Process Equipment-as-a-Service (PEaS) in the Food & Beverage industry: a disruptive business model or simple hype? | Agoria

Process Equipment-as-a-Service (PEaS) in the Food & Beverage industry: a disruptive business model or simple hype?

Image
Published on 10/06/21
On 27 May, Agoria's Food & Beverage Technology Club held an information session to raise awareness about PEaS in the Food and Beverage industry and to show the possibilities it offers when integrated into your customised business development models. The programme included case studies from TetraPak, Koolmill Engineering Ltd (UK), Energy Partners (South Africa) and Econocom!

Drawing the context of ‘as-a-service’ by Jürgen Tanghe from Studio Dott

Jürgen Tanghe from Studio Dott took the floor first to explain the context. What exactly is the "as-a-service" model? And what should a company look for before implementing this model? “In the past, we had products and possibly a few additional services on top of that, such as repairs, parts, and predictive maintenance, among others. However, we are now witnessing the rise of the "products as services" model which offers an outcome-based approach to that former combination of products and services. That means you don't just let people buy a product and use it; you basically deliver a complete outcome to your customers."

“Process Equipment-as-a-Service (PEaS) in the Food and Beverage industry is still in its infancy. There is potential return on investment for companies, but it is important to be aware of the servitization paradox: ‘Substantial investment in extending the service business leads to increased service offerings and higher costs, but does not generate the expected correspondingly higher returns.’ Before considering the model, process manufacturers should be aware of some key issues, such as pricing mechanisms, ownership and access to data, stakeholder responsibilities, financing and, above all, customer value. Product-as-a-service can be derailed because companies are driven by a revenue-generating strategy and fail to provide the appropriate answer in terms of customer value.

“It is important to listen to the customer, identify their issues, and think about how you can address them with your offering.”

Case 1: Ron Dekeersmaker & Anders Andren – Tetra Pak - Connecting the food industry – Paving the way for service solutions 

To stay on top of changing consumer demans, producers need to adapt frequently and quickly. Tetra Pak offers flexibility in terms of product size and capacities. Don Dekeersmaker: “Our customers talk to us about their desires and, as a result, our service involves not just offering the equipment but also having the expertise around it (in our product development centres) and conducting trials (in our technical test centres). After these trials, we can send them the equipment to start production.”

However, it doesn’t stop there. Tetra also offers different types of maintenance services to keep the equipment running. This does not involve only maintaining equipment as there are also predictable maintenance costs: the customer is aware of the equipment’s cost over a given period of time. We have also started offering Tetra Pack Secure, which is an outcome-based service leveraging; we handle all the different elements of their operation. What is the optimal cost of operating the whole factory and how can we secure the output, guarantee costs, and drive the service offering one step further?”

Case 2: Alex Anderson – Koolmill – Digitalisation of an antiquated global industry will change the way the world is fed

Koolmill Engineering Ltd is a producer of rice milling solutions. Each year, 667 million bags of rice will not make it from field to fork. That is enough rice to feed 600 million people for a year. Each bag lost wastes 250,000 litres of water.

Alex Anderson: “We believe that by creating adaptable digital solutions and automation and making these available to producers we can contribute to a more sustainable future. For us, automation is about creating value. Covid forced rapid change and may propel faster adoption of automation and AI. Creating value comes with optimisation: capturing data, analysing it and using the analysis outputs in real time. We can be productive by addressing the cost but we can also work on the other end and create more value. That is why we are challenging the norm: Moving the miller’s focus from cost reduction to value creation.”

“We have been working with Siemens and collecting data from suppliers, environmental data, moisture levels, and bringing this all together in a dashboard. In the data we can see things starting to happen and be proactive in our management. This minimises loss of food and loss of value. We will also look into that data to identify patterns that cause failure and send warnings to operators to prevent this from occurring in the future. This way, we are moving away from a customer-supplier relationship and more towards a cooperation and thrust relationship.

Case 3: A Dr. Oetker Case by Dawie Kriel, Energy Partner RSA

Dr. Oetker, a manufacturer and importer of frozen foods, recently upgraded its production and storage facility, including the installation of a brand new three-stage ammonia refrigeration plant. Thanks to the outsourced cooling model from provider Energy Partners, the South African branch of Dr. Oetker was able to cover its cooling needs thanks to high energy-efficiency refrigeration equipment operating with the natural refrigerant ammonia, without having to invest in the technology itself or worry about its maintenance and operation afterwards.

Dawie Kriel, Energy Partner RSA: "We first engaged with Dr. Oetker in 2018. At that time, they were developing a facility for their new production lines and they were looking at different solutions for the best and most efficient cooling for their facility. Energy Partners Refrigeration offered Dr. Oetker a cooling-as-a-service contract to install, operate and maintain the cooling system in the new facility."

"Because cooling as a service changes our side of the customer relationship from a contractor to a partner, it means we can grow with the customer and better understand their daily needs as they change and as the business grows. We can therefore adapt our system to meet those needs and, over time, improve the efficiency of the system."

Case 4: The PEaS model is not just a leasing model by Christian Levie – Econocom

Econocom is the first digital prime contractor in Europe. The company coordinates and takes overall responsibility for the entire business chain of a digital project. They design and implement digital technology that truly serves customers and creates lasting value. Based on the actual use by their customers, they are always preparing for the next phase and placing responsible digital at the heart of their operations.

"Our 'as-a-service' model also provides many benefits to the customer," explained Christian Levie. It gives them peace of mind. It is a robust, flexible, and scalable solution. We also guarantee operational excellence through continuous measurement and improvement. The costs are predictable (no peaks and troughs, no surprises).”

How Agoria contributes: the European Efficiency-as-a-Service Project

In conclusion, Mira Tayah from Agoria presented the EaaS project, which aims to develop and implement the servitization model to accelerate the market adoption of energy-efficient solutions by SMEs in Belgium, the Netherlands and Spain. AGORIA is leading the  project in Belgium.

"All too often we see that companies face different competing investment priorities and energy efficiency is not first on the list as not part of their core business. Higher upfront costs coupled with a lack of confidence in the performance of energy efficient technologies create additional barriers to investment in such technologies. With efficiency as a service many of these barriers are lifted  as the supplier no longer sells the equipment to the customer, but actually provides a service.. EaaS is a strategic win-win partnership in which customers benefit from improved equipment uptime, full outsourcing of service and the use of high end equipment while providers benefit from access to new markets, additional sources of continuous and predictable revenues and strengthened customer relationship."

Agoria and its consortium partners ANESE, BASE and Innoenergy will act as  facilitators to  companies that wish to introduce and implement the ‘efficiency-as-a-service’ business model. To this end, they are developing an EaaS toolbox comprising an EaaS contract, a price modelling tool and guidelines for monitoring, reporting and verifying energy savings. They will engage participating companies in capacity building, trainings and matchmaking events to  build pipelines of EaaS projects.

At the end of the session, we polled our Club members' opinions on this business model and what the main challenges are for its implementation:

 

Image

Image

Image

If you want to learn more about Process Equipment-as-a-Service (PEaS) in the Food & Beverage industry, please contact François de Hemptinne (Francois.dehemptinne@agoria.be)

Was this article useful?

Related topics