Another unexpected phenomenon further deteriorated MFS margins: The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No From Selling Tires to Selling Kilometers In buying TB tires, most transportation companies adopt a multiple-sourcing strategy, buying different brands of tires for their vehicles and sourcing them from differ- ent distribution networks. It is its backbone. It does this by calculating a whole range of factors, such as what tires the fleet is running on and their condition. In the meanwhile, an ambitious information system project was launched to support fleet management operations. On that point, every branch has their exclusive and homogeneous objectives and supports mutually without any frustration.

To be successful, a case must lead to one or more clear decision points and allow for a rich debate of contrary viewpoints. It was also seen as a way to build long-lasting relationships with customers and promote brand loyalty. To facilitate geographical expansion, the company adopted a new approach to service operations: However, it leads to the dependence on the third party to optimize the cost structure and the quality of the service provided. Some data have been modified for reasons of confidentiality.

We are both from the same company. I used to interact with local tire buyers, now I deal with the national Purchasing Director of large European transportation companies! Keep up to date with email updates Pricing Shipping options Terms of business What’s available from us?

Moreover, according to Michelin organization chart, each MFS teams is under supervision of regional sales director as well as MFS director, which increases intricateness of understanding and implementing goals, set by both directors.

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michelin mfs case study

Tires must be regrooved by a professional according to Michelin recommendations. They feared the company would take away their clients, leading to massive revenue decrease. Doing so would put the service provider on the same path as Michelin which is providing the best service so that the retread rate is maximized. Sales Directors complain to me very often.

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These distributors usually sell tires for different vehicles trucks and cars and from different brands. Due to the nature of such contracts, selling MFS was a more complex process leading to longer sales cycles.

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Despite the progress made by our competitors we still have an edge here, as we estimate that our tires last an average ofkms, vs. Whatever our ability to optimize costs, it will never be profitable with such low fees!

Tires undergo great tension.

Business Model Innovation: Michelin Fleet Solutions – From Selling Tires To Selling Kilometers

From Selling Tires to Selling Kilometers us with. We do not only entrust them with service execution, but also with an important part of our cost structure.

As long as those problems are tackled properly, there is a high chance that the project would soon be profitable. Upfront investment is necessary to generate the long-term benefit.

It was high time to secure a substantial first mover advantage! The objective was to promote a new business model across Europe: Vehicle fare per driven kilometer was contractually agreed upon and annually revised. Replacement is the other avenue for the TB tire market. But, this is an incredible responsibility on their shoulders! Tires must be regrooved by a professional according to Michelin recommendations.

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It would require massive investments in quality control, reporting tools, and training of service providers.

michelin mfs case study

In Germany, results for were disappointing with only 5, vehicles under contract out of an overall potential ofvehicles. By Christian Kowalkowski and Charlotta Windahl.

Our product edge is no longer at the heart of the offer… I find it difficult to show the clients the value of this solution offer.

Skip to main content. After three years, however, expansion is far below expectations and profitability is terrible — despite the outside help of a strategy consulting firm. Learning Objective This case investigates the difficulties that industrial groups face when they transition from studh products to providing service.

Quality control process with the service provider To facilitate geographical expansion, Michelin decided to rely on service provider networks to deliver the service to customer. From Selling Tires to Selling Kilometers the country. Our administrative people are overwhelmed with MFS invoices coming from the service providers. The underlying idea was that transportation companies had different priorities depending on the type of goods they transported such as bulk material, time pressured goods, or highly dangerous chemicals.