Michelin: From the World’s Leading Tire Manufacturers to a Leader in Mobility Businesses Driven by Data and IoT
Published in
3 min readApr 20, 2023
Michelin shifted from tire sales to selling business results (outcomes) driven by data and IoT. It is the first time a large manufacturing company has gone beyond selling tires to address the fuel saving problem with the promised efficiency gains.
Situation
- Since the 2008 economic and financial crisis, truck drivers have had tiny margins sometimes less than 2%
- Orders are difficult to predict. This makes it challenging to manage effectively.
- The cost of fuel is becoming an increasingly heavy burden. In some countries, fuel is the most significant expense for freight forwarding companies (more than wages).
Challenge
- For truck drivers, the challenge is to reduce operating costs while continuing to provide quality service to customers and they also have to comply with more stringent standards on CO2 emissions.
- Michelin is targeting fleet managers, company truck caretakers, operations managers, drivers, and business executives who want to lower their biggest cost which is fuels that account for 30–40% of Europe region.
- In addition to the fuel, parameter management, and maintenance issues ranging from automotive technology powertrain and reload, the weather, lubricants, tires, fuels, aerodynamics, and driving style and route are also challenges to Michelin.
- Verifying many parameters requires visualization, measurement, and the development of an action plan. which together form a large and important project of the company.
The Starting Point of Transformation
- In 2012, Michelin began collecting data and talking to operators about fuel consumption, vehicle inspection, vehicle type & usage, driving behavior, and related equipment.
- A possible fuel economy structure and action plan are then presented and also the proposed structure and an action plan of specific measures are to be implemented.
- When agreed therefore began to be applied to sample vehicles by installing Michelin telematics equipment. It integrates all parameters from maintenance, and tracking system to electronic connectivity from every vehicle which collects and processes information of the vehicle such as vehicle information, type of usage, related conditions, and fuel consumption.
- Drivers will be trained in driving techniques, learn management tools, and customized applications as well.
New Service & New Business Model
- Michelin pledges to help truck companies reduce fuel consumption with the introduction of telematics, tire management systems, and driving techniques training. Michelin promises to refund the customer if the end user is not satisfied with the result.
- Since the launch of the new service, Michelin has delivered fuel savings of 1.5 liters per 100 kilometers to trucking customers. This means that in one year Michelin will save more than 3 billion liters of fuel, reducing 9 million tons of carbon dioxide emissions into the atmosphere. This also create added value of more than 3 billion US dollars to the trucking industry (or more than 1,300 per vehicle per year) and in 2013 there were 500,000 users of Michelin’s solutions.
- Michelin drives trucking companies to focus on their core business by being able to access and analyze big data, and IoT technologies.
From the ability to directly access consumer data and the ability to extract the potential of information, Michelin able to create predictive models, new On-Demand service and As-A-Service business models which based on user demand. With expertise in utilizing connected information, Michelin is positioning itself as a key leader in the Connected Mobility business.
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