MICHELIN MFS CASE STUDY

  • June 24, 2019

Vehicle fare per driven kilometer was contractually agreed upon and annually revised. All tire makers have a broad and deep TB tire mix, as these tires must to be adapted to various road and usage conditions. Even if Michelin had been working for a long time with service providers, never had the company relied on third-party providers to such an extent. Click here to sign up. With MFS, Michelin had moved from its traditional business of manufacturing and selling tires toward the new world of service, i. This case investigates the difficulties that industrial groups face when they transi- tion from selling products to providing service.

The case lends itself to a very fruitful discussion of the opportunities and challenges involved in designing and rolling out a new business model in a B2B environment. Mastering such a life cycle is complex. We may end up making more money from tire-related services than from our traditional business. What recommendations should go to the board? Sales Directors complain to me very often.

Copy of Michelin Fleet Solutions by khaoula Hariz on Prezi

Just imagine the amount of invoices coming in. While conceptually appealing, mastering the process in real operations is however much more difficult. After three years, results were still below expectations.

michelin mfs case study

Distributors are independent local or regional entrepreneurs or bigger networks. Small players are ideal targets for external growth. We do not only entrust them ,fs service execution, but also with an important part of our cost structure. Second, tires have a strong impact on fuel consumption, the second most important cost factor after personnel.

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michelin mfs case study

This is where we have a problem. Replacement is the other avenue for the TB tire market. Every time a service provider performs any act on a vehicle under contract, he addresses us an invoice.

This stydy one of the major reason leads to the loss of MFS. All tire makers have a broad and deep TB tire mix, as these tires must to be adapted to various road and usage conditions.

Part of our challenge is that it is no longer about selling tires.

After three years, however, expansion is far below expectations and michelln is terrible — despite the outside help michslin a strategy consulting firm. As a consequence, distributors often have a complementary service business, performing some tire maintenance activities. TB tires are service-intensive: As long as those problems are tackled properly, there is a high chance that the project would soon be profitable.

Another unexpected phenomenon further deteriorated MFS margins: MFS offered large European fleets initially fleets with more than vehicles the complete management of their tire assets during a three to five year-period.

Michelin by Debbie Lu on Prezi

Disappointing Results Sthdy three studg, 50 contracts were signed in 10 different countries, generating 70 million euros in annual revenue. It would require massive investments in quality control, reporting tools, and training of service providers. However, low-cost Asian firms are increasingly gaining traction. These results were however disappointing. Moreover, salespeople found it hard to communicate and explain to the customer the benefit that they would gain from that solution offer.

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After three years of continuous investments, struggling with implementation issues, and painful lessons learned in the process, results achieved still remained below expectations.

Business Model Innovation: Michelin Fleet Solutions – From Selling Tires To Selling Kilometers

From Selling Tires to Selling Kilometers the country. Buy a new tire whose casing was designed as to allow life cycle management.

ISC stressed that willingness to pay greatly varied according to the segments. The sales force dedicated to MFS had a hard time selling the new solution offer. Michelin launched Michelin Fleet Solutions to offer transportation companies comprehensive tyre management solutions for their fleets of vehicles over a three to five year period. The TB tire market consists of two distinct but interdependent market segments: Additionally they see different down- sides in this offer such as higher upfront cost, increased dependence, or high switching.

While conceptually appealing, mastering the process in real operations is however much more difficult. These guys talk another language, and we need to roll out other arguments. Remember me on this computer.