The Digitalization Journey - Are You Future Ready?

The Digitalization Journey - Cummins

In our journey to help our customers unlock the potential in their businesses, we have looked at 23 industrial companies to determine how to deliver the right digital footprint to our customers. 

Is industrial market digitalization here to solve customers’ problems or to improve companies’ operational efficiency, or both? Enhancing the customer experience by solving customer problems is a key objective of digitalization. Hopefully, you have already read about five customer problems solved by digitalization in industrial markets. Yet this could be just half of the story. 

According to recent research, companies that balance enhancing customer experience with improving their operational efficiency in their digital business transformation efforts perform better than their industry peers. These future-ready companies, top right quadrant of the chart below, have delivered an average net profit margin that is 16 points better than their industry average. Future-ready companies were able to not only solve key customer problems, but also concurrently reduce their costs or improve their efficiency. 

Three Types of Digitalization Journeys

Let’s narrow our focus onto companies serving industrial markets that use power systems (defined here as engines or power generators) as primary or emergency back-up power sources. For this purpose, we have explored how these companies take different paths forward in their digitalization journey. Our benchmark included 23 industrial companies and found out that these companies generally fall into three categories:  

1. Companies that take a System Level approach and are trying to create the Operating System (OS) for the Internet of Things (IoT). Let’s call this model, “Platform as a Service.”  These companies market their platform not only to their customers, but also to other companies. They expect other companies will develop applications to solve customer problems with their platform as a service.

2. Companies that take a Component Level approach and create proprietary platforms. Let’s call this model, “Software as a Service,” or SaaS. These companies focus their expertise around their products and services and aim to create solutions for customers in their core businesses. The focus is on the application, like an app for the operating system of a smart device.

 Digitalization Journey - Three Categories

3. Companies that take a Component Level approach and leverage third party platforms to offer digital solutions to their customers. These companies are customers of the companies in the first category. They may brand the solution as their own, but it is built on another platform.

Component Level digitalization serves to improve the reliability, availability, and operating cost of physical assets. Varying levels of sophistication exists across component level solutions. Basic level solutions feature sensors to monitor health and viability of the assets while enabling basic detection and diagnostic capabilities. The more advanced solutions leverage data and analytics to plan component level maintenance and to proactively identify advanced performance issues. 

System Level digitalization serves to improve broader system processes and operations. These improvements could be flexible and scalable production, higher production yields and quality, and improved throughput and supply chain agility. Less advanced solutions leverage real-time data and analytics on products to increase process visibility and transparency, better allocate resources and increase overall production and supply chain performance. More advanced solutions leverage data and analytics to manage a broader set of operations, from fleet management to asset collaboration, and/or personnel to optimize the overall business performance. More advanced solutions could deliver improved safety, improved asset utilization, reduced asset base for same throughput, reduced labor expense, and more.

As companies embark on their digital transformation journeys, a balance between solving key customer problems and improving operational efficiency would be the path to create successful customers and companies. For industrial markets that use power systems (engines or power generators) as primary or emergency back-up power sources, we believe the path forward entails seven key solution themes, which we will cover in a future update. 

Cummins Office Building

Cummins Inc.

Cummins is a global power leader that designs, manufactures, sells and services diesel and alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled electrical generator sets from 2.5 to 3,500 kW, as well as related components and technology. Cummins serves its customers through its network of 600 company-owned and independent distributor facilities and more than 7,200 dealer locations in over 190 countries and territories.

From Virtual Visits to Value-Based Healthcare: Trends Transforming The Health Care Industry

Four Trends Transforming the Healthcare Industry

You might have spotted a new urgent care building on your way home or seen a new connected gadget during your last physician’s visit; just two examples of how our health care experience is evolving. 

At Cummins, we spend a lot of time listening to our customers in the health care industry, where our power solutions help to keep health care facilities around the globe Always On. Through these interactions, we have identified four trends transforming the health care industry that are contributing to these changes.

Trend No. 1: Consumers access health care differently and expect more

If you had a cold or migraine, there was a time where you accessed health care through a single path: Call to schedule an appointment. Go to a clinic or hospital. See a doctor in-person. Receive a paper with your test results and medication. 

Four trends transforming healthcare - graph 1Today, the way we access health care is evolving with the advances in technology. Here are three ways we access healthcare differently and expect more. 

Virtual Visits: Consumers are increasingly accessing healthcare services through virtual visits. You can have a face-to-face video chat with a doctor or nurse in minutes instead of going to acute care. For consumers, this means ease of access to care services at a more reasonable cost. For the health care industry, this means increased focus in educating the workforce to provide the right level of virtual service and building the needed infrastructure.

Internet of Things (IoT): Connected and smart devices are a part of our daily lives, and health care is no exception. While most of us use fitness trackers and nutrition apps, these are just the tip of the growing IoT applications in health care. Our article on "Experiencing a Connected Hospital" takes a closer look at IoT applications within hospitals. For the health care industry, this means increased investments to build the physical infrastructure that can keep this IoT ecosystem powered and connected at all times. 

Value-Based Health Care (VBHC): More nations and health care systems experiment with VBHC in addition to the current fee-for-service model1. Unlike the fee-for-service model, where systems and physicians get paid based on procedures and services delivered, VBHC focuses on patient outcomes to determine payments across systems. The expected benefit of VBHC is improved care at a lower cost for patients and the health care industry. 

Trend No. 2: Demand for health care increases, but with varying pace and evolving infrastructure profile

There is no doubt the combination of an aging population and a growing number of people seeking health care access increases the demand for services. However, there are two more insightful trends: geographical variation in health care demand and evolving composition of the health care infrastructure.

Geographic variation in health care demand: Demand for health care varies geographically and is driven by factors such as proportion of seniors in each geography.

Four Trends Transforming the Health Care Industry - Graph 2

"As the health care infrastructure expands at varying paces across geographies, we expect health care companies to tailor their facilities per local needs to be the market leaders. At Cummins, we design our power systems to be tailorable for the unique needs of health care facilities," said Colette Weiser, Healthcare Initiative Leader at Cummins. 

Evolving composition of infrastructure: The increased demand in health care doesn’t translate to building more of everything we have today. The composition of health care facilities is also expected to change. For instance, investments to urgent care clinics, ambulatory facilities and medical office buildings are forecasted to increase faster than investments to other health care facilities in North America2. The article ‘3 Ways Our Health Care Infrastructure Will Be Different in the Next Decade’ takes a closer look at this topic. 

Trend No. 3: Health care providers are transforming themselves to stay relevant and financially sound

Players in health care make bold moves and investments through mergers, acquisitions and partnerships to best position themselves in this changing landscape. In fact, seven of the 25 largest merger and acquisition deals in the last 10 years were in the health care industry and ranged from life sciences to pharmaceuticals3. Let’s focus on two aspects of this transformation across providers.  

Vertical integration: Companies in the industry pursue vertical integration to expand their control within the health care ecosystem and to reduce their costs4. The $69 billion merger between CVS Health and Aetna was a recent example of vertical integration, and it brought together a retail pharmacy chain and a health care insurance provider.  

Hub and Spoke Model: Increased presence of the hub and spoke system in the health care delivery infrastructure is another outcome of increased merger and acquisition activity. This is partially fueled by larger systems acquiring smaller systems as the economics of staying profitable get more challenging for smaller systems. This makes smaller systems acquisition targets for larger systems. This trend results in larger health care systems with facilities that are increasingly spread across geographies. 

Trend No. 4: Regulations aim to improve the quality of care, data security and infrastructure reliability

While health care is a highly regulated industry, it gets further regulated across different dimensions. Some of these new regulations complement the trends above. For instance, the increasing focus on value-based health care drives regulations focused on how payments are made to health care providers. The increasing use of IoT devices drives regulations focused on cybersecurity. The changing weather patterns put increasing strain on our electricity infrastructure, driving regulations focused on back-up power system requirements within health care facilities. 

"We expect the evolution within health care companies and changes in how consumers access health care to transform the industry," said Alex Savelli, Executive Director of Power Generation at Cummins. "This transformation would lead to better care at a lower price for consumers. At Cummins, we contribute towards the ‘better care at a lower price’ objective with our continuous focus on building reliable power systems for the health care industry fit for the local market requirements and supported by a world class service and support network."

To learn more about trends in the health care industry follow Cummins on Facebook and connect on LinkedIn. To learn more about power solutions for the health care industry, visit our web page. To learn more about how Cummins is powering a world that’s “Always On,” visit our web page.

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

References: 
1 The Economist Intelligence Unit [Web Page]. (n.d.). Retrieved June 17, 2019, from http://vbhcglobalassessment.eiu.com/ 
2 Avis E. & Morgan J. (2019). 2019 Hospital Construction Survey [Web Post]. Retrieved from https://www.hfmmagazine.com/
3 List of largest mergers and acquisitions. (n.d.). In Wikipedia. Retrieved June 17, 2019, from https://en.wikipedia.org/wiki/List_of_largest_mergers_and_acquisitions#2010s
4 Insights & Implications from the J.P. Morgan Healthcare Conference. [PDF File]. (2018). Retrieved from https://am.jpmorgan.com/

 

Cummins Office Building

Cummins Inc.

Cummins is a global power leader that designs, manufactures, sells and services diesel and alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled electrical generator sets from 2.5 to 3,500 kW, as well as related components and technology. Cummins serves its customers through its network of 600 company-owned and independent distributor facilities and more than 7,200 dealer locations in over 190 countries and territories.

On the Road Again: Summer Travel Inspiration and Prep Tips

Still undecided on your summer vacation destination? In her latest blog post for Cummins, Donna Hull from “My Itchy Travel Feet” provides her top vacation spots in the American West without the crowds of typical tourist destinations. Donna’s recommendations have something for everyone – from biking, hiking and horseback riding to food, wine and culture. 

If you’re traveling by RV, all of Donna’s top spots boast campgrounds and national parks. But before hitting the open road, make sure your RV is road-ready: get out and inspect everything; top off coolant; check oil level; drain water from water fuel separator; and follow engine maintenance recommendations. Learn more about RV maintenance here.  

Whether you’re leaving for a weekend road trip or an extended trip cross-country, it’s important to prepare by making your home appear that it is still being lived in. A trusted neighbor or house sitter and smart home devices such as automatic timers make this possible. And in the event of a power outage, a home standby generator like Cummins QuietConnect will keep your home’s security, automation and appliances up and running. 

Learn more information on preparing your home for your departure here. If you plan to be away for more than a week, Donna Hull has excellent advice for preparing your home for an extended vacation

Cummins Office Building

Cummins Inc.

Cummins is a global power leader that designs, manufactures, sells and services diesel and alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled electrical generator sets from 2.5 to 3,500 kW, as well as related components and technology. Cummins serves its customers through its network of 600 company-owned and independent distributor facilities and more than 7,200 dealer locations in over 190 countries and territories.

Customer Problems Solved by Digitalization Across Various Markets

Customer Problems Solved by Digitalization - Cummins

If you work for a company where a power system – in this case, defined as an engine or power generator – Is powering your boats, locomotives, mining equipment or buildings such as hospitals, small businesses or data centers, it is highly likely that you’re familiar with new digital products or solutions. These digital offerings could be sensors, telematics, app-based solutions or cloud-based services. 

As you hear more about these new digital offerings, it is important to be aware of the various customer problems and challenges these offerings are designed to solve. 

In this article, we’re going to focus on how these challenges and problems vary across markets, with a focus on industrial markets that use power systems (again, defined here as engines or power generators) as primary or emergency back-up power sources. To see the patterns in customer problems across these markets, we have categorized them into three groups driven by the utilization level of power systems in each market. 

Low Utilization: Markets where power systems are seldomly running. For example, airports, data centers, commercial buildings and healthcare applications where power generators are used as emergency back-up power source, as needed. The availability of power is critical in several of these applications, yet the utilization of power generators would be low since the primary source of power is the utility in most cases.

Medium Utilization: Markets where power systems are running occasionally. For example, rail, marine, and oil and gas applications where engines are used as a primary source of power, but the application doesn’t continuously run.

Medium Utilization Markets

High Utilization: Markets where power systems are near continuously running. For example, mining equipment with engines that run near continuously, or power plants that use power generators as prime source of electricity.

For customer needs, research indicates that reliability is the problem that consistently ranks as a top priority across all three categories. However, when you move from low to high utilization, initial affordability, customer and product support, life time affordability, and availability become more important, in that order. Let’s look at two examples spotlighting how these changes in customer needs become apparent in real life applications.  

Customer Needs - Power Utilization

For customers in the mining industry, a high utilization segment, PrevenTech, a new digital monitoring and reporting solution by Cummins, provides advanced detection of potential equipment health issues. PrevenTech’s continuous analysis helps mitigate performance impacts and improve mine site productivity by streamlining maintenance and service planning. For example, Cummins was able to reduce annual unplanned downtime costs of trucks using Cummins PrevenTech in the range of several thousands of dollars for one mining customer. A real-life example on solving customer’s problems around availability and life time affordability.

Customers in the healthcare industry, a low utilization segment, can improve the reliability of their emergency back-up power source using Cummins Power Command Cloud. Additionally, customers benefit from pro-active product support available through this digital solution. Users of Cummins Power Command Cloud can check their system status, identify faults and access critical notifications via a tablet, smart phone or workstation. In summary, customers in low utilization segments, such as healthcare, get what they need the most with Power Command Cloud: Improved reliability and enhanced customer and product support.

Digital solutions solve a variety of customer problems across industrial markets. If you are interested in learning how companies serving industrial markets take different paths in their digital journeys, check out this article

Cummins Office Building

Cummins Inc.

Cummins is a global power leader that designs, manufactures, sells and services diesel and alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled electrical generator sets from 2.5 to 3,500 kW, as well as related components and technology. Cummins serves its customers through its network of 600 company-owned and independent distributor facilities and more than 7,200 dealer locations in over 190 countries and territories.

Cummins-Powered Generator Sets Critical to Efforts to Add More Renewable Energy to the UK Grid

Cummins UKPR

Policymakers in the UK have prioritized decarbonization and higher penetration of renewable energy sources as important energy goals. With 66 million people and a GDP of 2.62 trillion dollars, the United Kingdom is the fifth largest economy in the world. Reducing carbon emissions, which come from burning coal and fossil fuels, is no small feat. 

UK Power Reserve (UKPR), part of the Singapore-based Sembcorp Industries group, wanted to provide an additional 500 megawatts of power to the UK national grid, but it was important for them to integrate their renewable energy sources with natural gas generators.

"Natural gas generators offer reliable power, which can be activated in distributed generation installations when renewable sources, like solar and wind, are not available because the sun is not shining, or the wind is not blowing," said Alex Savelli, Executive Director, Cummins Power Generation Business.

Today, UKPR has 26 plants, offering a combined 508 megawatts. This generating capacity is enough to power over a quarter of a million homes and meet over 1.4% of the UK’s peak demand for electricity.  

Cummins UKPR - Bristol Road Facility
Across the UK, 26 plants - not unlike the one pictured here - offer enough generating capacity to power over a quarter of a million homes. 

Across the 26 plants, Cummins installed a total of 254 of C2000N5C gas generator models along with transformers and switchgear in specially designed switch and control rooms in most of the sites. The industry-leading fast start capability offered by the C2000N5C models ensured each site can be on line when commanded by the National Grid in under 120 seconds, which was a critical requirement from UKPR.

UKPR’s gas-fired plants provide flexible, efficient, rapid-response power capacity to the UK energy market. These assets provide services to the market and National Grid at times of high demand, as well as offsetting the intermittency of renewable power sources such as wind and solar energy.  

"We’re proud to work alongside a company delivering low-cost, low-carbon solutions to the UK’s distributed energy mix," Savelli added.
 

katie zarich author bio photo

Katie Zarich

Katie Zarich is Manager of External Communications for Cummins Inc. She joined the Company in 2015 after more than a decade working in government and the nonprofit sector. [email protected]

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