Tool and Machine Subscriptions
Blockchain/DLT-based business models for production engineering
Co-Authors: A Beckers, Johannes Mayer, T. Grünebaum, T. Bergs
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Preamble
This use case was created within the project Blockchain Reallabor für das Rheinische Revier, funded by the Ministry of Economics, Innovation, Digitisation and Energy of the State of North Rhine-Westphalia, with the aim of forming a thematic community of interests. If you feel addressed, please contact us (mail@senseering.de) or contact the project directly (kontakt_realllabor@fit.fraunhofer.de).
The Use Case was also published on https://blockchain-reallabor.de/publikationen/ behind this direct link.
Problem
The competitive environment of manufacturing companies is characterized by high dynamics and uncertainty, which inhibits the willingness to invest in new production machinery. At the same time, diverse customer requirements lead to a high diversity of products and shorter product life cycles. The necessity to continuously develop new products or improve existing ones in order to remain competitive may require the adaptation of existing production processes or the use of new machines. The dilemma is already apparent at this point: On the one hand, market uncertainty, the expected short product life cycles and the risk of not being able to use individual machines to full capacity due to diverse customer requirements inhibit the willingness to invest in new production machines. On the other hand, the use of these new machines is necessary in order to meet the versatile customer requirements and to ensure an economically optimized and thus competitive production. In addition, especially during and after crises affecting one or more industries (e.g. the corona crisis), companies have to adjust their production capacities flexibly and at short notice due to rapidly increasing or decreasing demand.
Independent of the developments described above, manufacturers of machine tools such as drills, milling cutters and grinding wheels are currently facing a further challenge. Within the scope of the performance of sold tools, lifetimes are currently being determined which the tools must achieve. For example, the minimum volume that can be machined with a grinding wheel before the wheel is no longer usable is defined. If the corresponding lifetimes are not reached, the agreed price for the tool is reduced. However, a higher lifetime of the tool usually does not mean that a higher price is paid. At the same time, the tool manufacturer is not able to trace the cause of tool failure (e.g. of a grinding wheel) sufficiently, so that the causes of failure, e.g. due to incorrect tool application (e.g. use of too little cooling lubricant), are often not identified.
Solution approach
Tool or machine subscription business models in the sense of pay-per-use or subscription concepts in combination with distributed ledger technologies (DLT) such as blockchain technology represent a promising approach to solving the described challenges. With these models, machine and tool manufacturers do not sell their products, but rather enable temporary and performance-related use of the products. This approach offers the potential for manufacturing companies to use machines via subscription models in order to establish economic production chains for the manufacture of new products without high investment costs or to compensate for capacity bottlenecks in the event of fluctuating demand (e.g. during and after crises in individual industries). It is expected that the capacity utilization of production machines will be increased by the order-related use (subscriptions) of several companies. Existing resources can be used more efficiently, as manufacturers only produce machines according to the forecast demand and make them available for subscription models.
With tool subscription models, the focus is less on avoiding high investment costs or the use of a tool by several companies, but rather on performance-related remuneration in the sense of a pay-per-use subscription. Here, the tool manufacturers are paid according to the performance (e.g. service life) of tools. This model ensures fair remuneration for the performance rendered for users and manufacturers.
As described in the example of the grinding wheel, one challenge of the subscription models is the traceability of the use of the tool or the machine in order to determine the reasons for e.g. achieved lifetimes (e.g. faulty tool or incorrect use). Up to now, tool and machine manufacturers have had to trust users to ensure that their tools or machines are used within the agreed performance ranges (load intervals) and that the usage data are transmitted correctly. In order to improve this traceability of the use of tools and machines, the blockchain can be used to create transparency with regard to the use of tools and machines in accordance with the specifications. Via integrated sensors and machine interfaces, for example, force, power, control or other machine data can be collected and stored in the blockchain in a forgery-proof manner, see figure 1. Subsequently, these data are used to determine the costs of use.
Blockchain technologies enable direct, automatic payment for the use of a tool or the use of a machine via Smart Contracts. Using stored cost models, the amount of the payment can be determined in real time on the basis of the collected data (e.g. average tool load over the machine performance and service life) and the transaction can be completed. In the future, the collected data can not only be used for billing, but also offer a wide range of additional potential, e.g. with regard to load-dependent maintenance cycles of machines or quality tracking for individual production processes.
As Figure 1 shows, the focus of machine subscription models is not on the performance-related use of a machine by a company, but on a network. Different machine manufacturers and manufacturing companies operate in this network and use joint production capacities. The data in the blockchain are used to coordinate current machine states (including capacity utilization) as well as existing and planned requirements. For this purpose, tool subscription models represent the preliminary development stage for machine subscription models in order to establish subscription approaches in the industry and thus create the basis for the decentralized machine network.
Challenges
In order to implement tool and machine subscription models, various challenges must first be solved at different levels (including financing structure, production technology models, data security or legal issues). In the following, selected challenges are described.
Economically convincing business models for all participants: So far, there is a lack of economic valuation models and financing structures for the implementation of the subscription models described. Although investment costs are reduced for manufacturing companies that use machine subscription models, these costs are then increasingly incurred, for example, by the machine manufacturer or a financial intermediary. In this case, new financing concepts may become necessary. In addition, suitable cost models must be developed with which prices for a specific machine or tool use can be fixed in Smart Contracts.
Determination of relevant technology data: Directly related to the appropriate cost models are the technology data used to calculate costs. For this purpose, technological models must be developed or further developed in order to forecast the effects of use on the tool or machine. For example, information on spindle performance could be used as an indicator to forecast the service life of grinding wheels. In this case, the user of the tool pays a higher hourly rate at high spindle loads, as the life of the grinding wheel is expected to be shorter than at low spindle loads. According to the current state of research, the first approaches for predicting service life as a function of process variables are available. For this reason, tool subscription business models are assessed as being feasible in the short term. Machine subscription models are classified as realizable in the medium term.
Security: For the implementation of subscription models based on blockchain, it is also necessary to determine the quantifiable security advantages compared to, for example, centralized client-server architectures in order to make a final technology selection. Legislation: In relation to the described billing via Smart Contracts, it is necessary to examine what legal significance Smart Contracts have and how they can be automated in a legally secure manner.
Stakeholder
The potential stakeholders of the tool and machine subscription models basically include all manufacturing companies. Particularly affected are companies with high tool consumption as well as small- and medium-sized enterprises for which high investment costs represent a major hurdle. Further stakeholders are the tool and machine manufacturers, who bring their products into subscription models for use. As described in the chapter on challenges, the implementation of the solutions presented requires financing structures in which financial institutions can play a central role. It is also possible to include insurance companies in machine subscription models to cover damages caused by the use of machines. For the implementation of the blockchain solution or its setup, the expertise of IT companies specialized in blockchain technology is required.
