1|Page

Q1. Apply the Product to a solution perspective to define Value

proposition of DSP

Product Perspective Solutions Perspective

Innovation in Tires – Invented To seamlessly connect fleet, dealers

Value
Metallic Tire, Radial Tires and and Michelin to reduce operational
Proposition Low rolling resistance tires costs and inefficiencies

Value is created through fully

Value was created by the
digitized and well-connected dealer
innovation and quality in Michelin
networks offering broader services
Tires. Michelin was the second
Value Creation and solutions – thus helping
largest tire manufacturer in the
Michelin become a mobility
world and tires accounted 95% of
company
Michelin’s revenues

DSP was designed to –

Michelin served customers
1. Digitize existing dealer services
through three broad categories of
(as manual entry was a pain
Tires –
Designing 1. Passenger and Light Truck Tire
point to the dealers)
Offerings 2. Introduce new services through
2. Truck and Bus Tires
the dealer network to address
3. Speciality Tires
new customer pain points

 DSP aims at co-creating

solutions and enhanced delivery.
 It not just brings in efficiency to
existing processes but also create
Most of the interactions were
Company- incremental revenue for the
transactional with limited and
Customer unorganized post-sales
dealers.
Relationships interactions  Offers intangible benefits like
service differentiation and
visibility of employee
productivity

Digitization and inclusion of dealers

in the DSP program will shift the
Focus on Focus was mainly on product focus on quality to interactions.
Quality quality and operational aspects Training the dealers and equipping
them to adopt to DSP will be critical
here.

2|Page
Q2. What were the challenges for implementing DSP?

a) What were the recommendation of Forrester study?

Answer: To address this, Michelin commissioned a study by Forrester in mid-

2019. Forrester interviewed four MCSN dealers and found that dealers used
paper forms to record work performed by service technicians and to create
invoices for their customers that led to a lot of clutter and confusion in the
dealer’s office. These processes were error-inducing and time consuming,
leading to lost revenues. It also led to lost productivity of service technicians
who were spending an inordinate amount of time filling out forms and
following up with office administrators to clarify work orders, taking them
away from billable work. DSP, according to Forrester, could significantly
improve this process. Forrester quantified four potential benefits of DSP:

1. Improved mechanical-tech productivity: Using DSP on tablets or

smartphones would allow mechanical technicians to save about 10 to 15
minutes per order. Forrester further assumed that 75% of saved time could
be redeployed toward activities that could be billed at about $75/hour.

2. Administrative time savings: Forrester estimated that digital case files

generated through DSP would reduce time delays in processing orders by
about 10 minutes per case. It further assumed that each location employed
one FTE for this work at an hourly rate of $20.

3. Incremental revenue: Dealers needed approval for work orders from fleet
customers. Any delay in sending or getting this approval would mean that a
trailer sitting in a yard waiting for such work might not be there by the time a
dealer got approval. Forrester estimated that the average value of a job was
$400, and DSP would reduce this lost work in 0.5% of the submitted cases.

4. Improved audit and reduced legal liability: At least once a year,

dealers dealt with a customer who claimed they had damaged their assets or
not performed work for which they were billed. The paper-based system
made it difficult for dealers to find corroborating documentation. Forrester
estimated that digital records through DSP would reduce such disputes by 2
to 4 cases per year. The average cost of each claim was about $5,000.

In addition, there were intangible benefits of DSP, such as service

differentiation and visibility of employee productivity and efficiency.

3|Page
b) Other Issues related to implementation?
Answer:
Dealers remained wary despite the results of the Forrester study.
 They worried about making concrete investments and assuming
new risks for uncertain returns.
 Many dealers remembered Michelin’s failed attempt to launch
Truck Care.
 Dealers tended to be conservative and not especially
technology-savvy. Many of them had been in the tire business for
generations and saw no reason to change.
 Integrating DSP’s cloud-based system with the POS systems
used by dealers posed a major concern. Integrating with dealer POS
systems also raised concerns for the dealers who were worried that it
would give Michelin greater visibility into their operations.
 They did not like the idea of paying any fee to Michelin for DSP.
They wanted DSP to generate incremental business for them instead of
merely improving the efficiency of the current system.
 Establishing a mechanical care network also presented a
challenge. The dealers and fleets did not want to sign up unless there
was an established network to take care of their needs.
 Another challenge in building this network was location proximity
which played a vital role in truck repair.
 Michelin’s dealers viewed these new service providers as
competitors and were not enthusiastic about bringing them on board.

Sales Force also highlighted some implementation issues

◦ The sales force sees services as a complement to drive tire sales, but
now Michelin wants to make money on services. However, DSP is not
fully developed.
◦ Encouraging dealers to digitize the tire ordering and billing process
first, before introducing mechanical care service in the platform might
prove to give better results.
◦ Tires constituted more than 90% of Michelin sales; as a result,
services lacked attention from salespeople.
◦ The sales organization was also skeptical about the overall
revenue potential of DSP.
◦ About 70% of salespeople came from Michelin’s tire business, so they
still needed a shift in mindset to focus on service instead of tires.
◦ More clarification was required on how the two separate sales teams
would deal with the same dealer or fleet customer.

4|Page
c) Cost and performance concerns?
Answers: DSP also came with incremental costs for dealers.
1. Software subscription fee: Michelin offered DSP as a cloud-based
subscription service at a list price of $500 per month per location, and $250
per technician, per location.
2. Deployment and training: Michelin worked extensively with its dealers
to deploy DSP and train its staff. However, it required time from a dealer’s
technicians and administration team, which Forrester estimated to be worth
about $3,000 over a three-year period.
3. Tech-devices: The cost of tech-devices for dealer staff was estimated to
be about $2,000.
4. Ongoing DSP management: Ongoing management and maintenance of
DSP would cost a dealer about $5,000–$6,000 per year.

5|Page