SERVITISATION JULY/AUGUST 2020
THE EAAS WAY TO SURVIVAL
Technology is the key to a post-pandemic recovery, with those who have
embraced the change already best-placed to reap the rewards
BY MIKE HYNES, UK BUSINESS PARTNER, RELAYR
UK manufacturing is currently undergoing
the biggest technology-driven change in
its history, with ground-breaking
opportunities to innovate by exploring
operational practices – through
connecting equipment to
the Internet of Things (IoT) – that deliver
advanced processes such as servitisation, or
EaaS (Equipment-as-a-Service).
The boundaries between products and services
are becoming blurred. By embracing the process of
building revenue streams from using equipment’s
digital capabilities, the UK manufacturing sector
can be transformed, future proofi ng businesses and
empowering them to make informed decisions that
drive effi ciency, cost reductions and other benefi ts
for clients.
EaaS describes a process in which production
systems or machinery are not purchased but
provided by a supplier for a fee. The responsibility
for maintenance, service, repairs, and replacement
remains with the provider. In comparison to
the classic leasing model, EaaS is more practical
and aff ordable thanks to the ease of connecting
equipment to the IoT.
An EaaS operation can be the silver bullet to
enable industrial companies of any size to thrive
in an ever-changing business environment. It has
never been so critical to tap into equipment’s full
potential and gain a competitive edge by predicting
maintenance needs and enabling effi cient
processes.
However, implementing servitisation aff ects
the entire manufacturing business.
It transforms the value creation chain of planning,
34
EaaS models can
help the industry’s
recovery post-
COVID 19
research, development,
manufacturing, marketing,
sales, and service. It is essential
to have a solid strategy to be
able to profi t from the benefi ts
and avoid fi nancial risks. Since
servitisation is a relatively new
concept, manufacturers need
to understand the positive
implications for their specifi c
business case.
Adopting an EaaS model
should be fi rst and foremost
aligned with the company’s
vision and strategy. In addition
to that, they need to fi nd a
sustainable way to upgrade their
legacy machines and allow for
predictive maintenance service.
Whilst some manufacturers
are already using data analytics
to digitise operations and
increase asset utilisation,
many still need to jump on
the bandwagon and transform
from being a traditional
business model to a servitised
manufacturer.
Moving away from the
limitations of the capital
expenditures (CAPEX) model
pays off as switching to operating
expenses (OPEX) off ers
fl exibility and scalability. OPEX
eliminates costs, increases
revenue streams, and builds
stronger customer engagement.
Thus, UK manufacturers can
expand their services and reach
new markets.
While servitisation is
equally important and relevant
for all types of business, its
outcomes depend on the value
of the equipment. Based on our
experience, manufacturers with
kit valued above £20,000 can
benefi t much faster than others.
By ensuring recurring
revenues, subscription models
off er a resilient solution in
comparison to transactional
one-off business. In times
of economic downturn and
rapid change, it is critical to
rethink business models and
fi nd a fl exible solution. If
manufacturers do not act
from a position of strength
now, they risk being overrun
by the competition.
One of the most famous
names in engine technology,
Rolls Royce (RR), successfully
changed its business model
completely to servitisation.
The company stopped selling
its aircraft engines and started
leasing them. Thus, RR was able
to monitor performance better,
provide maintenance in a timely
manner and build stronger
relationships with customers.
A switch of business
model resulting in networked
systems can also off er a way
of quickly and eff ectively
adapting to current regulations
while guaranteeing complete
traceability of products, as well
as allowing the potential to react
before a machine breaks down,
which ensures higher effi ciency
and customer satisfaction.
Switching to an EaaS
set-up can also provide a
positive impact for sectors
crying out for skilled workers.
The implementation of
servitisation models paired with
smart manufacturing is a way
to attract talented staff as there
will be more technology-based
jobs in manufacturing. The
use of manufacturing data and
applications allows employees
to recognise new abilities and to
increase productivity. According
400%
Smart factories can
increase employment
by two to four times
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