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MFS (Michelin Fleet Solutions)

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1. #1 100% 12. Michelin Fleet New division for services under Euro
Solution (MFS) sales director. 3-5 year complete tire
2. #2 EXTERNAL 80%
Offer? management so buyers gain
2A)
1. peace of mind w/mo fixed payment
1. comp catching up in product
based on km's
performance
2. better control costs (unseen
2. mkt price going down
breakdowns)
3. first mover opportunity
3. benefit from Michelin's continuous
4. environmental considerations.
innovation
5. consolidation of transportation
Michelin gains
industry enables more -sophisticated
1. Long-lasting relationships
#2 INTERNAL and centralized customer to make this
2. Clients eventually understand their
type of decision.
value
2B)
3. Differentiate from competitor offerings
3. #3 90%
13. Michelin Fleet -MFS = comprehensive tire-management
4. #4 100% Support (MFS) solution offer
5. #5 80 (Service/Solution) -3 year long differentiation attempt, yet
to be profitable
6. Disappointing results? 3 years - 50 contracts - 10 countries
-Target: large Euro transportation
result = $70 million
companies
troubles selling the value of the
-Strategy: use smaller players for
solution/service
external growth first. (~1500 rapidly
7. European Roll-out growing, in hyper-competitive market)
14. Michelin -Worldwide leader in tire industry.
(Product-Driven) -Mission: contribute to the mobility of
goods & people.
15. Operational ISC: "Sales & Marketing-key to
Excellence & leveraging MFS success"
Managing Costs? Pierre Dupuis: "Success depends on
service execution!"
-Weakness is distribution network
complying w/terms.
(France & UK model) | (Europe roll-out)
-Relying on service providers to
8. EXAM QUESTIONS ANSWERED optimize tires means rely on them to
9. International Strategy 4 important marketing reasons for poor optimize cost-structure w/retread rate.
Consultancy (ISC) comes performance: -Re-Tread target = 70% ... lowest
in? 1. segmentation practices realization = 45%
2. selling
3. contracting
4. managing 3rd party relationships
10. ISC: Client Encouraged a "needs-based"
Segmentation/Contracting segmenting scheme to custom bundle
Process? the specific needs of customer.
-Contract (72 versions) must be
clarified/briefed
-simple comprehensive standards & fee
estimates
11. ISC: Turning distributors Build stronger relationships with
into close service distributors since they didn't want
providers? Michelin moving into service originally
-distributors FEARED client & revenue
loss
16. Organizational 20. T&B tires in the
Issues & eyes of their end-
hierarchy users? What is a
chart? tire? Why are
tires so important
for trucks?

-Legal department dislikes multi-year


contracts & overwhelmed by invoices (1/3
invoices from MFS).
-With the informations system not yet -Most companies use a multiple-source
running, decided to reconfigure everything strategy to buy
to revolve around managing complex -Logic = Total Cost of Ownership (TCO),
selling/delivery. time-related
-Board members referred to MFS as 1) Timely breakdowns - punctures
"lipstick on a pig." 2) Fuel consumption - efficiency
17. Starting to Sell 1920-French R&D's tire management offered 21. "The 4-Lives
Kilometers to avoid shortage of supply. Made 20 program"
Michelin's initial million Euros in year 2k. (Objective:
presence in Increase the
services? performance &
18. T&B of Michelin -25% of total sales, 40% group operating Durability)
Group? results.
-2 interdependent markets: 1) O.E. 2) R.T.
(OE="original equipment" market -truck
manufacturers) (R.T.="replacement" market -
transportation companies) 1. Purchase NEW Michelin tires
-Strong R&D, Industry leader in technology, 2. Re-grooving new tires (25% more km)
and premium products that drive the 3. Re-treading Michelin tires (like new)
market. 4. Re-grooving re-treaded tires (25%
19. T&B tires in the again)
eyes of 22. Time for Months after ISC, MFS is still below
Distributors? Discussions & expectations...
(independent Decisions -Training programs showed improving
local, regional Sales force numbers
entrepreneurs, progress? -Many feared a loss in sales of new tires
etc.)
23. Transportation -44% of European goods are
Industry (& it's transported by truck
challenges) -Expected 3% growth per year
(Large players changing business
-Service-intensive= needs constant model,
monitoring, regular maintenance, and time- becoming genuine logistics service
consuming repairs. providers, gaining high return on assets
-Some have complementary maintenance + flexibility in their supply chain)
service. (Main form of CO2 emissions = Negative
R.T. is 80% of T&B...Michelin has only 20% public image)
share of it.
24. Truck & Bus (T&B) tire -T&B = 27% of all tires sold worldwide w/3 top players
industry -Michelin, Bridgestone, & Goodyear ~18% each
-Threats = China/Korea cheaper labor/tire alternative
PRICE is key for sales,
25. Year 2000 Deployment? -Relied on service providers to manage fleets, not own employees placed within the transportation
company.
-Ambitious Info system was launched for support