6. Servitization for OEMs: Asset-Light Services

Asset-light services is a type of servitization model that enables companies to offer services without owning the physical assets necessary to provide them. This post does not focus on another servitization model for OEMs. Instead, it describes the model of equipment customers receiving equipment as a service from OEMs and aiming to provide services to their customers without possessing the equipment required to do so.

This post is part of our series on equipment-based servitization models for Original Equipment Manufacturers (OEMs) and Value-Adding Resellers (VARs).

What are Asset-Light Services?

Asset-light services is a type of servitization model that allows companies to provide services without owning the physical assets required to deliver them. In this model, companies use a third-party provider to access the equipment, technology, and sometimes expertise required to deliver the service, rather than owning or managing the assets themselves.

This approach can be used across a wide range of industries and services, including transportation, logistics, facilities management, and more. Asset-light services enable companies to focus on their core competencies while still delivering high-quality services to their customers, often at a lower cost than traditional ownership or management of the assets.

In asset-light services, the asset is typically owned by a third party, such as an OEM or a leasing company. The company providing the service then pays to use the asset on an as-needed basis, rather than owning the asset outright. This is the servitization opportunity as seen from the perspective of the customer.

Asset-owner

In an asset-light services model, there can be different types of asset owners depending on the specific circumstances of the arrangement. Some possible examples include:

The type of asset owner can vary depending on the specific needs and goals of the parties involved in the arrangement.

Successful Use Cases

There are a vast number of examples of companies that have successfully implemented asset-light services. Here's a few notable ones:

DSV is a logistics company that has successfully implemented an asset-light strategy, providing freight forwarding services without owning a large number of physical assets. Instead, DSV relies on technology, networks, and partnerships to deliver its services. This approach has allowed the company to achieve flexibility, agility, and scalability while focusing on core competencies and achieving significant cost savings.

Uber provides ride-sharing services without owning any vehicles. Instead, the drivers own the vehicles, and Uber provides the technology platform that connects drivers with passengers.

WeWork provides co-working spaces without owning the buildings. Instead, WeWork leases office space from building owners and provides services to tenants.

Benefits

Benefits of offering equipment as a service for OEMs has been described in the detail in the previous posts. This post focuses on the company offering asset-light services and their customers.

Asset-light services offer unique advantages that are not achieved through traditional ownership models.

Customer Benefits

Company Benefits

Sustainability

Asset-light services can enable sustainability in a few ways.

Firstly, they can reduce the environmental impact associated with owning and operating physical assets, such as buildings or vehicles, as the asset owner is responsible for ensuring that the assets meet environmental standards. This can even be integrated into the revenue model, linking meeting environmental standards to billing.

Second, asset-light services can promote resource efficiency, as service providers can optimise the use of assets by tracking usage patterns and identifying opportunities for improvement.

Finally, data analytics can help service providers to identify and address potential environmental risks associated with their services, ensuring that they are operating in an environmentally sustainable manner.

Overall, asset-light models can help to promote sustainability by reducing waste, promoting resource efficiency, and minimising the environmental impact of service delivery.

Data utilisation

In asset-light services, companies provide services without owning the physical assets required to deliver them. Access to equipment data for both owners, and company using it, is critical for optimising delivery and performance, reducing depreciation risk, and reducing the cost of service delivery.

In summary, access to equipment data is critical for optimising delivery and performance, reducing depreciation risk, and reducing the cost of service delivery in an asset-light services model. Sharing equipment data with the asset owner can also help in identifying areas where equipment maintenance or upgrades may be required to reduce depreciation risk and optimise performance.

Financing need

Asset-light services does not require a significant upfront investment. Particularly not if the equipment/service provider has a mature offering and tehnological capability. Financing may be necessary to acquire the necessary technology and infrastructure to offer the asset-light services, as well as to cover ongoing operating costs.

A third-party platform provider can help companies to reduce the initial cost of developing an asset-light services platform. By utilising a third-party provider, companies can outsource the technology and infrastructure needed to develop the asset-light services platform, reducing the upfront costs significantly. This approach can also help companies to spread the cost of developing the platform over time, making financing more manageable and affordable.

Financing options for asset-light services models may include venture capital, private equity, and other sources of funding. However, partnerships and collaborations with other companies may provide opportunities to share the costs and risks of developing the necessary technology and infrastructure. In some cases, revenue generated from asset-light services may be used to finance ongoing development and expansion of the services, which can help to ensure the long-term sustainability of the model.

Succeeding with Valueport.io

Valueport.io's EaaS capabilities can help OEMs successfully implement asset-light services in servitization, securing benefits such as lower cost, increased flexibility, and access to expertise for customers and enable lower capital requirements, reduced risk, and scalability for the company.

For asset-light models, having a transparent view of the performance of the asset owner's equipment and corresponding billing is critical for building trust and long-term relationships with customers.

Valueport.io's EaaS capabilities can help asset-light businesses address the challenge of transparency on performance by providing real-time data monitoring and analysis. By creating an independent "one-truth" for performance and billing amounts, asset owners can ensure accurate and transparent billing for the company. This not only helps build trust and long-term relationships but also allows asset-light businesses to increase their revenue potential and improve their asset utilisation.

Conclusion:

In conclusion, asset-light services - enabled by OEMs offering equipment as a service - allows companies to provide services without owning physical assets. These models can be implemented in various industries, and companies can take advantage of the benefits it offers.

Companies can benefit from asset-light services by having lower capital requirements, reduced risk, scalability, and access to expertise. Asset-light services can also be used to promote sustainability, as they reduce waste, promote resource efficiency, and minimise the environmental impact of service delivery.

Access to equipment data is crucial for optimising delivery and performance and reducing the cost of service delivery in an asset-light services model.

Ultimately, asset-light services have proven to be a successful model, and with proper data management practices, companies can utilise this model to enhance their services and grow their business.