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SKF’s bearings go digital

Source: FAG bearings  Tags: News

Demand for bearings is falling due to electrification in general within industrial production, (e.g. the automotive sector, where it is estimated that there are 70% fewer bearings in an electric car).

New digital sales channels are changing the market logic. SKF already sells bearings through Amazon. The challenge is to make sure the customer chooses SKF products rather than just choosing those with the lowest price. Global competition, especially from suppliers in China, is adding to the price pressure on bearings

SKF’s strategy in brief

SKF sells ‘performance’ rather than ‘products’. Machines are equipped with sensors which collect information on how they behave, perform and fail, (e.g. temperature, friction, wear, speed – a little like an ECG works on people). It is important to package the information generated and make it into a basis for an enriched value-added customer offer.

“This is a service that guarantees mechanical performance at a fixed price”, says Larsson. “If performance improves, we want a share of the increased profitability, and vice versa if performance declines.”

This development is in its infancy, but at a number of pulp mills, especially in Latin America, where interruptions in delivery are devastating and access to capital is sometimes scarce, there are already customers leasing equipment through performance-based contracts.

Fredrik Larsson’s main role is to develop new concepts and establish partnerships in the ecosystems that are emerging in manufacturing as a result of digitalization. “I work with establishing partnerships” he says. “Automation companies will be the platform, but we are in partnerships where we deliver services in the ecosystems together with others”.

Who should be the hub of an ecosystem?

“That depends on the customer. Small and medium-sized customers can benefit from SKF’s own cloud services system, but the manufacturing sector already has an IT platform into which we need to be able to integrate our offer.”  SKF 6311 2RSJEM bearings online , pls click here : 

SKF’s strategy has been to build its own “industrial cloud”, based on Amazon Web Services, which exchanges information with other clouds, i.e. cloud to cloud.

For the process sector, SKF is probably not the hub for the end customer. It’s more likely to be classic automation companies such as Honeywell, Siemens, ABB and Rockwell; companies who traditionally supply automation systems to manufacturing. The smart, sensor-coated ball bearings/machines will be a crucial part of these ecosystems. For SKF, it will be a matter of coming up with new offers and packages.

Who are SKF’s end customers?

It might be a company like ABB, Siemens and so on, or it might be the pulp factory or the car manufacturer that is the end customer. “We provide complete flexibility, depending on the customer relationship. So the answer is both. The important thing is that SKF has access to data to create increased knowledge, offer new services and improve our offer.”

“We have a global network for support and analysis in our own Rotating Equipment Performance Centres, where we collect data to indicate the condition of equipment, store and analyse data to generate critical insights, solve problems with customers and optimize business outcomes. We also have examples where we are part of Honeywell’s remote centres as a subset of their service offer.”

What does the business look like today?

“Most of the business still comes through traditional channels, but we are monitoring the new ones closely.”

SKF measures how much of its income comes from REP (Rotating Equipment Performance). It is still a relatively small proportion, but they monitor it and compare with forecast figures.

The exact proportion of ball bearings sales that are sold through e-commerce platforms today is not known, as they go through distributors. It is not yet a large amount, but it is expected to increase rapidly.

“We are piloting our own e-commerce/procurement platform to a limited market in our cloud, but we have no plans to compete with the distributors.”

How are customers dealing with digital transformation?

There is a great deal of interest among SKF’s customers. But the transformation is a maturation process, for all parties. Customers must be able to accept it. Change does not happen overnight. SKF must have the right processes and expertise in place to deliver and sell new performance concepts.