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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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Digital Customer Experience
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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Digital Customer Experience
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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Digital Customer Experience
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
© 2014 IBM Corporation
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
4
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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Digital Customer Experience
Electronics Retailers are friends and enemies at the same time....what is
the future of the classical retail/wholesale value chain?
© 2014 IBM Corporation
85%of transactions trackable by retailer to an individual name.
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Digital Customer Experience
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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Digital Customer Experience
Industry Example
Digital in
© 2014 IBM Corporation
Digital in
Multi Channel
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Digital Customer Experience
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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Digital Customer Experience
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
© 2014 IBM Corporation
Vacuum cleanerToasterDishwasher
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#4 samsung kühlschrank 5.251
#5 lg kühlschrank 4.475
...
#8 bosch waschmaschine 2.868
# Keywords Monthly Searches
#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
# Keywords Monthly Searches
#1 toaster 496.173
#2 kitchen aid toaster 2.472
#3 siemens toaster 1.621
#5 serverin toaster 851
...
#7 bosch toaster 458
# Keywords Monthly Searches
#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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Digital Customer Experience
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
© 2014 IBM Corporation
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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Digital Customer Experience
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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Digital Customer Experience
3 New Technologies
3D PRINTING OPEN SOURCEINTELLIGENT ROBOTICS
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Digital Customer Experience
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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Digital Customer Experience
MODULARIZATION
ROBOTICSHARD
AUTOMATION
FLEXIBLE
TYPICAL COST PER ROBOTIC ASSEMBLY STATION
FLEXIBLE ROBOTICS
INTELLIGENT ROBOTICS
-90%
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Digital Customer Experience
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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Digital Customer Experience
4 DIFFERENT PRODUCTSCOSTVOLUMESIZECOMPLEXITYPERSONALIZATION
WASHING MACHINE
INDUSTRIAL DISPLAY
MOBILE PHONE
HEARING AID
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Digital Customer Experience
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Digital Customer Experience
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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Digital Customer Experience
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
Source: Sourcemap, Econolyst, Mike Watson and Alex Scott, IBM Research, IBM Institute for Business Value
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Digital Customer Experience
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
© 2014 IBM Corporation20
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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Digital Customer Experience
LOWER SCALE
90%LESS VOLUME
REQUIRED
AGGREGATE NORMALIZEDMINIMUM ECONOMIC SCALE
REQUIRED
Source: Sourcemap, Econolyst, Mike Watson and Alex Scott, IBM Research, IBM Institute for Business Value
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Digital Customer Experience
58% of the total product value
of a washing machine will be 3D Printable in ten
years – the service business impact will be
disruptive.
© 2014 IBM Corporation
FULL REPORT & MODEL NOW AVAILABLE ONLINE AND ON YOUR MOBILE DEVICE
disruptive.
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Digital Customer Experience
Industry Example
Digital in
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Digital in
Mobile
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Digital Customer Experience
Why Mobile? Mobile is at the epicenter of the digital forces and a
catalyst for reinventing experiences and businesses
© 2014 IBM Corporation
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Digital Customer Experience
The Next Generation of Enterprise Mobility: IBM strategic investment in IBM Mobile First, IBM Interactive Experience and Security
© 2014 IBM Corporation
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Digital Customer Experience
„there is one more thing“
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
„there is one more thing“
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Digital Customer Experience
© 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 “
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
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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Digital Customer Experience
Industry Example
Digital by
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Digital by
Analytics inManufacturing & Supply Chain
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Digital Customer Experience
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
© 2014 IBM Corporation
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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Digital Customer Experience
IBM Manufacturing uses analytics tools across its operation
© 2014 IBM Corporation31
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Digital Customer Experience
Industry Example
Digital by Analytics
Sales & Marketing
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Sales & MarketingCustomer Service
HRR&D
Finance...
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Digital Customer Experience
Industry Example
Digital in
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Digital in
Software & Service Transformation
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Digital Customer Experience
Case Study IBM: Segment shift from hardware to services and
software builds foundation for IBM’s business success since late 1990s.
© 2014 IBM Corporation
Source: IBM annual report 2013
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Digital Customer Experience
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 -
© 2014 IBM Corporation
Repeat sale1-2 times per year
Sell hours of light in a stadium
sell -competitive
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Digital Customer Experience
Case study Google/Nest – Programmable thermostat
© 2014 IBM Corporation
$249 $25
10x price differentiation driven by software on the device and in the cloud.
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Digital Customer Experience
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
© 2014 IBM Corporation
Own data and generate new value
Be bold
Be disruptive
As premium brand go first
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Digital Customer Experience
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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Digital Customer Experience
How to get Started
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Digital inSocial / Multi Channel
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Digital Customer Experience
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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Digital Customer Experience
How to get Started
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Digital in
Mobile
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Digital Customer Experience
What‘s your best app?
© 2014 IBM Corporation
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Digital Customer Experience
How to get Started
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
AnalyticsExample Supply Chain
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Digital Customer Experience
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
© 2014 IBM Corporation
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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Digital Customer Experience
How to get Started
AnalyticsSales & Marketing
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Sales & MarketingCustomer Service
HRR&D
Finance...
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Digital Customer Experience
Summary
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
Summary
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Digital Customer Experience
Digital Transformation – 5 Key take aways
1. Engage the end customer
2. Focus on smarter home user experience
3. Develop robust systems engineering (remote
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
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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Digital Customer Experience
The role of IBM in Digital Transformation
1. Strategic Advisor
2. From strategy to execution
© 2014 IBM Corporation© 2014 IBM CorporationIBM Internal Use OnlyIBM Confidential
3. Design – Build - Run
4. Cloud-Analytics–Mobile–Social – Security
5. Software
6. Global rollouts
www.linkedin.com/in/thorstenschroeer
Let‘s engage
© 2014 IBM Corporation
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IBM Electronics www.ibm.com/electronics