In the manufacturing and industrial sectors, equipment failures can result in millions of dollars in lost revenue. The true cost of a mechanical breakdown — that is to say, the penalties incurred by missing deadlines and shutting down part of a production line — is estimated at between 4 to 15 times the maintenance costs. To put that into perspective, just one eight-hour day of downtime runs the average farm roughly $5,000 at planting and $2,000 at harvesting.
Stockholm, Sweden-based Syncron, an after-sales parts solutions company founded in 1990, aims to instill preventative maintenance practices in clients, with the help of artificial intelligence (AI). Today, the company announced a $67 million minority investment by global growth equity firm Summit Partners — its first in a Swedish company — which will see managing director Han Sikkens and principal Antony Clavel join Syncron’s board of directors.
It’s the company’s first-ever funding round, and gives it a post-money valuation of $175 million.
CEO and former Accenture executive Anders Grudén said Syncron will use the new capital to “support [the] continued development” of its enterprise products and to promote “further expansion” of global operations. Currently, more than 20 percent of its revenue goes into developing the AI algorithms that power its predictive services.
“We are delighted to partner with Summit Partners to support Syncron’s next chapter of expansion and our path to IPO readiness,” Grudén said. “Summit’s deep experience collaborating with high-growth, enterprise SaaS companies will add valuable support to our vision of leading the transition from reactive, break-fix after-sales service to intelligently maximizing product uptime and customer loyalty.”
The company’s bread and butter lies in insights delivered via the eponymous Syncron Service Cloud, a software-as-a-service (SaaS) platform that comprises two products: Syncron Inventory and Syncron Price. The former projects companies’ restocking needs based on “seasonal patterns and trends,” and the latter locks in the best parts prices by taking into account global and regional price lists, rebates, and discounts.
Later this year, a third will join the two long-in-the-tooth services: Syncron Uptime. It’ll apply AI smarts to internet of things sensor data in order to further mitigate any potential downtime.
Grudén claims that Service Cloud has already helped clients increase their fill rate — the share of customer parts demand that is met through immediate dealership stock availability — from 60 to 90 percent. Moreover, according to the McKinsey Global Institute, predictive analytics like the sort Syncron has on tap could save companies between $200 billion and $600 billion overall by 2025.
“We believe Syncron is uniquely positioned to support global OEMs on their journey toward servitization,” Clavel said. “Across automotive, industrial machinery, high-tech, aerospace, and many other industries, sophisticated manufacturers are working with Syncron to drive after-sales service excellence.”
Syncron has its competitors, of course. General Electrics’ “digital twins” technology produces a virtual model of actual machines and tracks their performance over time. And elevator manufacturer Schindler installs sensors that feed into its predictive maintenance system throughout its lifts.
But Syncron’s managed to attract a head-turning list of clientele, including Siemens, Toyota, Brother, Caterpillar, Electrolux, Hitachi, Mazda, and Manitowoc Cranes, one of the world’s largest manufacturers of industrial cranes. Construction company JCB uses Syncron Inventory to manage a network of 14 distribution centers and over 2,000 dealer locations. And Volvo is leveraging Syncron Pricing to keep track of more than a quarter million unique parts across 1,300 sites.
Syncron has over 330 employees in 10 offices around the world and does business in over 100 countries. It announced $35 million in revenue in August, hot off of the heels of the “most successful” first quarter in its history.