Industry 4.0 Enabling Smart Air: Digital Transformation at KAESER COMPRESSORS

(a) Situation faced: The case company, KAESER, is a leading manufacturer of compressed air systems and services with worldwide operations. The air compressor industry is characterized by high competition and has undergone significant changes over the last three decades. In response to shifting customer demands, KAESER started to transform and expand its traditional business model. (b) Action taken: KAESER introduced a service-based operator model, called SIGMA AIR UTILITY. In this model, customers no longer purchase the customized air compressors but pay a monthly base only for the compressed air they used. KAESER remains owner of the system, building and operating the compressors on the customer’s behalf. Industry 4.0 technologies play a key role in the success of this new operator model by enabling operational efficiencies resulting from big data analytics and predictive maintenance. (c) Results achieved: The SIGMA AIR UTILITY operator model leads to numerous benefits for both KAESER and its customers. Key benefits from a customer perspective include reduced cost and increased flexibility, the transfer of operational risks, increased transparency, and improved operational planning. From KAESER’s perspective, main benefits are the reduction in service cost, the development of a long-term partnership with customers, and synergies in product development and innovation. (d) Lessons learned: KAESER learned numerous lessons from the successful introduction of its service-based operator model. Key lessons learned relate to a lack of cost transparency on the customer side, the changing role of the sales department, the importance of partnerships, the emergence of new risks, the offering of a ‘mixed’ model as an intermediate step, the role of data privacy and security concerns, and a need for interdisciplinary teams.