Top 5 Product Engineering Challenges for Industrial OEMs—and How to Overcome Them

When an oil rig drills thousands of feet below the seabed or a factory line runs nonstop to meet global demand, there’s one silent force making it all possible—Original Equipment Manufacturers (OEMs). They design the heavy machinery, the drilling equipment, and the advanced control systems that keep these high-stakes industries moving.

But OEMs are not just machine builders. They’re innovation partners who help operators push the boundaries of efficiency, safety, and productivity. And as the industrial world shifts—driven by global competition, rapid digitalization, and the growing demand for sustainability—the challenges of product engineering are becoming more complex than ever.

In this blog, we’ll explore the top five challenges industrial OEMs face in product engineering today and share practical strategies to overcome them.

In industries like manufacturing and oil & gas, no two projects are exactly alike. An oil rig in the North Sea may need equipment that can withstand extreme cold, while a refinery in the Middle East may require machinery optimized for high heat and sand exposure. Similarly, heavy machinery for automotive manufacturing often needs custom configurations to fit unique factory layouts and workflows.

This growing demand for tailored solutions puts OEMs under pressure. The challenge lies in delivering customization without driving up costs or slowing down production cycles. Traditional, one-off engineering approaches can lead to long lead times, complex supply chains, and difficulty maintaining scalability across projects.

The solution lies in leveraging product engineering services and rethinking design and engineering approaches:

• Modular design:  By building equipment in interchangeable modules—such as pump systems, turbine blades, or control panels, OEMs can offer a wide variety of configurations without reinventing the wheel each time.

• Digital twins:  A virtual replica of the equipment allows OEMs to simulate performance under different conditions before physical production, reducing design errors and speeding up approvals. For example, a turbine manufacturer can use digital twins to test multiple blade geometries for efficiency in different wind or gas flow scenarios.

• Product lifecycle management (PLM) systems:  These systems integrate data across design, production, and maintenance, ensuring traceability and consistency even as products are tailored for different clients. For instance, a PLM platform can help an OEM track how a drilling rig component evolves across multiple client sites, making upgrades and maintenance smoother.

Example:
A European industrial pump manufacturer faced challenges fulfilling orders for clients in diverse climates. A mining facility in Canada required pumps capable of operating reliably in sub-zero temperatures, while a chemical plant in the Middle East needed corrosion-resistant, high-heat pumps. Using traditional one-off engineering approaches would have meant long lead times, higher costs, and difficulty scaling production.

By leveraging product engineering services, the OEM implemented modular designs that allowed the same pump components to be configured for different environments. They also employed digital twins to simulate performance under extreme temperatures and corrosive conditions, reducing errors before production. Finally, a PLM system ensured design changes and maintenance updates were tracked across multiple client sites.

As a result, the company reduced lead times by 25%, maintained high reliability across diverse projects, and scaled production efficiently.

Industrial OEMs are under constant pressure to embed IoT, AI, robotics, and automation into their product lines. These technologies promise predictive maintenance, energy efficiency, and higher productivity. In fact, McKinsey estimates that smart factories could boost global manufacturing output by up to $3.7 trillion by 2025.

But today, most factories still run on equipment that’s 20–30 years old. Legacy PLCs, CNC machines, and proprietary control software were never designed to “talk” to cloud platforms or analytics engines. A complete replacement would mean excessive cost, downtime, and disruption — making full modernization unrealistic.

The Solution: OEMs are overcoming this challenge by adopting gradual, integration-first strategies:

• Phased digital transformation:  Start with pilot projects, such as retrofitting IoT sensors on assembly lines, and scale once ROI is proven.

• Middleware and retrofit kits: Deploy gateways and add-on sensors that connect legacy machines to modern monitoring platforms without changing the core system.

• Open architecture design:  Design future equipment around open standards (like OPC-UA, MQTT), making it easier to integrate new technologies and vendors down the line.

Example:
A European automotive plant struggled with frequent breakdowns in decades-old stamping machines that were too costly and disruptive to replace. Instead, the OEM leveraged product engineering services to retrofit the machines with IoT gateways and smart sensors.

These devices tracked vibration, temperature, and cycle data, feeding insights into a predictive analytics platform. Maintenance teams could spot early signs of wear and act before failures occurred.

The outcome: a 20% drop in unplanned downtime, faster maintenance response, and extended equipment life—all achieved without heavy capital investment, demonstrating how modern product engineering services can maximize ROI while modernizing legacy equipment.

In industrial environments, safety and reliability are non-negotiable. Whether it’s a heavy-duty press on a factory floor or a high-pressure pipeline valve, the cost of failure goes far beyond downtime—it can lead to accidents, regulatory penalties, and reputational damage. According to the National Safety Council, U.S. employers alone spend over $167 billion annually on workplace injuries, much of it linked to equipment failures.

The challenge: OEMs must constantly adapt to evolving global safety standards and environmental regulations. This means extensive testing, documentation, and certification before a product ever reaches the customer. At the same time, they face pressure to deliver faster and at lower cost, making compliance a moving target.

The Solution: Leading OEMs are adopting compliance-driven engineering strategies that build safety and reliability in products from the start:

• Predictive maintenance: Embedding IoT sensors into equipment to monitor wear and tear, helping prevent failures before they occur.

• Advanced simulation tools:  Using digital twins and high-fidelity simulations to stress-test machinery under extreme operating conditions without costly prototypes.

Example:
A global aerospace OEM faced rising costs and delays from traditional physical testing required for FAA certification. Building multiple prototypes and performing exhaustive stress tests for every engine component was both time-consuming and expensive, stretching certification timelines and delaying product launches.

To address this, the company leveraged product engineering services. They adopted digital twin simulations, creating virtual replicas of engine components that could be tested under extreme temperatures, pressures, and mechanical stresses. Engineers were able to identify potential design flaws early, optimize materials, and ensure compliance with FAA safety standards before producing physical prototypes. This approach significantly reduced the number of costly real-world tests and accelerated iterative design.

The results were impressive: a 25% reduction in physical testing costs and a faster path to FAA certification, demonstrating how product engineering services can combine speed, efficiency, and compliance in complex industrial projects.

In today’s competitive industrial landscape, OEMs face constant pressure to deliver innovative products faster than ever. Whether it’s heavy machinery, precision tools, or industrial automation systems, speed to market can determine whether a product succeeds or falls behind competitors. At the same time, customers expect high-quality, reliable products—so rushing design and production can lead to costly defects, recalls, or warranty claims.

But today’s traditional product development processes are often siloed and sequential. Prototyping, testing, and approvals can take months, and collaboration across engineering, manufacturing, and supply chain teams is often fragmented. Balancing speed and quality becomes a delicate act. For example, a survey by PTC found that 69% of manufacturing OEMs struggle to meet delivery timelines while maintaining high product standards.

The Solution: OEMs are adopting agile and digital product engineering strategies to deal with this. It includes:

• Concurrent engineering: Teams work in parallel on design, testing, and manufacturing planning, reducing handoff delays.

• Rapid prototyping and simulation: 3D printing and virtual simulations allow engineers to test and refine designs quickly without waiting for full-scale prototypes.

• Cloud-based collaboration platforms: Centralized data and communication tools help cross-functional teams resolve issues in real-time, minimizing delays caused by misalignment.

Example:
A global industrial equipment manufacturer was tasked with developing a next-generation robotic assembly system, a project that traditionally would have taken over a year from design to production. Facing tight market deadlines and increasing competition, the company leveraged product engineering services to accelerate development without compromising on safety or performance standards.

The manufacturer’s engineering team turned to virtual simulations and 3D-printed prototypes. Digital models allowed them to test multiple design iterations in a virtual environment, identifying potential issues with mechanics, ergonomics, and safety before any physical components were built. 3D-printed prototypes complemented this by enabling rapid hands-on testing and refinement, reducing reliance on costly, time-intensive full-scale prototypes.

The results were transformative. By iterating designs digitally, the company cut development time by 30%, significantly accelerating its time-to-market. The robotic assembly system met all performance and safety standards, allowing the manufacturer to launch ahead of competitors while maintaining high product quality.

Industrial OEMs are increasingly challenged by the dual pressures of rising raw material and energy costs and stricter sustainability regulations. Customers and regulators alike expect equipment that is not only reliable and high-performing but also environmentally responsible. For example, in heavy manufacturing, energy can account for up to 30% of operational costs, making energy efficiency a key factor for both competitiveness and compliance.

The challenge: Designing industrial machinery that is durable, cost-effective, and eco-friendly is no easy task. Materials must withstand harsh operating conditions while minimizing environmental impact. Energy consumption, emissions, and end-of-life disposal must all be considered, without driving up the total cost of ownership. This balancing act is particularly complex for OEMs producing large-scale equipment like pumps, turbines, and presses, where small design inefficiencies can multiply costs over the product’s lifetime.

The Solution: Leading OEMs are adopting sustainable engineering strategies that align cost and environmental goals:

• Material innovation: Using advanced alloys, composites, or recycled materials to improve durability while reducing environmental impact.

• Energy-efficient designs: Optimizing motors, hydraulics, and control systems to reduce energy consumption without compromising performance.

• Circular economic strategies: Incorporating reuse, remanufacturing, and modular components to extend equipment life and reduce waste.

Example:
A European industrial machinery OEM was facing rising energy costs and increasing pressure to meet stricter environmental standards for its high-capacity pumps. The existing designs were reliable but energy-intensive and relied on materials with a significant environmental footprint. Replacing the pumps entirely would have been expensive and disruptive, so the company opted for a sustainable redesign.

The new design incorporated recycled steel, reducing the environmental impact of raw materials, and energy-efficient motor systems, cutting operational energy consumption. Components were also engineered for remanufacturing, allowing worn parts to be refurbished and reused rather than discarded, effectively extending the pump’s lifecycle.

The results were significant: a 15% drop in energy consumption, lower material costs, and reduced waste. This example demonstrates how smart engineering can align sustainability with cost savings, proving that environmentally responsible design does not have to come at the expense of profitability.

The challenges facing industrial OEMs in product engineering—customization, technology integration, safety, time-to-market, and sustainability—are not static. As industries evolve, these pressures are only set to intensify. Rising global competition, rapid advancements in AI and automation, stricter environmental regulations, and increasing demand for smart, connected equipment will create new layers of complexity in the years ahead.

Forward-thinking OEMs, however, are better prepared than ever to navigate this future. By proactively embracing digital engineering, predictive analytics, modular design, and circular economy strategies, they respond swiftly to emerging trends and stay ahead of the curve. At Utthunga, we combine innovation, agile workflows, and sustainability from the outset to set the standard for industrial excellence in a rapidly changing world.

Get in touch with our experts to know how we engineer smarter solutions today for the demands of tomorrow.