As players in the highly competitive global pump sector shift their focus from products to comprehensive systems, the endeavours that are set to thrive the most are those that directly influence user cost and their environmental, social and governance (ESG) priorities.
By Joe Keenan, Global Managing Director, Industrial Fluid Flow Solutions at RMI Pressure Systems
The global industrial pump market– which some estimate to be worth around USD $70 billion a year – continues to grow rapidly, at an annual compound rate of 4-6%. In an average industrial facility, it is likely that pumps can account for 30% of the total energy consumption. At the same time, it is acknowledged that the vast majority of pumps operate at low efficiencies – which runs the risk of wasting money and generating unnecessary volumes of carbon dioxide.
Addressing these energy inefficiencies should therefore be a priority for the growing pump sector, as such initiatives feed strategically into customers’ commercial and ESG imperatives. An important way of doing this can be seen in the shift away from a mere product offering – and towards broader system-based solutions for customers. This shift also presents opportunities for brand differentiation in a market that has become increasingly commoditized.
In pursuing this differentiation, designers and manufacturers of pumps need to respond to the users’ pressing needs in their specific applications. A key differentiator, for instance, is equipment longevity and reliable operation, which for many customers is a vital bottom-line requirement.
Climate Change and Global Conflicts
Currently, climate change and the geopolitical position brought forth several important prerogatives that define value for customers – especially for those in energy- intensive sectors such as mining and steelmaking. For industries like these, ESG is now becoming a central element in strategy and branding, demanding more efficient use of energy in production – especially as gas and power costs surge in the wake of the Ukraine conflict.
Many large customers are therefore looking to reduce their carbon footprint and operating costs by using less energy, while at the same time also conserving water as an increasingly precious natural resource. Responding to these needs should therefore be a priority for pump specialists to embrace a system- centric approach to enhance their offerings.
Focusing on Pump Systems
While pump OEMs must continuously improve the technical aspects of their equipment, there are invariably diminishing returns on these gradual enhancements on these components. The more comprehensive and significant trend is beyond the realm of the product, and into the systems space. The pump is one component among others within an application or system that aims to solve multiple customer requirements, as opposed to just one.
By way of illustration, a pump user would traditionally procure a pump for a certain purpose and would need the in-house expertise and infrastructure to install, monitor, maintain, and service that equipment. This requires specialized knowledge about how that pump is applied in that specific application or system to ensure that it delivers the value required to warrant its purchase price.
A market shift occurs when a pump supplier begins to augment its offering with the other components or accessories that the customer has previously had to procure themselves. It could even occur through corporate acquisitions of upstream or downstream ‘phases’ of production, allowing the customer to source more of their operational equipment from a single supplier.
Lessons from Electric Vehicles (EVs)
The significance of system offerings as a disruptive strategy was recently highlighted in the process of developing and marketing electric vehicles (EVs). With innovative battery technology as the enabling innovation behind the EV revolution, what is essentially occurring is a vehicle being constructed as a ‘system’ around a battery. This process has provided customers with a differentiated product and created a new trajectory for the motor industry.
The well-established pump industry can gain valuable insights from the recent growth of the electric vehicle (EV) sector. Two insights stand out for those companies wanting to grow their offerings from stand-alone products to systems.
For one, businesses can seldom be good at everything, so they need to decide where exactly their energies and resources are best directed. Secondly, developing a knowledge base is crucial. Creating a system solution often entails venturing further downstream into aspects of the user experience and operations, that were once the responsibility of themselves or another supplier.
This means learning more about what the user already knows to essentially assume more responsibility for their process. The next important strategy is to harness the power of technology for this new system, to improve monitoring, leverage operational data, predict maintenance requirements, and reduce downtime. In the pump sector, there has been a significant increase in focusing on systems and the potential to enhance these applications, including the incline use of variable speed drives to conserve both energy and water.
There are considerable benefits for companies with the insights and resources to successfully move forward with system-centric approach. These companies would transition into a less saturated market, as the barriers to entering this trade space may not be as prominent in comparison to former competitors. Most importantly, it situates the firm in a different position to its clientele – where the conversation moves away from products and their features to outcomes and their value.
CASE STUDY- Plunger Pump System for Italian Steel Mill.
When a steel rolling mill in Italy was looking to enhance the quality of its product while improving overall efficiency, it turned to a partnership of metallurgical plant solutions and high-pressure pump specialist RMI Pres- sure Systems.
The mill decided to invest in new descaling equipment – with a view to raising quality standards while lowering overall energy and water costs. According to Kathryn Poke, RMI’s general manager (EMEA), the company de- signed a bespoke solution based on its established series of reciprocating plunger pumps.
“The specialized system for the mill included controls, nozzles and headers to ensure reliable and efficient operation and a pump at the heart of it.” RMI was required to provide a pump which could deliver hydraulic power at multiple pressures, using a variable speed drive and engineered nozzles. The result was a system capable of producing flow rates from 50 up to 670 litres per minute, at pressures up to 1,000 bar.
The variable speed drive and engineered nozzles ensured that the system delivered controlled hydraulic pressure and precision impact while consuming less energy and water. The system was performance-tested, confirming its robust design and manufacture – which would underpin its reliability and uptime. The lower installation and maintenance costs resulted in a payback period of less than two years.
RMI managing director Joe Keenan high- lighted the value for customers of pump manufacturers moving beyond a focus on discreet products and into the systems space. “Customers are increasingly looking for solutions and not just products,” said Keenan. “This contract illustrates how RMI’s custom-design capability allows us to build fit-for-purpose solutions with our pumps as a central component.”
For the customer, the conversation is now elevated to a level where their key performance indicators (KPIs) – including compliance with ESG standards – can be discussed.
The supplier becomes the service provider and takes an active role in helping the user achieve these KPIs through systems that include pumping equipment. The difference now is that they are tested and sold using a different framework. In this sense, the strategic shift into the realm of systems and solutions must keep pace with the changing imperatives that drive customer decision-making, turning the supplier relationship into a stronger collaboration.