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Michelin: Building A Digital Service Platform: Assignment

Michelin was looking to build a digital service platform (DSP) to reduce costs and improve customer service. However, there were several challenges in implementing DSP. Key challenges included the high upfront costs, need to integrate existing systems, lack of technical skills, and concerns about returns on investment given Michelin's past failures. A Forrester study recommended DSP could save time processing orders and reduce disputes, allowing dealers to improve productivity. However, dealers were hesitant to adopt DSP until more fleets and established dealers were on board due to concerns about competition. Costs and performance concerns remained barriers to implementation.

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Kirat Chhabra
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2K views4 pages

Michelin: Building A Digital Service Platform: Assignment

Michelin was looking to build a digital service platform (DSP) to reduce costs and improve customer service. However, there were several challenges in implementing DSP. Key challenges included the high upfront costs, need to integrate existing systems, lack of technical skills, and concerns about returns on investment given Michelin's past failures. A Forrester study recommended DSP could save time processing orders and reduce disputes, allowing dealers to improve productivity. However, dealers were hesitant to adopt DSP until more fleets and established dealers were on board due to concerns about competition. Costs and performance concerns remained barriers to implementation.

Uploaded by

Kirat Chhabra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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B2B MARKETING

MICHELIN: BUILDING A DIGITAL SERVICE


PLATFORM ASSIGNMENT

GROUP 9

 UM20063 –Sarthak Das, UM20064 – Tanishq Ganotra, UM20068 –


Zadjiya Pattnaik,
UM20097 – Naresh Kumar Sahu, UM20112 – Satya Shibhashish
Q1. Apply the Product to a solution perspective to define the Value proposition of
DSP.

  Product Perspective Solutions Perspective

Value DSP integration is a digital service DSP being a cloud based platform
Proposition eminently working on a cloud-based reduced the operational cost and time to
platform. While the competitors were provide solutions as the completion of
generating revenues and taking up paperwork which used to take a major
huge market share it was imperative chunk of the service time will be
that Michelin had to switch to DSP so getting reduced because of this digital
that they could have a data driven platform.
service podium and easily cater to
customer problems.

Value DSP addition led to exponential Michelin's desire to expand its reach
Creation decrease in processing the repair through offering various other services
orders and several other service- to its customers beyond selling tires led
related queries. Beginning from the to accommodation of digital space into
Truck Care Service to OnCall 2.0, their strategy which aligned to their
DSP led to developing relationships goals of “customer centricity”.
between the company and the owners
of several fleets. One of the major
objectives was to reduce the
operational costs and the
inefficiencies.

Designing The concern about the slow growth in Implementation of DSP clearly led the
Offerings the market and several other company to reduce the solution time for
competitors, especially Dickinson's the mechanical technicians by 10 mins
Fleet Services generating revenues per case. The reduction of the intervals
through DSP platform, induced not just benefited the company but also
Michelin to hop into the platform. helped Michelin to generate more
The prominent issue of dealing with revenues through attracting fleet
manual work was supposed to be owners and customers by reflecting
reduced through the usage of digital better services. DSP would have also
services and the CFO also understood reduced the lost work in 0.5% of the
that complying with these services submitted cases.
will make their processes efficient.

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Company Michelin offered certain cloud-based The Forester claims the paper billing
Customer subscription offers for a certain price system was seemingly taking loads of
Relationship but in turn they provided certain time time for the customers and switching to
saving and hassle-free amenities that a DSP system would help the company
helped them build better customer generate several paperwork within few
relationships. Michelin also trained its minutes and the primary reason of
staff to get acquainted with the DSP reducing conflicts with their customers
system to better administer the was also deemed to reduce. DSP also
process so that they can serve their led to the availability of the service
customers easily. team to attend the customers.

Focus on It’s quite eminent that shifting from a Reduction in delays to register
Quality manual system would allow the customer cases and requests while
company to reduce clutter in the reducing the service and turnaround
system and avoid making errors. time. Standardised tools would have led
to ensure quality and consistency
throughout the service hours.

Q2. What were the challenges for implementing DSP?


● The cost of implementing DSP is high. Most of the service dealers are small scale entrepreneurs
and do not have enough capital to implement it.
● The existing system cannot be integrated with DSP and the company will have to implement it
from scratch
● An increased number of technical personnel would be needed to implement DSP
● There is a tug of war going on between fleet owners and Service dealers for who would
implement it first.

1. What were the recommendations of the Forrester study?


DSP's unique proposition was its ability to quickly and efficiently connect fleets, dealers, and
Michelin to save operating costs and inefficiencies.
● Operational Savings: DSP's digitized case files would cut order processing time by about 10
minutes per case. Each location was also expected to hire one full-time employee (FTE) at $20
per hour to complete this duty.
o Improved audit and reduced legal liability: At least once a year, dealers dealt with a
customer who claimed they had damaged their assets or not performed work for which
they were billed. The paper-based system made it difficult for dealers to find
corroborating documentation. Forrester estimated that digital records through DSP
would reduce such disputes by 2 to 4 cases per year. The average cost of each claim was
about $5,000.
Page | 2
● Improvement in Revenue generation: Dealers must authorize work orders submitted by fleet
clients. Due to the time it took to send or obtain this approval, a trailer sitting in a yard waiting
for work may not be accessible when a dealer receives it. According to Forrester, the average
task is worth $400, and DSP would save $400 in wasted work in 0.5 percent of the cases
reported.

● Advanced Mechanical & Technological Productivity: If mechanical experts used DSP on


tablets or cellphones, they could save 10 to 15 minutes for every order. And then 75% of their
saved time might be diverted to activities that can be charged at $75 per hour.

2. Other Issues related to implementation?


● Dealers were wary of the returns on this new investment, as well as the additional hazards that
came with it.
● Dealers were hesitant to sign up until there were many fleets on board, and fleet owners desired
established dealers to handle their demands.
● On the other hand, Dealers did not want a large number of service providers to join them, as
this would boost competition.
● Subscription fees are too costly for small businesses.
● Many dealers had their own ways that had been passed down through the centuries, and they
couldn't find compelling reasons to alter.

3. Cost and performance concerns?


● Initially, the cloud-based DSP was available for $500 per site and $520 per month per
technician per location. And the technology gadgets for dealers were anticipated to cost $2000,
which was initially extremely expensive for small businesses.
● The present DSP administration promised the dealers a DSP maintenance fee of $5000-6000
per year, and with such an enormous upfront cost, the dealers were dubious of the DSP ROI.
● The dealers were apprehensive about deploying the DSP because they were not tech competent.
● Many dealers and fleet owners were skeptical of DSP's effectiveness because Michelin had a
poor track record with Truck Care service on their first effort.
● Many clients had their own POS systems passed down through the generations, and it was
unclear how these would be integrated with DSP.

Page | 3

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