and the company can do away with the key fob. 3. What are some limitations of a smart products and smart service strategies? Give several examples of challenges that a business might encounter, and explain how it might overcome them.
The case study shows the efficiency gained by the manufacturers and the consumers through the implementation of technology and the smart service strategies. However along with the efficiency the other important element which needs to be measured is the effectiveness of the implementation of smart strategies. It is important to realize, that information technology and information systems can be mismanaged and misapplied in such a way that IS performance problems can create both technology and business failures.
In this case study, the Honeywell and Heidelberg cases have a heavy reliance on technology. This can create the following risks for which the business units needs to come up with mitigation strategies a) Infringement on Privacy: With the ability of the engineers to have remote access and control of the consumer networks, the biggest challenge is the security issue. This raises the possibility of unauthorized access to secure data and a big integrity risk. This is the biggest issue of using advanced smart products in the modern environment.
To mitigate this risk , the manufacturers need to ensure that the product being deployed meets the stipulated security requirements and the consumers need to ensure that the remote access is not granted to any element of the business which has zero tolerance to possible unauthorized access. b) Network Breakdown: With the overreliance on technology, another big risk faced by the consumers is what happens if the communication network breaks down? In the case of Honeywell wherein the PKS controls elements of the manufacturing support, a possible breakdown of the network is going to cause a risk of a major disaster.
This is compounded with the fact that the consumers did away with the human staff that was otherwise physically present to fix a potential problem. To mitigate this risk , the manufacturers need to ensure that there is an effective DR plan ( disaster recovery ) in place. This DR plan needs to be tested on regular intervals to take into account the changing nature of the business operating environment. c) Inaccurate Information: This is a very prevalent problem in the smart products. The products are often designed by individuals who have very little hands on knowledge of the end environment.
As in the case of another company Frito Lays wherein the IT portal development team made a wed based solution for the sales team. Before the development the IT team took interviews with the sales team to understand the environment. However with the lack of a sales team member as part of the project development team, the end product did not fit the requirement of the workforce. Hence it resulted in a waste of time effort and resources. To mitigate this risk , it is important for the product development team of the smart products to test each phase of development and take proactive corrective measures.