Future trends and challenges of the LED lighting business

The introduction of LEDs has the lighting industry facing many new challenges. With the introduction of LEDs the “digital era” began. This sped up development cycles so much that manufacturers are always busy developing new products. The lighting industry is used to relatively slow product development cycles – typically 9-12 months to introduce new products. Sales regularly has sufficient time and opportunities to respond to customer requests, but there are also requests for product variants that manufacturing cannot deliver fast enough. That causes major internal friction. R&D as well as Production, struggle to keep up with the rapid pace of improvements in LED chips, LED modules and light engines, which improve every 3, 6 or 12 months. Customers want to use state-of-the-art LED chips, but fixture product development cycles are too slow to keep pace, not to mention the request for product variations.

Optics has been identified as being one of the most critical components in product development, if not the most critical one. Optics brings about a significant drain on company profits due to high inventories and frequent write-offs. Optics is specific to the LED module or light engine that is chosen when the optics is designed. For any one fixture, if the optics is not changed, the purchasers can only buy from the one LED vendor that the optics was designed for, leaving little for price negotiation.

Changing the light engine and optics at the same time would be a reasonable solution; yet, optics is costly. Injection molding tooling is very costly, and there are a minimum number of order commitments necessary to pay these costs. This requires more certainty in forecasting than is possible. No one can be sure which fixtures will be well received at a trade show. Having to order, for instance, a minimum of 50,000 pieces before customers and distributors have seen a working fixture, severely limits risk-taking in new product introductions.

When identifying the key factors and key components for successful product generation, it is assumed that the product satisfies the preconditioned requirements for application and quality. There are three main points. The first point is speed: Faster product introductions and faster adaptation to changing customer needs and improved LED chips or modules are crucial. The second point is reduced inventories with just-in-time production and reduced product development costs. This means that fixture designers can afford to try more product variations. The third one is developing a higher margin: More specialized and more diverse products.

In addition to key factors are the top three future trends for LED lighting. The first one is the remarkable and continuous trend of electronics components. At the same time there is an increase of attention being paid to optics as the main driver of cost. Which leads to the second trend of optics being significant for product differentiation: Novel beam patterns, even illumination, shaped to fit the application perfectly, measuring performance not by gross efficiency but,by how well the lumens are directed to achieve the desired luminance levels where needed becomes more relevant.This option comes with the new light source, the LED. The third trend seen is the adoption and exploitation of print-optical manufacturing to enable and accelerate the first two trends mentioned.

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