Use case — Why Blockchain makes renting heavy machines so easy.
Do you remember the 80s? Yes? Then you already know a lot about the current situation in the rental area of heavy machines right now. Maybe today the colors of our clothes are less flashy and there is a bit more internet instead of using a fax machine. But overall, the processes have barely changed. Still, 70% of rental costs are incurred in the coordination of the process. People call for hours to bring a machine to the place of work and back after the job.
All companies work with different systems, have different interfaces and are therefore not able to exchange data digitally. And we do not even talk about automated processes.
The problem.
Of course, it’s not like companies do not want to recognize or change that. But they are in a conflict. On the one side they want to work together in a digital way and automate the whole rental process. But to achieve that, you have to share data with marketplaces or at least with partner companies. However, companies are scared to lose sovereignty over their own machine data. Understandable. Or would you like your direct competitor to get detailed information about your workload in the worst case?
How to tackle this situation with blockchain.
Let’s focus first on the process of matchmaking between customers and companies. The main problem here is that there is no standard solution to represent a machine in a digital way. So, to know if a machine is available or maybe needs a service first, you have to ask somebody and if it is your lucky day, this person knows the answer. Sometimes you have to ask two or three people to know more about the status of a machine. In a situation like this it’s hard to implement an automated process.
What you can do now with blockchain is to create a digital twin for every machine. The digital twin is from that moments on the digital representation of the machine in the blockchain and contains all the information about the machine. The digital twin allows the machine to become an independent participant in cooperative processes. One important fact: the owner of the machine is always the owner of the digital twin. If the owner changes, the digital twin also changes. The information in the digital twin thus remains exclusively with the owner of the machine.
Information stored in the digital twin of a machine.
Basically, there are two different kinds of information stored in the digital twin. Firstly, there are all the metadata of the machine (everything from basic information up to maintenance history) and secondly, there is the current status (Where is the machine? Ready for use?…)
For matchmaking, companies can now give partial access to the information about the current status of the machine in the digital twin. This allows for example marketplaces to provide real time offerings for their customers. But more exciting is that partners can give each other access to the availabilities of the machines.
I will explain the advantages with a simple example:
You are a rental company for heavy machines. A long-time customer calls you and asks for a special machine. Unfortunately, you do not have this machine. Instead of sending him away and risking him looking for a bigger partner, you check the availability in the digital twins of your partner companies. If you find a suitable machine you book it directly over the digital twin and convey the machine to your customer. This will generate additional business for you and your partner — spending two minutes to check the availability of several machines without using a telephone or writing an email.
The key is that the digital twin is a standard to indicate the status of a machine. And you are able to share this information without losing the sovereignty over your data to an independent third party. Because you as a company decide who gets access to the information in your digital twins on blockchain technology.
What’s more?
The second big thing we achieve with the digital twin are automated processes. To rent a heavy machine you have to bring different partners together. If, for example, you don’t have your own logistics team, you need a partner in this field, who brings the machine to the customer. For the entire time of the rent, you need an insurance and sometimes you need a specialized operator for the machine, as well. It’s a huge coordination effort.
Specially the “transfer of risk” is a hot topic in the rental business of heavy machines. For the time of transport, the logistics company has the risk for possible damages. When they finally arrive at the destination, they have to proof that there are no damages. From this point on the rental company bears the risk until the machine is put into operation. It is a great effort to create a verifiable process herefore. The digital twin greatly simplifies this process.
I would also like to explain this with a concrete example:
Once the matchmaking has been successfully completed, the rental company can provide limited access to the digital twin of the machine. In connection with the rental agreement as a smart contract, the digital twin can now coordinate the whole process by itself. Based on previously defined rules and procedures it can invite logistics companies, insurances and operators and give all the information these participants need.
For example, it can share all the information about the scheduling and destination with the logistic company to organize the transport. It can also give the driver and operator the right to add information to the smart contract so that the insurances have a transparent overview about what is going on. Thus, the transfer of risk can be made tamper-proof and transparent. After successful completion of the order, the payments can be processed automatically.
Conclusion
With a digital twin for machines in the rental area, you can basically take two big steps for your business. Firstly, you can create together with your partners an uniform standard how to share status information of machines. Thus, the cooperation with partners is digitized and new cooperative business models can emerge.
Secondly, you can give your participating partners limited access (reading and writing) to all the necessary information in the digital twin. This allows you to create automated rental processes in which all important information in the blockchain is stored tamper-proof.
Here some other use cases that benefit from the digital twin in the blockchain, because it’s not only about matchmaking and logistics:
- Coordination of claims involving all participants
- Ensuring the use of original spare parts
- Providing flexible pay per use business models
Why Blockchain?
If you present this case in your company, you can count on the question: “And why do we need blockchain?” — There is always someone who tries to destroy your lovingly prepared presentation. Here you have the answers.
Decentral Networks
Based on blockchain technology, you can create decentralized networks to connect partner companies together. In these networks you can share all kinds of data with your partners without losing the sovereignty over your data to third parties. In the case described, each machine receives a digital twin as a digital representation in a blockchain network, thereby being able to communicate on its own.
Not only machines receive a digital representation in the blockchain, companies and individuals also have a digital identity and can, depending on their authorization, become part of digitized processes.
Smart Contracts
Through smart contracts you can automate the majority of all processes to save money and time in orchestrating the rental processes across all company boundaries. Manual processes and handling costs are eliminated.
Tamper Proof
The architecture ensures that all important information is stored tamper-proof and permanent. This is an extremely important point, especially for the transfer of risk during a rental transaction.
