Value added services are a way that product companies can differentiate themselves from their competition. In this post we see how a heavy equipment manufacturer continuously creates value added services and products to sustain its long history of growth.
John Deere has major presences in two industry segments: Agriculture and Turf (A&F) and Construction and Forestry (C&F). In 2012, A&F sales of $27,123 Billion accounted for 80.1% of revenue and C&F, (at $6,378 Billion) represented the other 19.9%. Of the total $4,397 Billion operating profit, Financial Services (clearly a value added service) associated with the two lines of business (and not profit from financing non-Deere business) generated $712 Million, or 16.2%. As they say in the farm belt, “This is not chicken feed!”.
What Other Value Added Services Does John Deere Offer?
The list of John Deere’s value added services is very similar to what we saw in the posts about both U-Haul and USAA. They combine all their services under the name FarmSight™. Lets take a look:
- Automated Crop Reporting
- John Deere Field Connect – They remotely monitor moisture in the soil and help recommend when to irrigate the field.
- John Deere Harvest Identification, Cotton
- John Deere HarvestLab™ and Constituent Sensing – They provide equipment that measures important characteristics in crops like feed corn to advise the farmer on what and how much to actually feed their livestock.
- John Deere Implement Detection
- John Deere Machine Sync
- John Deere Mobile Farm Manager
- John Deere Mobile Weather
As an example, lets take an in-depth look at Machine Sync:
From the combine cab, a single glance at your GreenStar™ 3 2630 Display shows you where all the combines and tractors are in your network. As the combine operator, you can send a “ready-to-unload signal” and the software provides the combine location and bin-fill status to the cart operator, who can determine how quickly the combine will need to unload, prioritize which combine to go to first (when multiple combines are in the field) or call in additional carts as necessary. This can reduce wait time, fuel consumption, and even ground compaction.
When the tractor and grain cart pulls alongside your combine, Machine Sync lets you control the tractor’s speed and location from the combine cab, to mimic the movements of the harvesting combine while it unloads. This reduces spillage and operator stress, even for the most experienced operators.
Machine Sync is simple to set up and use. And the full-color GS3 2630 Display provides all machines in the network visibility to real-time logistics for every other machine, as well as grain tank fill status for all combines within the network.
In an interview in September 16, 2013, Fortune magazine, CEO Sam Allen answered a question about technology by giving this example.
“In baling straw, for example, there’s an optimum moisture content, and as the straw’s moisture content changes, you want the bale to be denser or less dense which means you want the tractor to go faster or not as fast. We’ve just introduced a baler that has moisture sensors on it that are sensing the moisture. The operator of the tractor does not touch anything, and the baler sends a signal to the tractor to go faster or slower.”
I bet the moisture sensing option is a real moneymaker!
John Deere has morphed from a shaper of iron to a company with lots of high tech products and services which separate itself from the others in its marketplace. Think of how much their distribution channel has benefited from this strategy!
In all the posts in this series, we see how very different businesses are concentrating on creating a wide variety of value-added products and services to increase productivity in an industry that is as old as humankind itself. Can you do similar things in your company for your channel partners and customers? It’s the future!!
To read about the whys and wherefores of changing your business from being product centric to services focused download the white paper.