Industrial services have always played an important role in manufacturing companies' value chains. Driven by tighter budget constraints and pressure to improve efficiency, companies are rigorously examining their industrial services strategy. To what extent should they rely on external services? What is the optimal outsourcing rate? How can they manage their service providers? How can these crucial services be permanently guaranteed?
Industrial services play an increasingly important role in value-based corporate management. As a major cost driver, they have a considerable influence on overall costs. Although there is no commonly accepted definition of "industrial services", for us the term encompasses the following:
- All technical services that are needed repeatedly throughout the operational phase
- May be provided by the companies in-house or specialized external providers
Are always specific to the plant/facility – traditional facility management services (further information: "Real estate management") for properties and buildings fall outside this definition
We typically focus on the following five services:
- Maintenance (includes inspection, repairs and optimization of production plants)
- Technical cleaning (of production facilities)
- In-house logistics (handling and monitoring incoming goods, in-house supply of production factors, management of raw and recycled materials)
- Production support (provision of appliances and personnel, building up the production organization, quality control, finishing services)
- Industrial assembly (disassembly, relocation and assembly of individual machines, parts of operation and entire production facilities (without newly constructing plants)
Our project approach emphasizes the role of industrial services as a strategic success factor for manufacturers. Our project experience covers the demand side of industrial services, mainly in process industries such as chemicals, refining, petrochemicals, etc. In these projects, we typically help corporate clients design their industrial services strategy and evaluate possible make-or-buy options. Besides optimizing cost structures, we help identify pragmatic solutions to further guarantee or improve service quality and 24/7 availability.
We also assist industrial services providers and production site operators in optimizing their business models (e.g. cost cutting, growth strategies and/or market-entry strategies).
Furthermore, we support strategic and financial investors in their M&A activities, for example by screening international markets for potential acquisition targets or by conducting commercial due diligence projects.
Developing a strategy for a leading site operator and service provider for chemical, pharmaceutical and related process industries
We developed a growth strategy for a provider of industrial services. The goal was to identify strategic options for offering the service portfolio not only at the provider's site and headquarters, but to expand to other sites and locations. We investigated different business models to evaluate the feasibility of organizational issues and their attractiveness. As a basis, we compared various models available on the market, including a sound analysis of the client's competitors. At the same time, we assessed different industries and sectors to assess their correlation to our client's service portfolio. To do so, we conducted a comprehensive market study, which included a broad spectrum of expert interviews, and implemented a market model to quantify the business opportunities for each service and industry. Finally, we made our recommendation for a go-to-market strategy together with an initial business plan.
Conducting a commercial due diligence project evaluating an industrial services provider with focus on process industries in Germany and the Netherlands
In a first step, the project team conducted intense market research in the primary industries (chemicals, refining, petrochemicals, pharmaceuticals), accompanied by selected client and expert interviews as well a profound analysis of relevant competitors (focus, figures, strengths/weaknesses). Using that as a basis, we then developed a specific market model. Finally, we combined the market insights we gained with a valid analysis of the target's key customers plus projects in the acquisition pipeline to provide a rough validation of the company's revenue plan. The objective results helped the financial investor conduct bank negotiations. Roland Berger supported the investor through further phases of the acquisition process until the deal closed.
The Roland Berger expert team conducted an industrial services study in Germany in late 2009 among approx. 300 companies in various industries. By surveying the customers of industrial services (CEOs, technical purchasing, plant managers), current trends and their drivers were identified and examined. In addition to that, the team developed a market model that was based on assumptions and figures provided by market experts. The key results are published in the attached presentation. For more information, please contact authors Dr. Kai-Stefan Schober and Peter Greppmair