Machine and Process Management

Machine as a Service: A Big Change in the Global Value Chain

In my previous blog (Machine as a Service: New technologies help, but are they enough?), I talked about how new technologies are triggering the development of the Machine as a Service (MaaS) offer with machine rentals (daily, monthly, yearly) provided by a supplier. Now, as promised, I’d like to share with you some of the business models that are being trialed with this new go-to-market strategy.

Is this new strategy possible? Yes! In fact, it already exists in some sectors. Take the automotive industry, for example. Car manufacturers provide a stock of cars to rental agencies who, in turn, supply them to their customers. The rental agencies add value by offering customers the benefits of convenience, flexibility in time and location, the right size/type of vehicle depending on use, and the confidence of having well serviced models available.

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Closer to our industrial business, let’s have a look at cranes in the construction sector. Between crane manufacturers and construction companies, you will find independent rental companies who provide cranes from multiple vendors, each with their own specifications. The rental companies also offer key services like onsite repair, safety inspection, crane placement recommendations, etc.  The value chain is so well established that sometimes there are even governmental rules/recommendations on how to determine the rental price per day/week from the monthly rental fee.

We will start to see this model being applied for more general production machines, as well, but with an interesting add-on: Machines can be rented together with an operator – a key parameter if you really want to manage the efficiency of the machine (the obvious impact of an experienced operator compared to a beginner or part-timer).  In this case, remote machine monitoring would most probably be handled by the rental company in order to ensure that the usage conditions are respected.

The go-to-market model I talked about in relation to the automotive industry also works with machines: The machine builder sells the machines; the rental company buys the machines and keeps them operational; and the end user rents and operates them as needed. There is no marked change for the machine builder in this scenario, but the end user benefits from a much greater degree of flexibility.

The burning questions are: Will there be an impact on the purchase price of the machine? If a rental company buys 10 machines in one shot, for example, will the cost be attractive enough for the company to be profitable (perhaps only thanks to additional services sold to the end user)?

Other business models being tested…

Is “conventional” machine renting the only model?  Interestingly, no. Other models are also being tried, with some promising results. At least one machine builder (www.contexo-automation.com) has decided that as the machine designer, they would also be the most qualified operator of the machine so they proposed to sell/rent production capability in their own facility, with their own operators, promoting the highest possible efficiency with machines that are always in top form.

Another proposal turns the scenario completely on its head: A marketplace has been created where end users rent out specific machines in their workshops by the hour when they are not being used for their own production purposes. This could prove to be extremely useful to companies who want to manufacture prototypes, for example, without having to first invest in their own production machinery. (https://www.maketime.io/become-a-supplier/)

All these changes are ongoing, and it‘s difficult to predict which model will develop in which industry.

What is already clear is that these changes to the business model are also driving technological evolutions in machines such as remote monitoring, remote maintenance, and asset management, in addition to the development of more modular machines (to quickly adapt machine configuration to new renter requests). Popular in the Oil & Gas segment, skid-mounted machines, or “machines in a container,” are becoming increasingly popular so that they can be easily moved… but that is another story!

Interested to hear your thoughts on this topic or click here to learn more about our Smart Machines. 

Join us in hall 5, stand G22 at Interpack 2017, a leading processes and packaging trade fair.


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