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XaaS business models redefine asset management across industries and provide a more flexible customer experience.

Source: Acefone

Relevance to the Future of Logistics

Co-Located & Distributed Service Logistics Facilities

As product ownership and responsibility for uptime remains with the XaaS service provider rather than with the user, the response time for necessary predictive maintenance is a key differentiator. One solution to faster response times is co-located and distributed service logistics facilities.

Co-located and distributed facilities and spare parts networks, including inventory positioning, must be a strategic building block in support of the business. As such, logistics plays a vital role in this new equation as the seamless supply and delivery of parts is critical to maintaining asset or fleet performance when provided as a service. The need for co-located inventory may be reduced, however, by onsite on-demand 3D printing and there may be no need for a technician to visit if they can instead use augmented reality (AR) to provide remote repair and maintenance support.

Logistics Services Diversification

Companies are broadening the lens of business potential to things that can be obtained as a service, and the providers of these services may choose to outsource operational processes to logistics organizations – introducing a new level of diversification. For example, companies may opt to use construction machinery as a service for a certain period of time with the aim of lowering costs and cutting capital outlay. This will require a logistics company to deliver the machinery to the customer’s site and bring it back. Multiple assets may be required, which explains the growth of solutions like the Wacker Neuson OnSite Box, which includes a variety of tools and equipment needed during construction. The user accesses the mobile container using a chip. Once the selected item has been removed from this container, the rental period starts and it terminates when the equipment in returned to the container. The customer is charged only for usage time. In this type of use case, the logistics provider supports the rental equipment company by mobilizing delivery of its solution.

Service Billing Models & Tools

As companies transition from selling products to providing them as a service, new service billing models and tools are required. Rather than managing inventory to record the products that have been sold, companies moving to XaaS must enable more complex usage-based invoicing. This is achieved with accounting tallies across multiple users on predetermined bases (per hour, per kilowatt, per kilometer, per use, per pick, etc). Smart contracts using blockchain technology can automate complicated processes in a transparent way, performing steps when pre-agreed conditions are fulfilled.

Challenges

To integrate, deploy, and manage an XaaS platform in what is still an emerging field requires adequate yet scarce IT skills; development will therefore come with initial high costs.
Companies using XaaS seek partnerships with XaaS suppliers supportive of their business challenges, goals, and data security needs yet only 4 in 10 report being “extremely satisfied” with their supplier’s performance reliability, IT integration, and utilization optimization.
XaaS increases the complexity of the billing model and therefore requires a strong IT infrastructure to ensure resilience.
For the XaaS supplier, data analytics capabilities are crucial to business success, providing insights into customer behavior patterns as well as asset maintenance and inventory management.

This trend should be MODERATELY monitored, with some use cases applicable today.

Outlook

The Covid-19 pandemic accelerated digitalization across all industries, particularly in logistics and the supply chain as demand for goods increased to record breaking highs. In this context, the global XaaS market expanded from 436.82 billion USD in 2021 to 545.35 billion USD in 2022, with a growth projection of 2,378.07 billion USD by 2029 based on a 2022-2029 CAGR of 23.4%. This imminent market development means business models are changing B2C and B2B relationships from product-centric to user-centric, altering business interactions globally.

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