Aftermarket2012 cargotec malcolmyoull

2. This presentation will cover •Why parts & service are not enough for the changing marketplace and why companies must focus on customer solutions •Why thinking about a complete customer solution will secure improved customer satisfaction and protect and grow future revenues and profits for your business 2

3. How to make this presentation a success •The presentation is intended to create triggers for the audience •Its not going to answer all of your questions, however it is an honest view of what we think of the future direction of Aftermarket •Ask the difficult questions, challenge our thinking •Success for me will be if companies want to collaborate with us to find new ways of improving the end to end solution for our customers 3

4. Malcolm Youll Bio. •Malcolm is an experienced international executive who has successfully operated within leading manufacturing and engineering companies to deliver increased revenues and profits across a variety of industries. Pragmatic in approach, he delivers results ahead of targets; using best in class methodologies, processes and systems to deliver unrivalled financial returns and customer service. •Malcolm earned an MSc in Manufacturing, Management & Technology and has attended MIT Driving Strategic Innovation and the Lausanne Leadership Program at IMD (International Institute for Management Development) - Business Programs 4

5. •Cargotec improves the efficiency of cargo flows by offering handling systems and related services for the loading and unloading of goods. •Cargotec’s Hiab, Kalmar and MacGregor solutions serve customers wherever cargo is on the move •Sales 2011: EUR 3,1 billion •Approximately 10,500 employees •Class B shares are quoted on the NASDAQ OMX Helsinki Cargotec in brief

6. SERVICES AMER APAC EMEA MARINE TERMINALS President and CEO LOAD HANDLING CFO CTO HR & Communications COO Cargotec Organisation

7. Services organisation Services Finance HR HCO CRA ROR OFS BLK Parts & Logistics Services Development M. Youll* Projects & Contracts Marine Service Operations Communications Executive Assistance Merchant Ships Service Offshore Service Terminal Service Load Handling Service Regions EMEA APAC AMER

8. How our journey began? Timeline Today Level of sophistication Invoiced business Benefits of solution 04UK0360X008_r&dworkshopfindings.pptx Source: - 8 -

11. Reasons for the shift to services Strategic rationale Environmental rationale Economic rationale 1.Manufacturing firms in developed economies cannot compete on the basis of cost (technological developments are enabling them to add innovative services)… 2.The installed base argument (e.g. for every new car sold there are already 13 in operation, 15 to 1 for civil aircraft and 22 to 1 for trains)… 3.Stability of revenues – services vs. products… 1.Environmental rationale (change notions of ownership and resource use – e.g. Mobility cars)… 1.Lock in customers (sell the original equipment at cost, make money on spares & suppliers - razor, printers)… 2.Lock out competitors… 3.Increase the level of differentiation (e.g. equipment provider offers to take customer’s risk and give predictable maintenance costs)… 4.Customers demand it (e.g. contracting for capability)… © 2012 Cambridge Service Alliance www.cambridgeservicealliance.org

12. The shift to services involves change and business model innovation How do firms innovate their business models in this world of service? © 2012 Cambridge Service Alliance www.cambridgeservicealliance.org

13. Making the business model innovation requires nine capabilities… ECOSYSTEM VALUE PROPOSITION Understand client’s BM Demonstrate delivery skills ACCOUNTABILITY SPREAD Collect data to quantify risk (data resources) Price risk to client and manage risk with partners PERFORMANCE (PROFITS & GROWTH) SUSTAINABILITY Demonstrate value VALUE DELIVERY Identify partners and design governance Coordinate multi- party value delivery Design value content and structure Understand sources of risk associated with BMI © 2012 Cambridge Service Alliance www.cambridgeservicealliance.org

14. Cargotec has built a strong foundation Advisory focused Aftermarket focused Product focused Product & parts Solution At point of sale Through life When is value realised? Where does the value lie? Outcome focused Cargotec Insight is an Advisory Service that allows you to create and capture value through consultancy, while identifying opportunities for… CMI, Uptime and Training and Development

15. Servitization within Cargotec - Asset Management Excellence

16. The move to servitization Timeline Today Level of sophistication Invoiced business Benefits of solution 04UK0360X008_r&dworkshopfindings.pptx Source: Neely, The Servitization of Manufacturing: An Analysis of Global Trends, Cambridge, 2009 - 16 -

17. We agree where we want to go Timeline Today Servitization Level of sophistication Invoiced business "Need based neutralisation" Value creation through lower risk Benefits of solution 04UK0360X008_r&dworkshopfindings.pptx Source: - 17 -

18. Asset management excellence is the first step Approval point for todays meeting Timeline Today Asset management excellence Servitization Level of sophistication Invoiced business "Cost reduction" "Need based neutralisation" Cost savings Value creation through lower risk Benefits of solution Source: 04UK0360X008_r&dworkshopfindings.pptx - 18 - Two further strategic projects will be required to fulfil Value creation in respect of Servitization, within Cargotec

19. Assets means Cargotec equipment in this context The management of assets essentially means Cargotec type of equipment (i.e. Cargotec & competitors). Asset Lifecycle Traditional Asset Classes Asset Strategy Plan Evaluate and Design Create / Procure Operate Maintain Modify Dispose Real Estate and Facilities Land, Offices, Warehouses, Retail Space, Schools, Hospitals, Airports Machines and equipment of Cargotec Plant and Production Mining, Textile, Chemical, Petroleum, Electronics, Food, Life Sciences Transportation and Fleet Military, Airlines, Trucking, Shipping, Railroad, Public Transportation Infrastructure Railways, Electric / Gas Distribution, Highways, Telecom, Water IT Equipment and Network PCs, Networks, Routers, Applications, Auto Discovery, Service Desk - 19 -

20. The direction we are following…. “Offer solutions which add value to customers processes“ Servitization is the innovation of organisation's capabilities and processes to better create mutual value through a shift from selling product to selling Product-Service Systems. A Product-Service System is an integrated product and service offering that delivers value in use. A Servitized Organisation designs, builds and delivers an integrated product and service offering that delivers value in use. What is servitization? 04UK0360X008_r&dworkshopfindings.pptx Source: Neely, The Servitization of Manufacturing: An Analysis of Global Trends, Cambridge, 2009 - 20 -

21. Market landscape: there is an accelerating trend towards predictive/preventative maintenance New and Emerging EAM (Enterprise Asset Management) Functions Question: What are your plans for new EAM functions? Source: “Survey Results for EAM Systems: Current practices and future plans”, Ralph Rio, ARC Advisory Group, April 2011, n=117 (respondents with manufacturing, technology, engineering and corporate executive roles) Based on planned EAM functions, customers are moving towards predictive maintenance. In 3 years time 84% will have predictive maintenance as an EAM function Additional Market Survey Results Predictive Maintenance Asset Info Master Data Management Warranty Management Training & Certification Tracking Mobility Software Analytics or Data Mining RFID Asset Serialization Cloud Computing 36% 35% 34% 21% 14% 14% 14% 8% 17% 12% 15% 15% 17% 8% 6% 6% 31% 30% 20% 21% 44% 32% 29% 18% 84% 77% 68% 56% 74% 53% 49% 32% Have Now 2011 Budget In 3 years EAM Functions – Existing and Planned - 21 -

22. UPTIME: a unifying theme and solution… …not "new" but an umbrella to bring together internal and external best practices to meet our customers' service needs in a systematic and profitable manner. - 22 -

23. Predictive Maintenance and Condition Monitoring Optimised Maintenance Strategy

24. Integrated Systems providing real time Information Control Predictive Maintenance Intelligence Advanced Data Mining Command Global View Communicate Advanced Planning

25. Concluding thoughts •Aftermarket “Solutions” is the future. Invest time in understanding Servitization; I am happy to facilitate this workshop if there are 4-6 companies interested •Recognise the value you provide within your own organisation and start to build support to have a solutions based company rather than a product based company •Understand your starting point and what you already have an “Umbrella approach” is often the safest way to make progress within an established business •Be realistic over time and investment 25

26. Malcolm Youll – Vice President Services Development Q&A’s 26 Malcolm Youll

Aftermarket2012 cargotec malcolmyoull

Aftermarket2012 cargotec malcolmyoull

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