CNH Industrial also contributes to the global fight against climate change by marketing products whose innovative features allow reducing polluting emissions and that are increasingly efficient at cutting fuel consumption and CO2 emissions. As evidenced by the materiality analysis, CNH Industrial believes innovation is essential to offering customers highly technological, eco-friendly, safe, and ergonomic products with a low Total Cost of Ownership (TCO).
In this spirit, research activities focus primarily on the development of products that can:
- reduce polluting emissions
- optimize energy consumption and efficiency
- use alternative fuels
- adopt alternative traction systems
- incorporate advanced telematics systems
- ensure safe use.
CNH Industrial has established an Innovation function dedicated to research and development (R&D), as part of Product Development and Engineering. It operates across the board, encompassing every business and geographic area, where dedicated teams develop innovative products catering to the distinctive needs of the region, including in Emerging Markets (see also page 212). Innovation activities are strictly related to the management of intellectual property and to the generation and exchange of ideas, as well as to participation in shared research projects.
In 2014, CNH Industrial’s research and development expenditure reached a total of $1,122 million, or 3.6% of the Company’s net revenues from Industrial Activities. R&D activities involved approximately 6,100 employees at 49 centers worldwide, 9 of which located in Emerging Markets (Brazil, China, and India) employing 992 people.
RESEARCH & DEVELOPMENT HIGHLIGHTS
|Research Centers (no.)||49||48||49|
|of which in Emerging Markets||9||8||7|
|R&D employees (no.)||6,122||6,280||5,845|
|of which in Emerging Markets||992||789||858|
|R&D expenditurea ($ million in IFRS)||1,122||1,240||1,149|
|of which on Agricultural Equipment||519||564||525|
|of which on Construction Equipment||130||151||143|
|of which on Commercial Vehicles||350||395||371|
|of which on Powertrain||123||130||110|
|R&D Spendingb as a % of sales||3.6||3.8||3.6|
(a) Inclusive of capitalized R&D costs and R&D costs charged directly to the income statement.
(b) Considering only net revenues from Industrial Activities.
CNH Industrial usually delegates its basic research to universities through dedicated partnerships. For highly strategic projects, on the other hand, the core research is often developed directly by the Powertrain segment. Basic research focuses on energy management, powertrain efficiency, and alternative fuels. FPT Industrial’s innovation strategy is based on a fully integrated development program evolving around three main areas of expertise: virtual development, basic technology evolution, and integrated modelling within CNH Industrial products.
The virtual development process, which is partially related to basic research, will enable CNH Industrial to get a step ahead of the competition, allowing to create a higher level of intelligence, to integrate powertrain innovations on a larger scale, and to look at the energy management of the final product as a whole rather than of the engine alone.
CNH Industrial’s innovation process refers to applied research and consists of a series of clear-cut steps, from the evaluation of innovative concepts up to the final step before product development (see also page 146).
There are nine steps in total, grouped into three overall macro-phases: concept, innovation, and advanced engineering. The application of an idea to a product requires an average of two to five years, based on the complexity of the idea itself.
The Concept phase, the first in the innovation process, is the most creative and is left deliberately unstructured.
It mainly focuses on concept and development, and on the assessment of one or more technologies and their potentials. At this stage, collaborations are established with companies of excellence, i.e., potential partners for current or future projects, and the activities carried out relate to technology scouting, benchmarking, and customer evolution trend-analysis to identify needs and opportunities for improvement and enhancement. This phase also encompasses the creative ideas submitted through the Open Innovation tools. Any idea suggested during the concept phase is evaluated by a group of experts; in the event of a positive outcome, it becomes an innovation project and moves on to the next phase.
The initial feasibility study is carried across the four steps of the Innovation phase, at the end of which the product must meet every technical requirement to move forward, or the project is discontinued.
During the Advanced Engineering phase, which follows Innovation, the design is integrated and completed, and a prototype is created to assess functionality and stability through virtual and field testing. This phase also defines the adoption of new technologies, new material purchasing needs, and the realization of components that were not identified during the previous phase. If necessary, suppliers are engaged at this time to collaborate in the joint development of components required to execute the project. Cost analysis is the final step of the innovation process: if economic requirements are unmet, the project is discontinued. If the project meets the requirements, as in 90% of cases, it is handed over to the product development platform.
In 2014, 20 innovation projects reached step nine and will be integrated into one or more products through the Global Product Development process (see page 146).
Intellectual Property Rights (IPR) are strategic, intangible assets actively protected by CNH Industrial.
The Company’s Intellectual Property (IP) team, which is part of the Corporate Legal Department, is responsible for:
- creating IPR awareness amongst Company employees
- prompting engineers and developers to share their innovative ideas with the IP Department
- managing applications for new patents and trademarks
- managing the existing portfolio of registered patents and trademarks monitoring potential infringements of the Company’s patents and trademarks by competitors or other third parties
- defending the Company’s interests in IP conflicts
- ensuring that the Company does not infringe patents or trademarks of third parties.
The IP team is also actively involved in the product development process, conducting patentability and freedom-to-operate reviews at a variety of mandatory stages throughout the process itself. As an additional safeguard against potential infringement, CNH Industrial also relies on external specialists who provide periodic updates on published applications and patents of competition.
|of which registered during the year||761||1,036|
|of which filed during the year||822||672|
|New Disclosures on Innovation Portal||730||805|
In order to better manage the wealth of innovative ideas generated inside the organization, CNH Industrial created an Innovation Portal accessible to all employees working in technology-related areas: these are the people who conceive, design, and build our products, and who therefore often have ideas that further improve the quality and performance of the products themselves. The secure and user-friendly Innovation Portal (a tool accessible from any workstation worldwide) provides an ideal channel for converting these ideas into disclosures, which eventually may lead to patents. Given the significant value-creating potential of these internally-generated ideas, the Company has set up a Patent Award Program to reward inventors whose ideas are successfully patented.
The Innovation Portal is managed by the IP team, with the support of product-specific Review Teams for the technical evaluation of new ideas. Each Review Team consists of internal personnel actively involved in all key aspects of the product, including engineering, manufacturing, marketing, testing, etc.
Employees who believe they have a patentable idea can submit their proposal to the IP Department through the Innovation Portal. Multiple inventors can be associated with an idea, and supporting materials (such as designs, photographs, videos, calculations, etc.) can be uploaded in a wide variety of formats. Once the required information has been entered in the system, the inventor can publish the idea to initiate the evaluation process. At that point, the idea formally becomes a disclosure and can no longer be modified. The system assigns a number to each new disclosure, which is then allocated to a Patent Attorney within the IP team. The system will also send an email to: all inventors named in the disclosure, who must individually approve the contents of the disclosure itself the witness, who is requested to affirm authorship of the idea the members of the assigned Review Team.
During the online evaluation phase, the Review Team may ask the inventor for additional information, if needed, to assist in evaluating:
- patent strength (legal)
- technological value
- market value
- financial value
- strategic value.
Inventors can access the Review Team’s comments and evaluations via the Portal.
Once the evaluation phase is complete, the official review phase begins. The disclosures actually assigned to a Patent Attorney are discussed periodically with the relevant Review Team in dedicated meetings, and ideas considered worthwhile for the Company then proceed to the Patent Search phase. If a disclosure is not selected, the file is closed and the inventor is informed of the decision.
During the patent search phase, the Patent Attorney investigates the patentability and feasibility of the disclosure.
If the search reveals no relevant prior art that could obstruct patentability, the Patent Attorney begins the patent protection process, working with the inventor to draft the necessary description for patent application. Once the final draft is approved by the inventor, the patent application is filed.
All disclosures (including closed cases) remain on the Innovation Portal along with the Review Team’s evaluations.
During 2014, 730 new disclosures were submitted via the Portal.
SUSTAINABLE INNOVATION FORUM 2014
New Holland Agriculture took part in the Innovative Emission Reduction II panel within the Sustainable Innovation Forum. The event was held in Lima (Peru) on December 9, in conjunction with the UNFCCC Conference of the Parties (COP 20) and the Lima Climate Change Conference. The conference was organized by Climate Action in partnership with the United Nations Environment Program (UNEP).
The Forum is an annual event aimed at offering business, government and financial leaders, and non-governmental organizations a platform to generate a stimulating and productive debate, catalyze sustainable innovation, and mobilize the green economy.
The brand also supported the event for the third consecutive year running as Gold Sponsor.