Manufacturers of heavy construction and mining equipment, often referred to as “yellow equipment,” have always placed a premium on the uptime of the assets they sell. This equipment is expensive and vital to the business efforts of the customers they sell to, whether they are rental equipment operators or large construction enterprises. For precisely this reason, these manufacturers routinely provide extensive warranties covering their products and incur significant expense supporting those warranties.

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In order to improve financial performance while also delivering superior uptime to their customers, manufacturers of construction and mining equipment are looking at Internet of Things (IoT) technology as a means to improve business outcomes. Heavy equipment used in large construction projects are essentially complex systems comprised of multiple interlocking subsystems, with the powertrain and hydraulics subsystems being the most susceptible to failure. Many manufacturers have already embedded sensor technology enabling the collection of operating data from a range of critical points within these subsystems. Thus far, the primary purpose of this data collection system has been to feed real-time and historic data to the equipment operator so that they can make more informed decisions concerning maintenance requirements.

There are several ways in which IoT systems benefit not only the equipment manufacturer but also rental equipment business and, ultimately, end users.

Increased Uptime

Equipment downtime is the enemy of all participants in the construction equipment supply chain. It deprives rental companies of revenue, impairs productivity for end users, and increases service costs for the manufacturer. From the perspective of the equipment manufacturer, direct monetization of IoT benefits is primarily confined to reductions in actual service costs but indirect, and less tangible, benefits also accrue through heightened brand reputation for high reliability.

 

Reduced Warranty Costs

Warranty costs represent a very significant expense for construction, frequently two to three percent of total sales. This means, for example, that as much as $4,500 could be accrued for anticipated warranty costs on the sale of a $150,000 piece of equipment. This expense, while necessary, adversely impacts gross margin and, ultimately, profitability. Correctly designed IoT systems can reduce warranty costs in a number of ways. First, real-time monitoring of equipment health instantly detects faults as they occur. Depending on severity, continued use of the equipment can lead to additional damage, increasing parts and labor costs. IoT can take immediate action by sending commands to the equipment in order to minimize further impact.

Benefit: increased production efficiency, reduced service costs.

Many IoT systems have the ability to analyze equipment error codes and operating parameters along with historical repair information to create an optimized repair plan. The plan assigns probabilities to potential fixes, eliminating guesswork and reducing repair times. This information allows service managers to assign a technician with the correct skills and ensures that only necessary parts are used.

Finally, IoT systems can keep track of what work was actually performed, minimizing erroneous or fraudulent warranty claims.

Device Optimization

Construction equipment manufacturers strive to maximize the performance of their products, whether to improve output or increase efficiency. IoT systems can aggregate information from the entire fleet of equipment, identifying those that are underperforming and providing prescriptive, corrective actions. This information can be used to modify calibration or configuration settings immediately, and can serve as input to the R&D process.

Benefit: increased production efficiency.

Asset Utilization

Manufacturers of construction and mining equipment, as well as rental operators and large construction concerns, are often challenged with locating assets in the field and understanding how effectively they are being used. IoT system can create geo-fence zones and apply unique logic per zone or asset. This can be used to reallocate underused assets or enforce business policies.

 

 

 

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