The idea for Robotics as a Service (RaaS), which makes companies pay a subscription fee for robots instead of buying them in advance, is gaining ground in manufacturing and logistics, Jessica Twentyman reports.
Why buy a robot when you could simply pay for it with a monthly subscription, depending on the results it offers in your factory?
The concept of Robotics as a Service (RaaS) is rapidly gaining ground in manufacturing, and one of its latest advocates is the industrial robotics company Kuka, which is taking the idea to a whole new level.
The German company, which was acquired by Chinese consumer products maker Midea in 2016, recently announced that it will launch a new SmartFactory as a Service initiative. Also on board are MHP, a Porsche Group consultancy specializing in the automotive and manufacturing sectors, and insurance giant Munich Re.
A factory in a box
Customers of this new on-demand service will obtain an automated plant with robotic personnel based on Kuka technologies; Help with the implementation and integration of MHP; and Munich Re’s risk management and financing services.
The idea is for the service to provide an opportunity for manufacturing companies, particularly automakers, to outsource a capital-intensive part of their business, avoid upfront investment costs and eliminate risk. The partners claim that SmartFactory as a service could reduce time to market for some manufactured products by as much as 30 percent.
According to Kuka CEO Dr. Till Reuter, “The adaptability of a plant is the key criterion for making manufacturing fit for the future.
The partnership with MHP and Munich Re “brings the business model of the future much closer,” he added. It’s not that close, though: Partners acknowledge that it may still be a couple of years before they have a live implementation of SmartFactory as a Service up and running at a client site.
Robots for rent
What is clear is that Kuka’s is an extremely ambitious vision: it is one thing to rent a robot and another to rent an entire factory. In the meantime, however, there are many companies working on more modest versions of a service-based approach to industrial robotics.
According to a May 2018 report from ABI Research, robotics as a service is an elastic concept, which means different things to different providers. But generally speaking, it is widely used to describe a business model based on robot rental or leasing as a full service, rather than asking customers to pay in advance to own it.
“Although the robotics market continues to grow, the constant pressure on robotics providers to maintain margins means that they seek to expand market opportunities beyond selling robots as products,” said ABI Research analyst Rian Whitton.
Overall, ABI Research estimates that the installed base for RaaS will increase from 4,442 units in 2016 to 1.3 million in 2026, while annual revenue for RaaS providers will increase from $ 217 million in 2016 to almost $ 34 billion in 2026.
“This will make the annual revenue of RaaS providers, including all payments for services, higher than the revenue from a shipping of industrial robots, which currently represent the majority of the robotics industry in terms of revenue,” he explained. Whitton.
Dealing with humble tasks
An example of this type of provider is Fetch Robotics, based in San José, California. Earlier this year, the company was selected by the World Economic Forum (WEF) as one of the 61 most promising technology pioneers with the potential to “shape the Fourth Industrial Revolution.” One of his main areas of focus is the automation of warehouse operations for online retailers.
According to Fetch chief operating officer Carl Showalter, larger companies tend to buy robots the traditional way, with an upfront capital investment payment, but then pay an annual cloud service fee for services. predictive maintenance, and so on. Smaller customers pay nothing upfront, but sign up with a monthly robot fee with Fetch.
Another example is Los Angeles, California-based InVia Robotics, which recently announced a $ 20 million funding round and provides e-commerce order fulfillment companies, such as Rakuten Super Logistics (RSL), with harvesting robots based In warehouses. Rakuten has recently chosen InVia’s person-to-person product fulfillment service, a subscription-based model.
According to ABI Research, the RaaS installed base between 2016 and 2025 is expected to have a compound annual growth rate of 66 percent. The markets with the highest absorption of RaaS are forecast to be logistics, manufacturing, and hospitality.
As change consultant Sean Culey explained in his report for the Internet of Business earlier this year, the manufacturing sector will experience profound changes in the coming years.
The confluence of a range of technologies, including industrial robotics, robotic process automation, on-demand manufacturing, 3D printing, the Internet of Things, artificial intelligence, sensors, autonomous transport, blockchain, and the sharing economy, will shift manufacturing to monolithic processes based on lower labor cost and towards more personalized, automated and localized (PAL) value chains, depending on customer needs.
In this way, manufacturers will be able to custom-manufacture, for example, a single pair of athletic shoes and deliver them the next day to a local customer for the same unit cost as a million pairs in China that are mass-produced and ship them via From the market. world.
In fact, one company, Adidas, is doing exactly that with its Speedfactory program: small, local, automated facilities equipped with robots that can produce shoes to a customer’s personal profile.
The fact that such facilities may be available on-demand for a client company, or for multiple clients, makes economic sense since it not only benefits clients and their clients but also guarantees revenue streams to the client. provider.
Furthermore, by locating these facilities on the coast, as close as possible to the client’s needs, local auxiliary employment would be enhanced and the environmental impact of external outsourcing would be minimized. And following the cloud model, RaaS would see providers absorb the maintenance and upgrade cycle in their on-demand services, which means that users will no longer be stuck with rapidly depreciating assets as smarter robots, Faster and more programmable are available.
But the robot-as-a-service factory model does have an impact on employment, of course. In 2016 alone, China purchased 66,000 industrial robots. If everyone can do the work of 15 people (24 × 7, 365 days a year), then that’s roughly the equivalent of a million human jobs in the shop, more if you consider no vacation or sick days.
The FT reports that automation has replaced the jobs of up to 40 percent of workers at some Chinese industrial companies in the past three years, according to joint research by the China Development Research Foundation and the capital fund of risk, Sequoia China.
China is automating itself faster than any other nation on Earth to retain its low-cost labor advantage. However, the combination of the RaaS and Culey PAL value chain concept suggests that it may not be necessary to outsource manufacturing abroad to countries like China.