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DES_MarchApril_MPFiltri.indd 1 2019-03-18 12:04 PMFluidPower: IIoT
G
iven its flexibility, low up-front costs
and unrivaled power density, it’s no
surprise fluid power remains a major
motion control technology globally.
According to market analysis by Frost &
Sullivan, the total hydraulic and pneu-
matic equipment market totalled $52.67
billion in 2018, roughly 76 percent of
which is hydraulic business and 24 percent
pneumatic.
Europe, the Middle East and Africa
accounted for the largest share of that
total revenue at approximately 40 percent,
followed by North America (~30 percent),
Asia Pacific (just under 25 percent) and
Latin America (~6 percent). Market share
leaders include Bosch Rexroth and Parker
Hannifin tied for the top spot followed
by SMC, Eaton and Festo.
For all its market strength, however,
the industry faces a number of on going
challenges. Foremost among them is the
steady electrification of formerly fluid
power industrial applications. For many
end users and system integrators, electric
represents a cleaner and more efficient
solution with a lower maintenance cost.
Other challenges, the market analysis firm
contends, include a shortage of skilled
workers in the field and the penetration
of low cost fluid power components from
regions with low manufacturing costs.
To address these challenges, the market
research firm says IIoT technology rep-
resents the industry’s best strategy to
overcome fluid power’s perceived weak-
nesses and open new business models. The
most obvious application of the digital
transformation is improved maintenance.
“Digital troubleshooting saves time,
expense and effort,” said Frost & Sullivan
Industrial Research Analyst, Varun
Raman, in a recent webcast produced byDigitizing Fluid Power
IIoT-enabled fluid power
solutions hold promise of
new business models while
shoring up weaknesses.the market analysis firm. “With efficiency
being the biggest problem for fluid power
systems, the energy savings that each plant
has reported by using smart fluid power
technologies, is an improvement of 20 to
30 percent in many cases.”
In addition, Raman said, digitization
also streamlines service requests. Rather
than a potentially lengthy and costly
distributor-driven model, factory and
mobile level analytics allow service
requests to be placed only when absolutely
necessary. It also simplifies maintenance
in that shutdowns can be planned while
at the same time improving productivity
because of minimized unscheduled down-
time.
Beyond preventive maintenance
advantages, the market analysis firm
argues that digitization also opens new
business models. While fluid power com-
ponents have become a commodity sus-
ceptible to low price wars that drive down
margins, digitization allows OEMs to
differentiate their product and introduce
a more service-oriented offering.
“Some of the emerging business mod-
els we see involve a shift from a purelyfixed product-driven business to more
services and also outcome driven mod-
els,” Raman said. “We see that having
implications for how fluid power services
will transform over the next five to 10
yea rs.”
Specifically, Raman recommends
suppliers move toward a subscription/
outcome-based model. Rather than a
single sale, such a strategy allows the
OEM to follow up with the end user over
time. As well, service pricing is driven by
outcomes or reaching specific goals,
helping suppliers stand out from com-
petitors on more than simply component
costs. For the integrator, digitization
opens subscription-based remote
machine monitoring and data analysis
rather than a single machine sale model.
“Fluid power is no longer going to be
just a hardware component industry
where prices are constantly being driven
down by commoditization and competi-
tion from low labor cost manufacturers,”
Raman said. “Predictive analytics and the
software side will create opportunities for
a recurring revenue stream.” DE
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