Michelin: Re-innovation of service model

Although China's total vehicle sales lead the world, Michelle (China) President Xia Yuefu is more concerned with the issue of vehicle safety. On May 5th, 2011, Xia Shafu signed a strategic cooperation agreement with the China Automotive Technology and Research Center and agreed to carry out in-depth cooperation on research areas such as road safety, environmental protection, and energy conservation.

After all, Xia Yifu is responsible for the sixth year of Michelin's China business, and the similar cooperation agreement signed is not the first time. In his opinion, Michelin's sinicization process will go one step further each time a cooperation agreement is signed. Only this agreement may be different, and partners are more concerned with Michelin 's innovation in car safety services .

Declaring a transition from a product model to a service model is not Michelin's exclusive strategy. Vehicle companies, tire companies, even oil companies, and spare parts companies are all seeking service value, and major auto industry affiliates have entered a period of new service model competition.

The specific practice of multinational companies represented by Michelin in China is: To shorten the transition period to the service model, not only to introduce new product technologies from overseas parent companies and subsidiaries, but also to accelerate the introduction of advanced marketing service models.

Innovation service

Michelin's strong rivals Bridgestone and Goodyear have adjusted their old "tire hegemony" strategy to "serving hegemony." The core link of "service hegemony" is the retail terminal where the market is dotted.

The owner of the retail terminal is an investor in Chinese SMEs. Michelin must win the “tire hegemony” and must be implemented on these Chinese collaborators. The practice of Michelin transplanting parent companies only working with agents in Europe and not directly dealing with retail channels does not fit the current Chinese market. What should I do next?

"Starting a zero-distance strategy with retailers in China is a very rare practice in the company's global operations." Liu Peng, manager of Michelin (China) car and light truck replacement market channel, said that this is Michelin's strategy for the Chinese market. Innovation, at the same time, broke the traditional marketing model of the company in the European and American markets, and shifted the focus of Michelin's operations in China from products to network construction and services.

In terms of network construction, Liu Peng told reporters that Michelin has already completed the infrastructure system. Including tires stores and auto parts stores two major channels. The channels are divided into different levels from non-selected retailers, juniors, seniors, and top-level retailers. Each level includes different targeted retailers. However, Liu Peng also said that similar retail network architectures and competitors are also infiltrating. It is the service model innovation attached to this architecture that they should compete with each other.

Compared with network construction, service model construction is more difficult. The main problem is that the service model can easily fall into the homogenous competition. For example, Michelin's “along with you” plan from the parent company is very similar to Bridgestone’s “car nanny” program.

In accordance with Michelin's original design of "Going Along with You", it deliberately highlighted its own terminal channels. Consumers can enjoy "accompanying you as long as they buy two tires at any Michelin-designated retail store that "sells" with you. "Professional services such as free 24-hour roadside assistance and free repair of tire punctures are provided. Although Michelin has now lowered the threshold, customers can enjoy the service as long as they purchase a tire, but similar services have also appeared in Bridgestone’s “Car Nanny Program”. This makes Michelin's retail terminal quite embarrassing in the market.

Michelin needs to come up with better ways to compete with his opponents.

Introduce platform and innovate

In China, Michelin does not lack high-end competitiveness in the brand, but in service value, it is always tangled with its rivals, so accelerating the introduction of the best business service model in the group's various systems has become the key to decisive battle "service hegemony."

"The 'plus-plus' service model will change the state of service competition in China." At the beginning of the year, at a party, Wang Zhaohua, Michelin's vice president, emphasized the service model introduced from the Australian subsidiary. According to Wang Zhaohua, the "plus-plus" service model covering 16 countries and regions in the world can lead the reform of the automotive service industry in China.

"Zhijia" is not a product but a service brand of Michelin. It differs from traditional tire replacement and maintenance services in that it aims directly at the consumer experience. It is based on tires and involves department store-style integrated services such as engine oil and brake pads. “Every year or even every day, we can find innovative needs through this service platform.” Liu Peng further explained. Obviously, the introduction of "plus-plus" service model is not in the form, but it provides a service innovation platform that responds to market changes.

In China, Michelin has made four basic innovations in the 'plus-plus' service model. It involves SOP (standardized management process), DMS (retail management system), non-tire value-added products and business, and unified marketing platform. "Michelin only engages in SOP and DMS on China's retail terminals because the owners of these Chinese SMEs on the terminal lack management experience." Liu Peng talked about the original intention of these two innovations.

The SOP is like the McDonald's standardization of shop management processes. Technically speaking, it is the procedural action of changing tires, replacing oil, and other repairs. Michelin used image data in consideration of differences in the overall quality of terminal personnel. Train terminal personnel through store guidance, etc. The content covers hardware, software, business capabilities, service flow, organization structure, and many other aspects.

“In order to ensure the actual results of the SOP, we borrowed from the Michelin restaurant's mysterious visitors approach, hired third-party companies to find the actual consumers, let them go to the terminal in the name of the customer, we summarize their feedback, and then improve the terminal. Opinions.” Liu Peng said that this innovative approach has ensured that the ChiPlus model has a high level of customer experience.

DMS is a system independently developed by the Michelin Chinese team. It is a retail management tool based on the actual needs of the daily business of retail stores and closely integrated with the entire business process. This system transfers the terminal's entry, sales, storage, customer data, shop trips, and replacement parts types from manual bookkeeping to electronic bookkeeping. Liu Peng said that the IT system has now entered the second-generation Web version from the stand-alone version. "On the one hand, the store owner can monitor the operation of the store at any time. On the other hand, Michelin can fully control the market changes through the system, and adjust product and marketing strategies at any time."

Non-tire value-added products and businesses are Michelin's service innovations that are different from its competitors. Michelin noted that many customers are looking for replacement tires at the terminal. Most of them also need replacement of organic oil and brake parts. They hope that Michelin can give a one-stop solution. Therefore, Michelin is also expanding its business scope for the first time, introducing Shell, Mahle, Valta, Valeo, Philips and other company products. “We are even ready to provide water, coal, and other paid services.” Liu Peng believes that these non-core businesses not only meet customer needs, but also allow shop owners and Michelin to jointly increase new sources of profit.

Unified marketing platform innovation is a marketing plan developed by Michelin using terminals. It is to use the geographic location of each terminal to carry out marketing activities in a community that is 5 to 10 minutes away from the site, including leaflets, maintenance promotions, and community BBS forums. "Let each retail store act as a marketing expert. This is our innovative marketing." Liu Peng said that through this approach, the final results will be clearly reflected in the DMS system.

In order to win the "service hegemony", Michelin relied on the marketing service model introduced from overseas subsidiaries to temporarily lead one opponent's position, but competitors adept at making changes would not sit idly by, and Bridgestone's latest "Wings of Wing" service. The model is launching new challenges to Michelin.

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