Strategies for diversifying the product range of system suppliers

Strategies for diversifying the product range of system suppliers

Strategies for diversifying the product range of system suppliers

System suppliers play a central role in mechanical and plant engineering: they combine the advantages of standardized products with individually tailored solutions that meet the requirements of machine builders worldwide. In view of dynamic markets, growing customer demands, and technological changes, a clearly defined strategy for diversifying one's own product and service range is crucial in order to remain competitive in the long term.

Diversification means not only developing new products, but also continuously refining the portfolio and adapting it to new trends, markets, and industry requirements. Successful system suppliers thus expand their position, create new sources of revenue, and at the same time minimize their dependence on individual customer groups or markets.

Modularization is a key success factor in diversification. It allows standardized components to be bundled into a modular system from which customized complete solutions can be created. These modules are compatible with each other, easy to combine, and can be assembled quickly and securely.

This offers clear advantages for machine builders: they can equip their systems with tested, ready-to-install functional units, which significantly reduces planning and assembly costs. At the same time, there is still enough scope for specific adaptations. This means that even complex customer requirements can be implemented quickly—regardless of whether it is a standardized series machine or a special machine with specific requirements.

Particularly important: this flexibility does not come at the expense of cost-effectiveness. Standardized interfaces and clear system architectures ensure that adjustments can be made efficiently without disrupting existing processes.

Successful diversification usually involves several levels:

Horizontal diversification

Here, system suppliers expand their portfolio with new, related products or modules that can be seamlessly integrated into existing systems. A typical example is the introduction of additional connectors, functional units, or interfaces that increase flexibility for different machine concepts. This allows new customer groups to be reached without having to change the core business.

Vertical diversification

Vertical diversification involves the targeted extension of the value chain. For example, a system supplier not only delivers individual components, but also completely prefabricated, tested assemblies or entire installation systems that can be integrated directly into machines and plants. Machine builders thus benefit from a partner who takes responsibility for entire sub-areas — from development and production to assembly support.

Lateral diversification

In addition, the development of new, technology-related areas is also playing an increasingly important role. Digital solutions, e.g., for condition monitoring or predictive maintenance, complement the classic product business. This results in data-based services that not only offer direct added value for customers but also secure long-term business relationships.

The variety of technical requirements in mechanical engineering is vast. In order to diversify successfully, system suppliers must not only design their products to be flexible, but also be familiar with industry-specific and regional characteristics. This means that a solution must be able to be integrated just as smoothly into a machine tool in Germany as into a packaging machine in the USA or China.

In addition, regulatory requirements are increasing in many countries. Anyone who wants to compete in international markets must ensure that all components and systems comply with applicable norms and standards. Continuous quality assurance and close coordination with international partners are therefore essential.

Customer proximity is another key factor in this context: direct contacts, short delivery routes, local service teams, and reliable after-sales support strengthen trust and bind customers to the system supplier in the long term.

Digitalization is also driving diversification in mechanical and plant engineering. Many machine builders now rely on plug-and-play installations that are easy to integrate and ensure high system availability.

Innovative connectors, pre-assembled cable systems, and modular functional assemblies help to get machines up and running faster. In addition, IoT applications, smart sensor technology, and digitally networked modules are making machine installations not only more efficient but also more intelligent.

System suppliers who actively drive this technological progress are not only securing competitive advantages for themselves but also creating new markets for themselves and their customers.

A successful diversification strategy is based on a combination of proven standards and a high degree of flexibility. System suppliers who develop modular systems and are also able to tailor these solutions to individual customer requirements create real added value for their partners.

This increases efficiency and cost-effectiveness, shortens assembly times, and minimizes interface problems. At the same time, it ensures that customers from different industries and markets receive exactly the solution they need—without compromising on quality or safety.

The LQ Group demonstrates how this principle works in practice: With its EnergyLink modular system, LQ combines standardized components such as X-TEC circular connectors, W-TEC power cables, and A-TEC function modules to create customizable complete solutions for machine and plant engineering. Customers benefit from shorter assembly times, reduced complexity, and a future-proof system architecture. LQ thus proves that well-thought-out diversification not only opens up new markets, but also creates sustainable added value for machine builders worldwide.