Equipment as a Service (EaaS) and Why IOR is required
The introduction of software as a Service (SaaS) changed the landscape of data storage and management. And at the same time, it provided a platform for the Original Equipment Manufacturers (OEMs) to scale up their services and offer the Equipment as a Service (EaaS) business model.
So, what is Equipment as a Service (EaaS)?
Also known as Machine as a Service (MaaS), Equipment as a Service is a new business model based on pay-per-use. In this model, OEMs (the EaaS provider) rent out their equipment to manufacturers and other end users for a given duration. And in return earn regular income (payments) for the use of their equipment.
Why Equipment as a Service?
EaaS has revolutionized the manufacturing industry. Before EaaS, both OEMs and the equipment users were behind in terms of measuring the actual performance of equipment. There was no way of assessing machine health, measuring the operational capacity of equipment, and upgrading machine design.
But this is no longer an issue. Manufacturers and OEMs use cloud computing applications, Internet OF Things (IoT) platforms, and edge computing to assess the machines through the entire production process. They use the data collected to make the necessary changes, enhancing the equipment's capacity, design, and performance.
How do they do this?
The OEMs make their equipment smart devices using the Internet of Things (IoT). They embed sensors, processors, and communication hardware in the equipment and use them to monitor and collect machine-related data.
The data is collected and stored using cloud computing. IoT and cloud computing enable OEMs to analyze machines through the entire production process. With IoT, OEMs can now provide equipment to end-users and continue monitoring the equipment's behavior, use, and performance while improving its performance.
How does EaaS work?
Equipment as a Service works in two models.
In Model 1, OEMs provide the equipment or machinery to a customer through a subscription plan.
Once clients subscribe to their EaaS offering, the manufacturer or OEM leases the machines to them for a given period of time.
These are the terms of this subscription-based model;
• The equipment /machines are left or stationed at the subscriber's facilities.
• The software updates and spare part replacement are the responsibility of the OEM vendor.
• The OEM maintains ownership of the machine data. They can use it for research and development, predictive maintenance, and other purposes.
Model 2 is the outsourcing model. In this model, both OEMs and manufacturers outsource factory machinery (Equipment) to customers for specific durations.
These are the terms of the outsourcing model;
• The equipment remains in the facilities of the OEM or manufacturer. This means that the customers use the equipment within the service provider’s facilities.
• The EaaS provider gets the subscription payments and the equipment data for their services. And in some instances receives a percentage from the proceeds of the sales of goods.
Why SMEs use Equipment as a Service
It reduces capital expenditure
The EaaS makes the production process more accessible and more affordable. Most SMEs don’t have adequate capital to buy manufacturing or production equipment outrightly. And as a solution, outsource this capital-intensive equipment at cheaper costs.
The manufacturer or OEM installs the equipment in the client’s production facilities with the subscription plan. And this helps the SMEs retain control over the production process and the quality of the products made.
It increases productivity
EaaS involves improving machine/equipment efficiency and optimizing productivity using IoT and data-driven strategies.
Once the OEM analyzes the machine data and uses it to improve the performance or capacity of the equipment, the machines become more efficient, thereby enhancing productivity.
It reduces operating costs
In EaaS, the subscriber's role is to make regular payments to use the equipment. The manufacturing equipment’s maintenance, repair, and updating of the software, hardware, or firmware is the service provider's responsibility.
This, therefore, reduces the daily operational costs of small businesses.
Why OEMs use the EaaS business model
These are some of the reasons why equipment manufacturers have adopted the EaaS approach to business.
• It increases revenue generation. There is a continuous flow of income from the periodic payments made by the EaaS subscribers.
• It improves customer relationships and retention.
• It increases new market opportunities. The flexible payment options win new customers over.
• It increases or prolongs the life of the machinery (you can maximize the equipment’s performance)
• Improvement in equipment design (capacity, operation, and machine features)
• It enhances designing progressive /predictive maintenance strategies. (A shift from the preventive to predictive maintenance)
Shipping EaaS abroad
EaaS deals with two aspects; installation and maintenance of equipment and software. There are regulatory compliance of all customs requirements, legal, logistical, and technical elements to consider when shipping equipment/ services to overseas locations.
To expedite the whole process of subscribing and having the equipment delivered to a client’s facilities, you will need the services of an Importer of Records (IOR).
Who is an Importer of record?
An importer of record (IOR) is a third party (a person/legal entity) who represents the owner of the imported goods. The IOR is a registered legal entity with a physical presence in the country receiving the goods. This person becomes the owner of the imported goods at the time of import, pays all the taxes on the imports/equipment, and meets all customs compliance. The IOR assumes all duties until the equipment is transferred to the client.
Partnering with an IOR provides other benefits, as discussed below.
Why you need an IOR
Legal entity representation in the recipient country
Most nations require you to operate within their borders, a process that can get expensive and time-consuming, especially if you are installing equipment or machinery in several locations across the globe. And even when you do, the personnel in the country you are exporting to may lack the right customs knowledge or accreditations to finalize customs compliance requirements and procedures. This makes IORs your best alternative.
Getting an IOR partner is the perfect solution. It enables you to quickly import and install the equipment and software components with minimal disruptions. Black Thorne, for example, offers legal entity representation in 226 countries across the world.
Cost and time efficiency
Getting equipment and the necessary software and hardware components into some countries may take longer (several months) if you're working as your own importer of record. You will find it costly and frustrating to acquire the required licenses and permits when shipping the equipment to client locations around the globe.
It will save you time and money to delegate the duties and responsibilities that come with serving as your own IOR. An IOR partner will know the quickest, least expensive, and hassle-free way to meet your shipping needs.
When it comes to EaaS, you need a person who understands the type or complexity of goods/services being imported. And this is vital if you plan to send goods to a location outside the US and EU. An importer of record will have the necessary knowledge about the shipment and help you through the documentation and customs clearance processes.
Logistical red tape
There are instances where having a business branch in the recipient’s country won’t be enough to import your equipment. You will need import licenses and authorizations to do so.
An IOR will enable you to ship your equipment to overseas locations without them getting detained. It will also ensure that your client gets the equipment delivered in time to their facility.
Expert EaaS installation and support
EaaS needs specialized installation in a client’s facility. For this reason, hiring an IOR with a global supply chain specializing in equipment and software installation, maintenance, and repair services will benefit you greatly.
The importer of records will also help you meet your service level agreements (SLA) and specific KPI requirements. An IOR's support will help you to penetrate emerging markets that are usually economically or logistically challenging without a reliable local partner.
Besides helping you fulfill the SLAs, your IOR partner can provide value-added logistics support, such as export licensing and equipment installation and maintenance.
Forward stocking locations; faster response time to your clients
Forward stocking locations are smaller warehouses that hold inventory or spare parts. They are set up in close geographical proximity to a specific product's customers (end users).
An IOR's forward stocking locations will enhance your existing warehouse infrastructure, bringing your services closer to the end-users that need them. And this will facilitate more robust warehousing and on-demand shipping services.
An IOR’s forward stocking locations significantly improve your response time to your customers (end users). It ensures quicker delivery of critical machine components, tools, and upgrades, thereby reducing the downtime of vital equipment for your clients. And in turn, this provides better returns on investment from your EaaS business model.
You need the services of an IOR for the success of your EaaS business model. Your IOR partner will ensure the efficiency in shipping, clearance, delivery, installation, maintenance, and repair of your equipment overseas.
An IOR ensures that both you and your client's needs are met.
With a solid presence in over 200 countries worldwide, Blackthorne is the right IOR partner for your EaaS shipping needs. Our bespoke shipping solutions include professional support services like EaaS equipment installation and maintenance. Contact us today! We'll get you the best solution for your EaaS business model.