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Digital Platform Economy in Mechanical Engineering

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Digital Platform Economy in Mechanical EngineeringIn the course of digital transformation in mechanical engineering classic value-added structures are increasingly changing. Formerly purely physical products are increasingly transforming into hybrid product-service systems. Now, digital platform economy stands for a new way of handling business transactions and has become increasingly important within the B2B sector. Data, products and services are offered via a variety of digital platforms now a days.

Types of digital platforms

There are many types of digital platforms such as B2C platforms, B2G, B2B, P2P or engineering platforms, to name just a few of the most common ones. The German Engineering Federation (VDMA) defines digital platforms as “intermediaries that use digital technology to connect two or more market participants via the platform and simplify or even enable their interaction”. [1]

The Federation of German Industries (BDI) divides digital platforms into two categories: data-centric and transaction-centric platforms.[2]

Data Centric Platforms

Industrial Internet of Things platforms and data (transaction) platforms are among the data-centric platforms. These types of platforms generate, collect and/or store information and offer, among other things, an infrastructure for its exchange, analysis and evaluation. They thus enable the development of new, data-based business models and services.

Transaction Centric Platforms

Transaction-centric platforms, on the other hand, enable exchange and trade between players in a uniform digital environment. These include digital B2B marketplaces, retail and manufacturing platforms, supply chain/logistics platforms and networking platforms.

Economic Importance of Digital Platforms

In the field of digital B2B marketplaces in particular, vertically structured platforms are rapidly emerging. In this space manufacturing companies offer their products, accessories, spare parts, services and increasingly so digital services via digital platforms. This offer is supplemented by suppliers of raw materials, logistics service providers, financial service providers or software houses for end-to-end integration and data transfer.

B2B platforms and marketplaces are mainly used to present commercial and technical information on products of different brands. Procurement processes, for example, can be digitalized there. Ideally, necessary systems such as ERP, CRM, PIM and suppliers are connected for efficient data exchange and consistency. This means that the data is transferred in real time when an order is triggered and corresponds exactly to the order in the customers’ system and the order in the supplier’s system.

The SEEBURGER Business Integration Suite as B2B platform for PDM/PLM and e-procurement
Figure 1: The SEEBURGER Business Integration Suite as B2B platform for PDM/PLM and e-procurement

BDI published an article of 23rd June 2020 called: ‘The second platform revolution: Digital B2B platforms “Made in Germany”’ stating that ‘by the end of 2018, 67 percent of companies in industry and industry-related services in Germany were already using platforms. Just under seven percent of the value added in this sector depended substantially on the use of platforms. This corresponds to 112 billion euros. The main reasons for the use of platforms, in addition to sales to corporate customers, are the purchase of products and the creation of products and services together with third parties. The use of platforms leads to additional revenues for most companies.’ [3]

Importance of Omni-Channel in the Context of Platform Economy

As a result of digitalization, a paradigm shift is taking place, especially in the industrial environment. The way in which procurement and service is carried out in mechanical engineering is undergoing lasting change. Omni-channel sales are becoming increasingly important, especially in electronic B2B business between companies. Companies appreciate Omni Channel Services and expect a customer-specific B2B process, integrated on all channels and systems such as CRM, ERP, PIM, online shop, website or print catalogue, all at the PC workstation, mobile with smartphone or accessible via tablet.

This is because in omni-channel distribution, industrial goods & products, spare parts or digital services are sold through different distribution channels that are integrated with each other. In order to enable mechanical engineering to adopt omni-channel capability, B2B processes must be designed to be consistent across all channels and systems and, as far as possible, executed in real time. The necessary expansion of digital B2B sales channels requires certain organizational and technological prerequisites, above all a well thought-out integration platform.

SEEBURGER Omnichannel Integration – integrated order fulfillment for a continuous customer journey
Figure 2: SEEBURGER Omnichannel Integration – integrated order fulfillment for a continuous customer journey

Real-time Integration in Machine Tool Construction

As a sub-sector of mechanical engineering, machine tool manufacturing supplies machining centres, press lines and other machines which are built to increase the efficiency of production systems. In addition to reducing malfunctions, machine tool manufacturing increases process speeds and efficiency. Thus customers place their hopes into digital solutions offered by the machine tool building industry. These customer expectations are met with production areas becoming more flexible and their machines and systems easier to operate.

A consistent networking of the systems offers control of the entire value stream based on real-time data and a consistent digital documentation process. These are the prerequisites for efficient industrial processes.

From Isolated Applications to B2B Platform Economy

The challenges for mechanical engineering are extensive. This is because the complexity of the B2B landscape generates a multitude of platforms. In addition, there is the diversity of suppliers on the platform from the platform operators and the customers, all the way to the users of the platform, each in its own having unique processes, data and systems.

For providers of neutral platforms, the task is to think outside of their own isolated applications. Digital platforms, which are themselves further networked in a platform economy, become much more interesting for customers and can promote a competitive edge.

Platform economy will be an important differentiating factor for mechanical engineering, and the added value provided by digital services and business models will always be an important element. A correct positioning within the platform economy must therefore become an essential part of the complete business strategy of every mechanical engineering company.

How best to define and implement a Platform Strategy

As you can see, the digital platform economy is significantly changing the mechanical engineering industry as we know it. Business areas are being replaced, changed and renewed at a rapid speed. Therefore, it’s existential for mechanical engineering companies to develop a clear digital platform strategy for their cutting edge platform economy.

SEEBURGER helps with an agile approach to design, plan and implement the platform business model and supports customers

  • through holistic, process-based digital management consulting, SEEBURGER:
    • Identifies the requirements of Mechanical Engineering for digital platforms and platform economy,
    • Offer an evaluation and optimisation of the products and services on the market in terms of their potential to be offered on a digital platform,
    • Helps design internal and cross-company processes and organisational structures with regards to platform economy.
    • rolls out definition, conception, combination and the implementation of the platform-based and classic business model into an integrated hybrid business model,
    • in setting up your own platform business model with or without additional partners based on company-specific product or service systems
  • by the platform integrator
    • in the seamless integration of existing ecosystems and those created by the digital platforms as a further sales channel

 

SEEBURGER thus supports Mechanical Engineering through analysis, conception, definition of the company-specific platform strategy and the underlying range of products and services in order to develop the potential of the platform economy for their own company and build up a platform-based business model.

In addition, with the Business Integration Suite and central integration platform, SEEBURGER ensures standardised exchange of information, data security and integrity between the user (customer), partner and operator of digital platforms.

 


[1] Plattformökonomie im Maschinenbau, Herausforderungen – Chancen – Handlungsoptionen, VDMA, Deutsche Messe, Roland Berger, April 2018, Page 3

[2] Leitfaden Digitalpolitik Praxisbeispiele: Deutsche digitale B2B-Plattformen, Auf Deutschlands industrieller Stärke aufbauen. Ein Ökosystem für B2B-Plattformen fördern. Dr. Thomas Koenen, Steven Heckler, June 2020, Page 7

[3] Die zweite Plattformrevolution: Digitale B2B-Plattformen „Made in Germany“, BDI e. V., Steven Heckler, Stefanie Ellen Stündel, 23.06.2020


 

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About the Author:

Seref Erkayhan
Dr.-Ing. Seref Erkayhan is product manager for engineering (CAD/CAx) and product data exchange at SEEBURGER AG. He heads the division for mechanical and plant engineering.

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