As part of an ongoing series of Industry 4.0 articles to help manufacturers embrace the fourth Industrial Revolution, we will be going through some concepts, theories, and practical examples. Our first article was about Industry 4.0 success stories. To keep up with the series, sign up for our newsletter.
In the last 30 years, technology has brought many changes to the factory floor. From the need to expand factory sizes due to on-premise machines that ran programs at a snail’s pace, to the current ability for Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) solutions to run the factory, we can’t deny the improvements that technological advancements have brought in the realms of efficiency and productivity.
Now, there are factories that can print products at a moment’s notice, and machines that can tell the operator when it’s about to fail. These Industry 4.0 solutions have brought new business models into the factory, and a new trend, Equipment as a Service (EaaS), will no doubt do the same thing.
What Is EaaS?
As per our Manufacturing Industry 4.0 Software Glossary, EaaS, or Pay-Per-Use, is defined as:
A business model where equipment is leased out at a lower price instead of sold, with remote diagnostics and predictive maintenance solutions provided by the vendor.
Basically, instead of selling the machine to manufacturers, vendors can lease out the machines at a lower cost for a period of time, and commit to providing maintenance. Previously, as per PwC, “EaaS has not been widely adopted because systems could not accurately predict equipment failures. Customers paying for equipment in this fashion quickly become disenchanted when they experience downtime due to product failure.”
How Has Industry 4.0 Helped EaaS?
Thanks to the Industrial Internet of Things (IIoT), EaaS has been gaining in popularity over the last few tears, as predictive maintenance, artificial intelligence, and IoT solutions have become more reliable.
And in businesses where pay-per-use wasn’t a viable option before, Industry 4.0 has made predictive maintenance into a feasible business model. That, combined with the increasing amount of competition and lack of space in factories, has made EaaS adoption rates increase across industries. At the same time, adoption rates of IIoT solutions have also soared, making Industry 4.0 vital for more and more manufacturers who want to stay relevant.
How Has EaaS Helped Manufacturers?
Instead of experiencing downtime when machines fail or during planned preventive maintenance, lessors can depend on sensors to monitor the machines, and only come in when the data shows that the machine is going to fail.
This predictive type of maintenance has come in handy for manufacturers of machines, and changed the game when it comes to manufacturing efficiency. As mentioned in Digitalist magazine, “Pay-per-use for machines and equipment (also known as equipment-as-a-service, or EaaS) has become a successful business model in various industries, including office equipment, medical equipment, jet engines, and others.”
For buyers, the lower cost of leasing as compared to buying is now buoyed by the lower maintenance downtime thanks to IIoT.
Image credit: The Opsession Blog
However, manufacturers will also have to reorganise operations and sales teams to manage leasing instead of selling, as it is a stark difference in business models. At the same time, manufacturers, both lessors and buyers, will need to invest in Industry 4.0 and IIoT solutions in order to ensure that efficiency and productivity is kept high, to avoid mistakes and unnecessary downtime.
Leasing is a long-term relationship that depends on reliability, so it is crucial to invest in the best technologies to keep sensors efficient and data as clean as possible while still being easily available.
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