ICR: What role has FLSmidth played in the industry’s transformation over the last 30 years?
Jan Kjærsgaard (JK):
It’s important to note that I’m quite new to the cement industry. But I’ve worked for many years in industries that have faced similar challenges, including the renewable energy sector. That industry is young, especially compared with cement. There, I was part of a highly successful, global organisation that prided itself on constant innovation to stay ahead of the market. This was a prerequisite of success in an industry that was inventing itself. We needed constant insight into what customers require today so we could best foresee the needs of tomorrow.
Even though the cement industry has been around for much longer, I believe it has the same demands for innovation today. The industry has also had to adapt quickly in recent years to keep up with major developments in technology and producers’ requirements for improved productivity.
An industry is shaped by external forces as well as the impact of its influential players. In FLSmidth, I see a company that is an influencer, successfully managing to retain a leading position, despite big changes to its environment. We have been part of the industry’s productivity agenda, thinking ahead about where the market is going, recognising the differences among the local markets and responding accordingly. We have rolled out many innovative service offerings and packages, streamlined our product portfolio, and invested in solutions to reduce the total
cost of ownership across the life-cycle. We are very fortunate to have a global team of highly-qualified and experienced people to make this all possible.
ICR: What is the single most significant achievement of the company?
JK: I’m sure there are many specific milestones regarding technologies, products and customer relationships that have defined our history, but it is the company’s inherent global nature and attitude towards innovation that sets us apart and has allowed us to adapt. And there’s more to come. We’re taking significant new steps to ensure we continue meeting customer demands in this new era.
ICR: What role do you expect the company to play in the future of the industry?
JK: We’re seeing some major trends shaping the industry. Our goal is quite simple: we must embrace these trends and align our approach accordingly. Therefore, we’ve made some major structural changes at FLSmidth, effective from 1 July 2018.
One trend is a desire for greater simplicity in supplier relationships. Customers need to know exactly who to contact in their suppliers’ organisations and how. Believe it or not, this hasn’t always been transparent. In the past, in many cases, our point of contact has been a function of the particular offering. We are making it easier for our customers by providing a single point of access. Going forward we are restructuring so that our customers will be supported closely by an integrated sales team based in the region.
At the same time, customers expect us to draw upon the expertise throughout our company. That will not be sacrificed in our new organisation and we’ll still be flexible enough to access specialist expertise from our global organisation when needed.
Another trend is greater demand for a full life-cycle approach. In response, we are strengthening our after-sales capabilities in the regions. This will make our support more timely and personal. Meanwhile, we are establishing central ownership of our full life-cycle offering. The central organisation is tasked with supporting our local regions to ensure they can help customers keep their plants running optimally. But, they are also responsible for developing our total offering, from product development and innovation to delivery of full production lines.
ICR: How do you expect the industry to evolve over the next 30 years, compared to the last three decades?
JK: Productivity has always been important and it will continue to be even more so. Cement is a very competitive market, where even small efficiency gains can have a big impact on a plant’s competitiveness. We believe cement producers want to embrace digitization as a way of driving greater efficiencies. So we are positioning ourselves to be at the forefront of developing digital solutions that drive productivity, decrease a plant’s environmental impact and create ever-safer working conditions.
Developments in other industries provide inspiration for our future. In the energy sector, for example, the use of sensors in moving parts and network-based connectivity to gather data about plant operations is already well established. There is no question that this is where the cement industry is heading.
However, digital technologies alone will not make the big impact. Transformation will happen only when the industry adopts the digital technologies into its processes in a way that best aligns with its business processes and overall goals. It requires a holistic approach involving many disciplines and functional areas.
This is the thinking behind establishing a new central digital organisation headed by Mikael Lindholm as chief digital officer. He is building the organisation and culture to drive the digital agenda in our company and beyond. In a rather conservative industry like ours, you might see this as a radical change. But I don’t believe it will take 30 years for the industry to see that it’s the right thing to do.
* This interview first appeared in the July issue of International Cement Review