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A global HVAC company recognized the necessity to establish a presence in the smart market and collaborated with the EY-Nottingham Spirk Innovation Hub to develop an innovative smart thermostat for its residential business unit. EY teams assisted in assessing the product's feasibility and implemented a strategy to guide the smart thermostat through various stages, including design, engineering, testing, and digital development. The smart thermostat was successfully launched in 2023, with projections indicating sales of over one million units within three years. To support the transition to smart connected products, manufacturers often face the challenge of delayed revenue generation. To address this, the HVAC company utilized short-term cost savings from value engineering initiatives to fund its investments in smart connected products. This approach not only provided the necessary financial resources but also allowed the company to develop smart connected products for internal use cases, such as supply chain and manufacturing, thereby accelerating capability-building and creating a revenue bridge during the transition. Furthermore, an EY-Parthenon analysis highlighted that industrial manufacturers could potentially save an average of $1.8 trillion through various cost efficiencies over the next seven years by leveraging smart connected products. This includes initiatives such as IoT tracking for inventory management, real-time supply chain visibility, and operational excellence through predictive maintenance and process optimization. By adopting these strategies, the HVAC company and similar manufacturers can unlock significant revenue opportunities and enhance customer lifetime value, positioning themselves as strategic players in the evolving market.
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