The advantages and disadvantages of “Machine-as-a-Service”​

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Innovation is the central part of business change and primary compelled to use modern technology, processes and products, the type of change that can influence competitiveness significantly. Pay-on-demand for equipment could be a functional approach for change for small/medium-sized manufacturers.

Only companies with large financial investments have access to good quality machines and also their maintenance. When compared with the workforce, economical and accessible, machines could be costly.

Some advantages:

·       Efficiency – Machines generate more production with minor energy and within a limited time.

·       Worker might be more dedicated to their work when they make use of machines.

·       Improvement in the quality and quantity of products, as a machine, ensure high and large production rate.

·       There is a cut in production costs and labour salary.

·       Workers improve their technical skills through training.

·       Higher salaries resulting in better living standards for skilled operators.

Some disadvantage:

·       Machines are expensive to buy, maintain and repair.

·       Machine with or without uninterrupted use will get broken and worn-out.

·       Their maintenance or repairs are costly, difficult to set up and operate without previous training.

·       The pollution caused by machine increases, generating waste, augmenting power or oil use.

·       Health disorders can cause injuries if workers do not use personal protective equipment effectively.

·       Unemployment – Machines replace man labour, as some times machines are more than workers.

A new approach to buying

Some agreements among companies around manufacture machinery and organisations that buy their equipment to manufacture their products:

·       The acquisition of expensive manufacturing equipment can be bought outright, although companies seldom pay cash for expensive manufacturing equipment. For equipment purchased in this way, it often takes years for a company to recover their initial investment cost.

·       They could get a loan to buy the equipment.

·       The manufacturer could lease the equipment from the equipment manufacturer.

Manufacturers engaging in one or the other of the last two alternatives usually involves monthly payments, despite the demand for their products (e.g. end-user demand can go down; these manufacturers take on the market-based risk.)

The new approach is known as Machine-as-a-Service and requires a customer buying equipment with weekly or monthly payments centred on how much real market demand exists. In other terms, the equipment manufacturer would receive weekly or monthly checks according to the number of units produced on the equipment during the former period.

In this situation, the equipment manufacturer is taking on additional risk above and beyond any product warranty. Adding to the finance fees, agreed as acceptable anticipation, the equipment buyer is likewise paying for a sort of market-demand insurance.

This strategy might not seem correct to all equipment manufacturers, but there will possibly be some others who consider it a way to access technology; they otherwise would not have access. That might cause financial risk; this is a concern for many small/medium-sized manufacturers all around.

Further comments: There might be value-added for those looking to acquire manufacturing equipment, which you likewise would be willing to pay. Your supply management for original equipment manufacturers is worth the try.

Do you consider a ‘Machine-as-a-Service’ good strategy for your company?

Prophetic Technology