Could virtual shop floors and ‘uptime experts’ replace traditional bricks and mortar dealerships? Stephen Roy, Senior Vice President of Sales Region Americas at Volvo Construction Equipment (Volvo CE), explains how dealers are adapting their role to keep pace with construction’s high-tech future.
Advancements in automation, connectivity and electromobility are well underway in the construction equipment industry. Despite the industry being a slower innovator than sectors such as transport, agriculture and oil and gas, it is quickly catching up. As a result, the digital revolution is transforming the relationship between manufacturers, dealers and customers. It is important therefore that dealers, as the frontline of the business, are ready to take on the challenge of future-proofing their business.
Most notably, we are seeing a lot of ongoing research into how emerging technologies, such as augmented reality (AR), can make their operations more efficient. AR can be used to carry out repairs quickly, conveniently and remotely – not only allowing the machine to stay up and running for longer but also making a trip to the dealership only necessary for the largest jobs. In fact, some of our dealers are already piloting ‘mixed reality’ consultations using AR glasses, using these to not only find and fix problems but also offer 1-on-1 training on the go.
Over time, we could also start seeing more advanced voice solutions being offered to help boost efficiency for machine operators. Construction has been historically over-reliant on the visual way of communicating but for those workers who spend most of their day behind the wheel, it makes sense to provide an easier – and safer – form of communication like voice control.
Adoption of any new technology can represent a big shift in employee skills, diagnostics and traditional dealerships. Without the need for a bricks-and-mortar shop floor, we could even be heading for a new era of virtual dealerships, where almost everything is done via non-traditional channels.
Which is why many manufacturers are looking outside their industrial field of focus and taking inspiration from Silicon Valley – not only in terms of tech innovations – but also for e-commerce and automatic servicing. Having a stronger online presence, like Amazon, is increasingly important to customers. The amount of parts and services being sold online is slowly increasing, so could buying a machine online soon become an industry standard? It’s also not unfeasible to think that software updates on machines could be automated via the cloud – just like your smartphone. If our customers are heading in this direction, then dealers need to be ready to provide a competitive online offering.
This new way of working means dealers are also having to adopt new sales models – moving away from the sale of a machine as a single entity and heading towards the sale of a machine as a service. This means providing customers with a certain uptime guarantee and charging customers only for the time in which the machine is in use. And it’s already happening. Several leading global construction companies have been pioneering a rental business model, where customers can hire capacity and not specific machines, for almost three years now.
With uptime a key concern for customers, it’s no wonder that we are starting to see ‘uptime experts’ taking over the more traditional sales role in dealerships. Customers don’t want to be told what machine to buy. Their needs are more individual than that. They want the confidence to know that their business will run as efficiently as possible and that they can get an overview of their entire operations without the hassle of analyzing dozens of different systems. In effect they need a holistic ‘one stop shop’ solution. For dealers this means providing everything in one neat uptime package – a combination of machines, services, telematics and overall site planning.
In a competitive environment like construction, offering a fully integrated business model like this is what will set dealers apart. Volvo CE’s Uptime Center in Shippensburg – one of three centers located at key locations around the world – is the result of this ‘uptime first’ attitude. Telematics has been around for a while, but here the big change is that the OEM is taking the noise out of data overload by filtering thousands of data points for dealers and customers, sending them only actionable alerts.
And what about electromobility and automation? How are these industry-shaking trends driving change for our dealers? As we are all learning to adapt to electric machines, there will be a crossover for a period of time. Dealers of the future will have to learn to service both diesel and battery-powered equipment, becoming generalists and specialists at the same time.
Likewise, with automation. Dealers have already successfully adapted to AI-driven systems such as Volvo Co-Pilot – and taught customers to do the same – but they now face an arguably even steeper learning curve with the anticipation of self-driving machines. How will they be serviced? And how will they fit into the construction sites of tomorrow? We, as OEMs, have a role in readying the dealer for this new age of automation, whether that is helping to plan out new business models or training up staff.
After running the same business model for 50 years, of course change is a little scary, but we know that our dealers are already engaging with this change. In fact, a survey by McKinsey & Company showed that contractors are welcoming the shift that digitization will bring and have high levels of trust in OEMs – and of course dealers – to help them navigate this new era.
The challenge now is upskilling a workforce capable of steering this navigation. Change is happening fast, but the skill set we are going to need in the coming years is still being developed. With diagnostics more important than ever, hiring a younger talent base able to make the most of this digital disruption and to come up with fresh and innovative solutions, means making the construction industry an attractive place to work for digital millennials. When you combine this with the knowledge of experienced field technicians and engineers, we will have a winning formula to guide us through the digital future. And if we get this right, it will not only provide efficiencies across the industry, but will also help address a construction skills shortage affecting us in North America.
The end goal is to have a team of dealer experts – not just able to sell and fix machines – but also empowered to take ownership of the entire uptime process so they can address our customers’ needs quickly and efficiently. It is no easy task, but with new investments, partnerships and ongoing research into new technologies, together we can radically transform the efficiency of the job site.