New Business Models Based on Flexible Supply-Chain and...
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New Business Models Based on Flexible Supply-Chain and Manufacturing Equipment

By Lars Skogmo, Head of Process & Automation, AECOM

Lars Skogmo, Head of Process & Automation, AECOM

Digitalisation and connectivity are changing the conventional manufacturing world and supply-chain while at the same time giving rise to a multitude of new opportunities. Examples here employ autonomous equipment, self-learning systems with swarm intelligence, nesting manufacturing concepts, self-organising warehouses, and artificial intelligence in general. Many of these systems obtain their peak effectiveness when combined with flexible mobile technologies like automated guided vehicles (AGVs) and mobile manufacturing cells. Nevertheless, the requirement of huge capital investments into these technologies coupled with organisational changes facilitate hesitation in most companies rather than an atmosphere of change. A solution to increasing the usage of these disruptive technologies could be the reduction of investment risk.

"I believe we will soon see the first leasing opportunities on the market and they will be followed by internet platforms for full package service later"

Fundamentally, other market disruptive approaches and business models can yield insights into how capitals can be reduced or distributed. A possible solution for many companies could, for example, be derived from Uber, Air BnB, or other service and goods sharing platforms. The possibility to lease equipment, AGVs and robots could increase accessibility to for any large and small manufacturer to implement new production technologies without investing millions on the technology. Subsequently, the capital expenditures are reduced and transferred to operating costs. One key benefit of such models for service buyer is increased flexibility in the scale of their operations. Hypothetically, where only 20 AGVs were necessary at the start-up of the new production line, another 100 AGVs could be leased for the following year and reacting to a hypothetical change in market demand, the AGV fleet size could easily be reduced by 20 the next year and so on. The leasing company delivers, installs, and takes care of the maintenance of their equipment—the AGV—while the manufacturer can focus on the production processes, their core business. This not entirely new concept can also be understood as that the manufacturer factually buys the transport service within his facilities, but not the vehicle per se. With the rise of novel communication technologies and ever-increasing accessibility to information, this concept is easily expandable to other areas such as welding where the manufacturer procures Welds-as-a-Service instead of welding robots.

From my personal experience as a consultant working in many different industries, having insights into the problems and needs of my clients, and observing current market as well as innovation trends, I can easily summarise the following; most manufacturers want to focus on their manufacturing core business. Logistics companies want to focus on their core business of logistics. A general trend here is to partner with a select service provider who can take care of, for example, installation and maintenance of the equipment, robots and technology in their facilities. A similar trend can be observed with some product developing companies who focus only on developing their products while another company produces the goods for them in a Production-as-a-Service concept. Multiple benefits and challenges arise from this naturally. Where one company does not have to invest millions on fixed installed equipment another can provide specific production services for multiple companies with similar products. Where in the past the flow and amount of information between organisations limited such concepts, digitisation can create new market segments for service providers while at the same time increasing quality standards. Services can range from transport, over the number of welding points or length of the weld seams, to the number of assembled parts or meters of quality steel produced. This through digitisation facilitate service approach is not much different from the common company car lease concepts. Here, companies lease mobility-as-a-service from a car leasing company with full service for the cars, ensuring mobility for their employees.

One can easily imagine a possible future for the industry where different equipment supplier companies share a digital platform to offer and bundle the desired packages of equipment, machinery, and tools. On this digital industrial marketplace, one company could provide AGVs-as-a-service, another could offer robot-actions-as-a-service, and a third could offer bespoke handling equipment. Via this integrated platform, full delivery and service packages could be provided together. An essential part of the integration of new equipment, processes, suppliers, or technologies, in general, will be played by open communication standards between every company system (from ERP to MES to PLCs and sensors). Factually, to reap the benefits of the digitisation seed requires a certain degree of standardisation of control systems, communication protocols, and general software interfaces while still allowing custom-made solutions to be possible.

I would like to conclude with an anecdote from last year to underline the market trends described earlier. After being invited to a large manufacturing conference in Turkey, I chose to present possible solutions for production including autonomous AGVs, nesting of production, as well as the rise of new business models such as leasing equipment in a not so distant future. After returning home from the conference, I was approached by several companies about the leasing of AGVs with very specific requests on the number of lease-able AGVs and the price of this service. While most of this confusion can easily be attributed to lost-in-translation errors, it clearly showed me the demand for such services as well as the opportunities for new business models for production equipment and machinery as-a-service. As this demand develops and grows, I believe we will soon see the first leasing opportunities on the market, and they will be followed by internet platforms for full package service later.

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