Machinedesign 9889 0617 Instcontrols Fig4
Machinedesign 9889 0617 Instcontrols Fig4
Machinedesign 9889 0617 Instcontrols Fig4
Machinedesign 9889 0617 Instcontrols Fig4
Machinedesign 9889 0617 Instcontrols Fig4

Where Subscription and IIoT Models are Working

May 22, 2017
Subscription models—the renting or leasing of equipment—have found success in the auto, farming, and aerospace industries

Despite some bumps in the road, the subscription model is generally considered a success in the auto and farming industries. One place where subscription or leasing seems to be particularly effective is in aerospace. GE and Rolls Royce have started renting their engines by the hour rather than having the airlines purchase them. Such a system might work better in aerospace rather than vehicles, tractors, or manufacturing equipment, as it is highly regulated. Of course, road vehicles have regulations, too, but they are not nearly as strict as aviation rules, regulations, and litigious concerns.

In addition, this puts forth the idea of involving large and small companies alike. Even the small airlines are big when compared to a family-owned manufacturing plant or farm. Smaller companies are accustomed to doing their own work, while larger companies may be more lax and have the revenue to let someone else manage it as long as the ROI fits its business goals. Bigger companies, especially in the U.S., may welcome this certified, hands-off approach if it can alleviate them from having so much liability.

“The most radical departure from a traditional component purchase is the idea that customers will start paying for up time,” says Marissa Tucker, product director at Parker Hannifin. “This mirrors what has happened to some extent in the ride share business. The consumer only pays for the car when they're using it, and expects it to be operational. The driver also has an agreement with the company to drive safely and not damage the vehicle, etc.

“Similarly, in industrial automation, IIoT would allow the ownership to reside with the manufacturer—where they own the product and data, but also have the responsibility to maintain operation up to the consumer’s standards,” continues Tucker. “IIoT is required for such a model because predictive maintenance and monitoring are crucial. If a product is about to fail, the company needs to send a replacement, or they'll be on the hook for damages. In addition, if the consumer uses the product out of spec, the company also needs to monitor this as to charge the consumer some penalty for shortening the expected life of the device.”

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