Let’s talk usership versus ownership
The way we think about ownership is changing, and many B2C industries are already adapting accordingly. So why shouldn’t we? Especially when use is subjected to fluctuations that are becoming harder and harder to predict.
Clearly, the time has come for a more comprehensive, flexible cost-effective and measurable solution. One that gives you back control over your operations and your capital.
"Goodbye ownership. Hello usership!"
Wondering whether usership is relevant for your business?
"Goodbye ownership. Hello usership!"
Wondering whether usership is relevant for your business?
The true value of ownership is use
More and more companies are making the shift from “owning” to “using”. The concept of usership touches on many different, often complex factors. Therefore, the independent European Rental Association and the Solvay Brussels School of Economics and Management developed an objective and transparent method of calculating the total cost of usership of any given piece of equipment. The criteria go beyond the financials alone and include such factors as support services, sustainability, logistics and access to expertise.
Are you considering all aspects before making an investment in new equipment?
There are many factors that determine the respective advantages of renting and buying. For each organization, the “crossroads” at which they intersect will be different. But overall, the equation revolves around three main parameters.
1. Percentage of utilization
If there is even a small chance that the equipment you are thinking of purchasing will not be in operation 100% of the time, it is essential to look at the total cost of usership. Our experience has shown that once the rate of utilization drops to 40% or lower, the flexibility afforded by renting makes it the overwhelming favorite. Allowing you to increase capacity for recurring or emergency peak shaving and decrease it in response to both foreseen and unforeseeable downturns in production.
2. Cost of utilization
When most people think about operating or utilization costs, they think about repairs and maintenance, and the cost of parts and labor. But what about things like electricity or fuel consumption, installation time, ease of operation? Not to mention the issue of reliability and the indirect costs of potential downtime! All of these costs go up as your machine gets older. And the potential cost savings of newer, more efficient technologies can only be booked as a missed opportunity.
3. Agility of utilization
Flexible decision making is an important part of an agile organization. One that is capable of adapting to market changes efficiently and effectively. Renting essential equipment typically involves much shorter validation procedures with fewer stakeholders. Thus lowering the barriers to financial decision-making and saving valuable time throughout the whole process. And we’re sure we don’t need to tell anyone that time is money.
Of course, renting and buying need not necessarily be mutually exclusive. A combination of both is quite common and, in many circumstances, to be recommended. By renting a proportion of your base and/or reserve capacity, you retain maximum control while sharing the liability during peak production and adding an extra buffer of reliability to your operations. All with the added peace of mind that your machine park – the means with which you create value as a business – is in the hands of trustworthy specialists.
Usership in action: how other companies optimized their balance sheets through usership.
Peak shaving during harvest season
If you’re in the food and beverage industry, you’ll know better than anyone just how critical timing can be. Freshness is everything. And so when harvest time comes around, it’s all hands on deck and – quite literally – full steam ahead! But what about the rest of the year when the steam generators, boilers, feed and blowdown tanks, etc. you use for sterilization and/or blanching are just sitting around quietly depreciating? Chances are, when your usage is seasonal, you’re better off renting than owning.
Modular power plant for a brewery in full expansion
Our prospect, an industrial-scale brewery, had a big decision to make. Option 1: wait 3 years for upgrades to the local electricity grid so its newly completed glass plant could commence operations. Option 2: buy the four 1MW generators it needed to get the plant online ASAP. Option 3: rent the power generators instead. Option 1 simply wasn’t an option at all! And an initial feasibility study favoured buying over renting. But while that study took all kinds of factors into account from the capital expenditure and service contract to overhead, depreciation and administration costs, it was based on one blatant assumption: a rate of utilization of 100%. The reality, however, turned out to be a very different story!
