Frost & Sullivan Industry Manager Anand M Gnanamoorthy recently took the opportunity to speak with Mike about Flowserve’s technology leadership and vision for the pump industry.
Anand M Gnanamoorthy (AMG): What do you think are major challenges that pump manufacturers face today and how will the industry evolve in next 5 to 10 years?
Mike McCalley (MM): That is a great question, and I would like to envision in a couple of ways. First, I think the industry is trending toward being more efficient and is focused on improving productivity through scale and extending product lifecycle among several others factors. Second, and the most important aspect, is creating transparency in the operating capabilities of systems, processes, and equipment. This is going to be primarily driven through advancements in technologies both in terms of metallurgy and digitalization of the space and with an increasing focus on assurance and capabilities. So, at the end of the day, the core element in the pump industry is about uptime, efficiency, and productivity. The more pump companies create the sense of reliability in their products, the more we can drive productivity for our customers to help them produce more barrels of oil equivalent, megawatts or tonnage, and be able to do that effectively, efficiently and with a greater piece of mind. Obviously, this will have a direct impact on their ability to succeed and that’s what’s going to drive this industry.
AMG: You have brought an interesting point that I had not thought of. You talked about the transparency of operating conditions and parameters. What do you mean by that, and why do you say that is important?
MM: When I think of transparency, it is about being able to see completely through your value-chain or your supply chain in a seamless fashion, and from an IoT perspective, it is being able to know the operating capabilities and parameters of your entire process. It has to be all encompassing – that is, it is as far up the value chain as you possibly can, all the way till your customer. The more seamless you can make it, the more powerful and effective your customer is going to be.
Here is my fundamental belief about: it does not matter whether it is a pump company or a PLC company or a fastener company, it is about empowering your customers to be more effective at what they do. It is about helping them be able to achieve their desired outcomes. As we help them to succeed in their business, the better partner that we will be for them. And frankly speaking, the better the industry will be. Especially for rotating equipment, or flow control equipment, I cannot think of a better place where you need more transparency. Right now there is an urgent need to create transparency about how the equipment are performing and how that impacts the process management of the entire system.
AMG: This is powerful idea but how willing are end users in this idea? What are the key issues? Are end users comfortable in sharing their operating data? How do you see the end users changing?
MM: I think it is important to define end users. We can define end users as the maintenance team, plant management team, regional management executives, or C-suite executives. Based on who you interact with, you probably are going to get different answers. For me, that absolutely is one of the critical stop-gaps. When companies get to the point of diminishing returns in terms of productivity, it creates a situation where companies have to decide between two choices. One is whether should they continue to invest to get minimal incremental returns or alternatively should they somehow transform their systems and process to get large returns. So what we are actually finding is that there are several factors coming together in an industry level. There is reduced capital available for CAPEX and OPEX. That being the case, companies are looking for ways to improve productivity and efficiency. In addition, there is the transformation of the workforce. Millennial are being added to the workforce. The way the millennials perceive data and the importance of information is radically different than baby boomers. I think that is another area where you have an opportunity that type of a step change.
AMG: How does Flowserve use technology to address the three major challenges we discussed now – productivity, transparency and aging workforce,?
MM: I imagine Flowserve’s strategy being similar to scaling Mount Everest or K2. For somebody who has been there before, knows that everything changes every day. And so, you want somebody that instills the confidence in an ever changing world. You need a keen eye for what is changing tomorrow and what is going to be changing over the long haul. What you saw at the ThingWorx event is an example of Flowserve’s leadership in this space. Our partnership with ANSYS, National Instruments, and HP are examples of us moving the technology envelope forward.
Another major factor is our ability to collect data. We added wireless sensors on all our pumps and valves, and this really does help create and drive improvements in product performance (either through traditional asset management solutions or through predictive analytics), and it creates a better operating environment for our customers overall.
You got to remember that it is an evolution, and not an end point, as we continue to move forward and continue to partner with our customers. We got to meet our customers where they are at on their digital transformational journey and help them along. It is more about helping our customers in their road ahead than it is necessarily trying to force-fit something on them.
AMG: There are maturing technologies such as big data and analytics and there are emerging technologies such as cognitive analytics, and digital-twins. So how does Flowserve find a right mix of new technology to ensure that they are ahead of the competition?
MM: Candidly its starts with the customer and being a better partner for our customers. And the other piece of this is, it probably goes back to your original question which was, who do you engage with at the customer place? You need to recognize the varying scope of vision and impact for each of the different set of participants and decision-makers in the customers’ operating environment. You need to better understand what their problems and their pain points are, and help them solve those. What we bring is the deep technical understanding about flow management solutions such pumps, valves, or sealing technologies, but we also bring in expertise on how to integrate these solutions into their operating environment, and what are the overall impact of digital and how that can help improving their environment.
AMG: In a space where it is easy to mimic strategies and technologies, and the competitive advantage does not last long, how is Flowserve ensuring that after so many years it is still #1?
MM: Well, it is going to sound kind of basic, but at the end of the day it is all about understanding your customers, closely aligning with them, and understanding the their operating environment and their challenges. Three important factors we focus on are:
- The customer’s operating environment. Where they’re going, what their vision is, and what are their long-term strategic plans and expectations.
- Next is regarding the product offering that we offer today.
- Third one is adjacent technologies, specifically as it relates to digitalization of the flow control industry.
I think it is the nexus of these three things that is going to create an incredible opportunity both for our customers and ourselves. That to me is the key differentiator for Flowserve.
AMG: Lastly, What would you outline as vision for Flowserve in 10 years from now? How do you see the market changing? How do you envision that for Flowserve?
MM: #1 it is about moving at the pace of the market and #2 anticipating the where the market is going. These two elements are absolutely critical. And, you have to know where the market is going in order to maintain pace, because if you get too far ahead of it, your customers will have a hard time engaging with you. And if you are too slow and far behind, you could get disconnected from the conversation and become a vendor and not a partner. So it is basically moving at the pace of the market but staying one or two steps ahead of it. This way you are staying engaged, having meaningful dialogue, adding value to users of the equipment and at the same time you are ahead in the technology curve. It helps your customers understand what the potentials are and what opportunities they have to improve their performance and increase their operations.
