Heidelberg goes Digital

So what does this mean for the print media industry (PMI), which as a whole, along with the industry's leading supplier, Heidelberger Druckmaschinen AG, is in the midst of a digital transformation? The age of the Internet of Things is characterized by networked and increasingly intelligent products whose interaction aims to permanently optimize an entire system. For Heidelberg as a systems provider, the aim must therefore be to make the customer's value chain so efficient that a print shop can still achieve adequate margins in the digital age and at the same time have scope for innovation. This presupposes a profound change for Heidelberg and its customers.

For PMI, the initial situation is promising for now: printing is growing in line with the demand from brand owners to package their products more and more and to position them more globally. The industry is huge, producing an annual print volume worth around 400 billion euros - and rising! By comparison, the global software industry represents 300 billion euros with all the Apples, Microsofts and SAPs -so much less. The music industry, including Spotify, is only worth 30 billion euros.

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Overall equipment effectiveness decisive for economic success

The formula by which a print shop makes a profit is as old as the printing industry itself: A press that prints makes money, a press that doesn't print loses money. It is therefore a question of making optimum use of the resources employed. In the history of industrialization, it has always been about making better use of the resources employed and about the interaction of man and machine to achieve a productive optimum. The measure of such utilization of a production system is the so-called Overall Efficency Effectivness (OEE), i.e. the total effectiveness of a plant. The aim is therefore to continuously increase the OEE of print shops. It is surprising that the industrialization of PMI is still in its infancy compared to other industries. For example, OEE in the automotive industry exceeds the 75 percent mark on average, whereas print shops average just 30 percent.

 

PMI has huge efficiency potential

The PMI therefore faces huge potential that it must tap for the sake of its future. The Internet of Things with its digital technologies and business models offers the opportunity to usher in a new era of competition. Data provides the fuel for this. It is the oil of digitization. This is why IT has become an integral part of the products and therefore also of the press, and is now more important than the press. Today, Heidelberg has more than ten thousand machines connected in a cloud. These intelligent and networked machines, some of which have up to 3,000 sensors, send masses of data every second, the analysis of which gives Heidelberg experts insight into how customers work. As a result, Heidelberg knows exactly what it takes to operate a printing system with optimum overall effectiveness and thus sustainably increase profitability in print shops.

Growth through new data-based offerings: Autonomous printing and Heidelberg Subscription

However, this also enables Heidelberg to make its customers attractive new offers: Based on this treasure trove of data, the company delivers the Smart Print Shop, in which all systems are networked with each other and with Heidelberg. Using predictive monitoring, Heidelberg Service permanently monitors the system remotely and can thus predict the service life of critical parts to shorten maintenance cycles and avoid unplanned production downtime. Heidelberg has also developed push-to-stop technology or autonomous printing, whereby the printing system processes incoming jobs fully automatically and the operator only intervenes in the process if there is a problem that the system itself cannot solve - in other words, push-to-stop! Some print shops that have implemented such a smart overall system are already able to achieve an OEE that is three times the industry average and on a par with the automotive industry.

But it's not just important to digitally connect machines to a Smart Print Shop that supports productivity, it's even more important to find a digital business model that supports growth: In the analog world, Heidelberg was all about selling machines, service hours and consumables. However, customer benefit does not depend on owning the presses, but rather on the ability to use the means of production with maximum productivity. Profit does not come from the ownership of press capacity alone, but from the utilization of press capacity. But this inevitably leads to the conclusion that it makes much more sense to have a customer pay not for the systems but for their result, namely productivity or the printed sheet.

​​​​​​​The idea of pay-per-use is anything but new and is catching on across the board: Consumers increasingly don't own music CDs but subscribe to a streaming service; airlines pay Rolls Royce for propulsion "per hour in the air" rather than the service hour on the ground. Why? Because those who produce and sell smart connected products understand how products are used based on their treasure trove of data and can plan accordingly. It is estimated that globally, a product value of around 200 billion euros is transferred to a subscription business model every year. Against this background, Heidelberg has developed the new digital business model "Heidelberg Subscription" in which the interests of the company are aligned with those of the customers, namely to increase the efficiency of the overall system. To this end, Heidelberg supplies the smart overall system comprising the press, services, consumables, consulting, and software solutions, and the customer pays in return for the quantity of sheets printed. As part of such a subscription agreement, Heidelberg analyzes the print shop's current OEE and measures the current cost level per sheet. From available benchmark data, the limits of the maximum OEE can be defined accordingly. Heidelberg and the customer define the price per sheet, which already includes a significant increase in productivity and aims to exceed this level, so Heidelberg will do everything it can to further increase customer productivity. Enabled by receiving and analyzing the data obtained, Heidelberg takes responsibility for a print shop's results and this enables growth for both the company and its customers: Heidelberg benefits from recurring sales and the print shop from additional productivity that it can sell on the market.

Subscription contracts fundamentally change the relationship between manufacturer and customer. Both are dependent on each other and seek to continuously improve the relationship with additional services (manufacturer) and with usage data (customer). "Heidelberg goes Digital," thus also stands for the transition from ownership to usership, because usership is the new growth engine in the age of the Internet of Things. For Heidelberg, as for all players in the PMI, it is therefore a matter of becoming digital digirati.