With growing competition, Indian industrial bearings vendors are looking beyond price and quality to make value-added services their main selling proposition.
by Mitalee Kurdekar
It was renowned economist Michael Porter who once suggested that there is something beyond price competition if one carefully looks at competitive strategies. According to him, all such strategies fall into two compartments; one is doing what all others in your industry do, and the other is to do something that no one else does or can do. The first one relies on price competition, but results in sharing the total business pie, which can only decline profitability. However, with the second option, one can create a unique advantage or value proposition for one’s customers that would be sustainable over a longer period of time. As a result, one can attract new customers or expand the pie to one’s own benefit.
The Indian industrial bearings industry is actively adopting this method, with many global and even Indian players keenly strategising on Customer Value Proposition (CVP). This is understandable, as the industry has standardised products making it difficult to only compete on the basis of price or quality. Therefore, industry players are offering a suite of value-added services, along with the product, so that they can not only retain their existing clientele, but can also attract new customers. Emerging business scenarios do assist such players, offering new possibilities to tweak their CVP, constantly and to everyone’s advantage.
The industry in India is dominated by players who have a global presence and hence have a strong R&D back-up from their parent organisation. Some value propositions on offer include providing full service in every region that the vendor operates, support from global supply chain management wherever necessary, customised co-design facility through local development centres, total life cycle support, high precision manufacturing with in-house tooling capability, wide product offering, world-class technology support etc. Many of these are factors in creating the differentiation that helps the vendor to successfully carve out a place in an otherwise competitive market.
Indian Business Landscape
Of course, the industrial bearings market is still in growth mode in our country. Presently, the demand in India for bearings comes from industries that are involved in motion applications more, rather than from industries using bearings in stationary machines. Globally, demand is equally divided between these applications. But things are beginning to change. With the focus on infrastructure and defence projects, the demand for industrial applications is bound to grow further.
Sanjay Koul, chairman & MD, Timken India, is optimistic when he says, “The consumption pattern for our industrial users has gone up. So the demand is certainly showing positive signs of growth. As we get better on infrastructure, factory output grows, exports grow, Make in India takes off and we become a strong defence player, the industrial business is bound to grow.” However, he cautions that, “We will have to see if the demand remains sustainable. If it is going to be, this is going to be a great story and the key challenge then is the speed of development.”
Lokesh Saxena, VP, industrial business and services, SKF India, supports this view, stating, “With the Government’s push to manufacturing, infrastructure and clean energy industries, the need for industrial bearings has increased from 12% to 15% over the past few years.” India’s global partnerships – encouraged by Indian Governments – in areas like railways, infrastructure and clean energy sectors are proving to be key drivers for the increased demand for industrial bearings and related products.
Saxena points out that the increasing demand for clean energy has brought in new global players to the Indian market, thereby opening ways for partnerships with local manufacturers. “The biggest challenge for the Indian bearings industry is increased in-flow of bearings from the Chinese market; this increases the pressure on domestic industries. He says that the big challenge, though, comes for increased imports of Chinese bearings, which puts pressure on domestic industries. The Indian industry representatives have also demanded an anti-dumping policy (similar to that made for steel) from the government,” he professes.
Basket of Services
Saxena further adds that his company believes in creating and capturing value for its customers. This is imperative for business development and expansion, as mentioned earlier. Capturing the essence of this initiative, Saxena declares, “SKF has stepped up from being a mere product manufacturer to a complete Rotating Equipment Performance solution provider. This integrated approach assures the complete utilisation of the bearing’s life cycle for our customers.”
Koul of Timken makes an interesting observation, calling his organisation a seed to flower company. “We start with our customers from the drawing board stage. Timken has more than 100 years of experience in high-precision manufacturing, which gives us the edge to take these learnings across the spectrum. We are with our customers while they mount our products for their manufacturing operations, and we make sure that we train them on getting the best residual life out of these engineered products,” he explains.
GK Pillai, MD & CEO, Walchandnagar Industries, agrees with this customer-focussed value addition on the part of Indian vendors, when he states, “Most of the international reputed brands are having their manufacturing base in India and, over the years, in terms of quality, reliability and delivery, they have been meeting most of our expectations. The technical support provided by Indian manufacturers is of an equally high quality.”
Walchandnagar Industries uses industrial bearings in different divisions like sugar, cement, boilers and gears. Based on business requirements, they prefer to standardise the bearings so that one or two vendors can provide a suite of bearings of various specifications. This seems to be the preferred approach with many large-scale users. Pillai says, “This helps us in having rate contracts with some of the leading bearing manufacturers.”
Rahul Karambelkar, GM, materials, Bajaj Auto, echoes similar sentiments. He suggests that, “We work with both multi-national corporations having Indian operations as well as domestic players. They are all very good suppliers and provide various value propositions. However, our choice is majorly driven by our product performance and business requirements.”
Extending Longevity
With most equipment and parts used by manufacturers, there is a chance that they get repaired and reconditioned in the normal course of their working. Even in the case of industrial bearings, which undergo continuous stress and friction in their working life, this is possible. In fact, this is one of the services offered by global vendors of repute and is also being offered as a service to customers in India.
“On any given day, our Service Engineering teams could be on top of a wind mill or 500ft below a mine shaft or near a 10000C metal furnace or on an oil rig, along with our customers. We are running many roll-shops for our metal customers, making sure their up time is optimal. It is not only about adding reliability to their equipment, but it is about simplifying their life and adding value to their operations,” supplies Koul.
Saxena explains SKF’s stance, saying, “We came up with a cost mechanism solution to provide world-class services at a comparatively lower price by remanufacturing used bearings. This also reduced the overall turnaround time for our customers as all our solution factories are strategically located near our key customers in Pune, Manesar and Jamshedpur.”
This is a very useful support tool from vendors as it helps users to reduce the operational costs on new bearings, avoid any stock-outs and, more importantly, eliminate downtime. Many vendors also assist their customers with the selection and use of appropriate lubricants and lubrication systems in order to extend the shelf-life of these expensive components. These applications depend a lot on the operating conditions at user sites in terms of friction, temperature etc.
Avoiding Counterfeits
While reputed bearings manufacturers are contributing to bettering user operations with quality product offerings and services, there are other parties who are producing counterfeit industrial bearings. Such products are a menace to both vendors and users. While vendors suffer losses to reputation and business, unsuspecting customers get cheated. In rare cases, counterfeits are preferred by those who do not understand the long-term economics and only go for the initial price advantage, which is outweighed by long-term problems and resulting costs. However, large companies understand the implications quite well.
Karambelkar of Bajaj Auto acknowledges the issue, but clarifies that it is not applicable to Bajaj Auto, saying, “Our entire procurement material is sourced directly from our approved vendors.”
Koul says, “This is a serious and grave threat to the end-user. We also engage experts who fight this threat legally and support industry bodies to curb this menace. Lately, we have started using mobile technology with bar codes and scan mechanisms, tamper-proof packaging and laser marking to make it difficult for counterfeiters.”
Saxena agrees, “The problem of counterfeit bearings has become more widespread in recent years and all markets are now susceptible to receiving these products of unpredictable quality of all brands, unknowingly. We educate our customers to distinguish between original and counterfeit bearings, and ensure they only get the best quality product.”
At the end of the day, vendors are striving to help customers in any way they can, thus developing sustainable partnerships with them. And that is what is going to be the key differentiator, spurring businesses on the path to growth and profitability.