Introduction
As technological and economic systems develop around the globe, many manufacturers, producers, and suppliers have entered the market. In other instances, large companies have taken up the smaller companies, making the market more competitive. ABB Motors and Mechanical Inc. is one of the companies that have a significant share in electrical and industrial automation. The company acquired the formerly known Baldor Electric company in 2011, and the name ABB Motors and Mechanical replaced the former officially in 2018 (Hjelm & Ström, 2021). The company has grown to be a renowned designer, manufacturer, marketer, and service provider in the field of industrial automation. It mainly deals with motors, generators, and mechanical products for power transmission.
To satisfy demand, ABB motors and mechanical Inc. has diversified its products, thereby providing both small and heavy power systems. Its motors range from sub-fractional industrial motors to around 100,000 horsepower. The types of motors manufactured by this company include AC, DC, Servomotors, synchronous reluctance, variable speed, IEC, NEMA, and gear motors (Hjelm & Ström, 2021). In the power transmission sector, it designs and manufactures pulleys, mounted bearings, sheaves, enclosed gearings, bushings, and couplings. Other products include speed reducers, sprockets, clutches, tensioners, brakes, shaft collars, and V-belts.
Competition
In every industry, there is bound to be competition among manufacturers and marketers as they seek to obtain a large market share and satisfy demand while gaining high profits. ABB Motors and Mechanical Inc. faces stiff competition from other producers in the heavy industrial electrical and mechanical products sector. One of ABB’s main competitors is the AutomationDirect Company. AutomationDirect is a key player in the industrial controls and automation sector. It was originally founded as PLCDirect that was known for its quality PLC products. Apart from PLCs, the company also manufactures and sells variable frequency drives, motors, sensors, and process controllers (Kuzmanović et al., 2020). In view of competition, AutomationDirect has an estimated revenue of $108M per year. In comparison, ABB has a revenue of $267.2M per year (Hjelm & Ström, 2021). This implies that ABB has a significantly larger market share than AutomationDirect.
The second most significant competitor of ABB is Schneider electric. Energy management and industrial automation are the core sectors that have made Schneider a globally recognized manufacturer and marketer. Its products are meant for industrial, residential, utilities, waste-water plants, commercial buildings, oil and gas manufacturers, and data centers (Samigulina & Samigulina, 2020). Its manufacturing processes are categorized into energy management and industrial automation. Its common products include motors, switchgear, circuit breakers, transformers, and car charging systems. From the perspective of products manufactured, Schneider electric is more diversified, thereby having a higher revenue than ABB. It is estimated that Schneider electric’s annual revenue is 25.2 billion Euros. Also, Schneider has a wider market attributing to the higher revenue and a larger pool of employees.
The Manufacturing Process
Being a global manufacturer of heavy industrial automation machinery and systems, ABB has a well-established flow of materials. To begin with, the company uses high-quality inputs from renowned companies. In the manufacturing of motors and most industrial automation machines, ABB relies on aluminum, steel, and cast iron. Some of its suppliers include the United Nations Steel Corp, Haynes International Inc., Steel Dynamics Inc., Suncoke Energy Partners, and Nucor Corporation. The manufacturing process begins from the supply of raw materials in the ordered quantities.
At the manufacturing site, the materials are checked, tested, and verified to be of the right quality. One of the key processes involved in CNC machining entails cutting the metals into desired measures. This is made in line with the developed designs and following customer requirements. From the CNC machine, the various components are assembled, which again has to follow the set tests of quality. This is crucial because if components are assembled when not of the required quality, the whole process may result in defective products. Quality is a core value at ABB which means that the company has to be careful with every step right from sourcing to manufacturing and marketing. The next step after assembly is winding, which ensures that the machines and systems are ready to be sent to consumers. After this step, the products are now moved from the production department to the marketing department for sale. It is worth noting that ABB has several distributors around the globe who facilitate the marketing process.
Challenges
With the rapidly changing technology and the growing demand for industrial automation solutions, ABB faces several challenges in the manufacturing process. The first challenge is finding and maintaining a balance between speed and quality (Du, 2019). The demand is growing fast, implying that the company has to produce a significantly large amount of products. At the same time, quality is a necessity for sustained operations. This means that if the company concentrates on speed alone, it may compromise its quality and end up out of the market. On the other hand, quality comes with a lot of manufacturing time which could mean that ABB’S competitors may be manufacturing more and selling higher volumes than ABB. This is the main challenge that the company has tried to solve by utilizing up-to-date technological modes of manufacturing.
The second challenge encountered by ABB in its manufacturing process is estimating the impact of production decisions. As a company grows, it has to develop new strategies that require decision-making. The main challenge here is that whichever decision the company makes will have both merits and drawbacks. There is limited availability of software that can be used to estimate the value and effect of business decisions. This is attributed to the fact that the market parameters keep changing. For this reason, the manufacturing personnel is charged with the heavy responsibility of making decisions depending on past knowledge and gut feeling, which does not always benefit the company.
The value estimation challenge is also evident when attempting to integrate the Industrial Internet of Things (IIoT) into older devices. At ABB and in many other manufacturing companies, there are some older devices and machines that existed before IIoT was developed (Du, 2019). These devices are still and in use and need to be improved for better performance. The challenge comes in whereby the company has to estimate the value of implementing the IIoT technology in older devices. Again, there is limited data in this area, making it a significant challenge.
Application of AI and Advanced Technology at ABB
Artificial Intelligence (AI) has provided a solution to the manufacturing challenges facing many organizations. At ABB, AI has been applied in several sectors enabling the company to manufacture high-quality goods fast and in an efficient way. One of the benefits of AI has been cost minimization since it helps reduce labor costs and minimize damages. One of the areas where advanced technology has been applied is the energy management sector. ABB uses the cloud to conduct energy management activities, thereby increasing efficiency and time management (Sandberg et al., 2018). The second area is virtual commissioning and offline production activities. The advancement of technology through IIoT has made it possible for ABB to virtually commission some of its production processes. This has led to increased production, improved quality, and better decision-making. Lastly, through actionable intelligence and advanced data analysis, ABB has been able to evaluate its manufacturing processes in comparison with the global trends. This has kept the company at par with other global manufacturers.
ABB’s Competitive Advantage Resulting from Advanced Technology
The application of advanced technological processes such as virtual commissioning and data analytics have given ABB a competitive advantage over its rivals. For instance, when the COVID-19 pandemic struck, some manufacturing companies were closed to minimize human contact and limit the spread of the virus. However, ABB still conducted its core processes virtually, with only the critical activities being done physically at the manufacturing plant (Sandberg et al., 2018). This enabled the company to record high revenue of at least $267 M despite the pandemic crippling many businesses. Another advantage is that ABB has maintained its high-quality manufacturing, a factor that has given the company a large consumer base. Essentially, the company has remained among the best performing manufacturing companies, and with the incorporation of AI and recent technological advancements, it is set to further improve its performance.
Conclusion
ABB is a globally recognized designer, manufacturer, and seller of high-quality products in the industrial automation sector. The company acquired Baldor electric company and has become renowned for motors, power transmission systems, and mechanical equipment. Its main competitors include Schneider electric and AutomationDirect. Despite encountering stiff competition, ABB has maintained its production and marketing with high revenues acquired due to its use of advanced technology in areas such as virtual operations and the cloud.
References
Du, J. (2019). Examination of the feasibility of the multichannel strategy within a b2b complex product context : A case study on ABB control systems within industrial automation division (Unpublished doctoral dissertation). Uppsala University
Hjelm, A., & Ström, F. (2021). A life cycle assessment of ABB process industries’ mine hoist system. Chalmers Open Digital Repository.
Kuzmanović, S., Miltenović, V., & Rackov, M. (2020). Innovative design solutions of universal motor gearbox with helical gears. Machines. Technologies. Materials. 14(4), 137-141.
Samigulina, G., & Samigulina, Z. (2020). Development of industrial equipment diagnostics system based on modified algorithms of artificial immune systems and amdec approach using schneider electric equipment. 2020 International Conference on Industrial Engineering, Applications and Manufacturing (ICIEAM). Doi: 10.1109/icieam48468.2020.9111977
Sandberg, J., Holmström, J., & Lyytinen, K. (2018). Digital transformation of abb through platforms: The emergence of hybrid architecture in process automation. Management for Professionals, 273-291. doi: 10.1007/978-3-319-95273-4_14